Figment’s First Look: Solana

Figment Networks: meet Solana

Upcoming Staking AMA

Staking Hub will be hosting an AMA with Anatoly Yakovenko and Eric Williams to discuss everything Solana with an emphasis on staking.

Join us! Thursday, August 8 at 11am PT / 2pm ET / 8pm CET

Blockchain Scalability Now

Figment Networks provides trusted token delegation, secure staking infrastructure, and compliance tools for long-term token holders and Proof of Stake (PoS) blockchains.

In addition to running best in class validator infrastructure, Figment is dedicated to growing PoS blockchains via open source software tool development, analysis, community, and governance.

We believe that blockchain network participation must include more than just staking and validating. We have the opportunity to grow networks via active participation, including building software tools like Hubble, creating compliance tools like Rewards Reporting, governance, and community building. What is the goal?

End-user Adoption

We see the scalability problem as a sticking point for end-user adoption. One of the things we love about the current generation of blockchains launching are all the different approaches to scaling.

What if we don’t have to wait years for blockchain scalability? What if someone made a blockchain faster — much, much faster?

Solana is a permissionless, decentralized, and secure smart contract blockchain platform proposing to solve the scalability problem now. Without sharding.

Why is that important?

Solana bypasses the complexities and developmental delays inherent in sharded blockchains. While other networks push back launch dates, Solana is gearing up to deliver now. We’re excited to help make that happen by participating in Solana’s incentivized testnet competition, Tour de SOL.

The Countdown ?

The point of Tour de SOL is to test the stability and performance of the network, to test its design and parameters, and to harden the network’s design prior to Solana’s imminent mainnet launch. These tests will be critical to building confidence in Solana’s innovations.

Figment joined 49 other external nodes on July 25 for Solana’s first attemptat booting a fully decentralized cluster in preparation for Tour de SOL. Tour de SOL is scheduled to run from September through November, paving to path to Solana’s mainnet launch ?

Figment Networks will be offering a validator service for Solana that will be open for delegation. Contact us to learn more.

Solana

Solana is designed to ensure that the software doesn’t get in the way of the hardware. Their internal testnet recently achieved approximately 50,000 transactions/second across 200 nodes in 23 regions worldwide. As global Internet bandwidth capacities increase to meet user demand, so does Solana’s scalability solution.

Solana encodes the passage of time as data, called Proof of History (PoH), and leverages a verifiable delay function (VDF) to reduce transactional overhead between nodes in the network. The seven key innovations that make the Solana network possible:

This is a really deep dive into how Solana works ☝️

Project contributors

The Solana Labs team is composed of 24 members, including co-founders Anatoly Yakovenko and Greg Fitzgerald.

“Anatoly (CEO) rose the ranks to Senior Staff Engineer Manager over a 12 year period at Qualcomm. After leaving Qualcomm, he began engineering distributed systems for Mesosphere and later, Dropbox. He holds 4 patents in his name, including one for the invention of a lossless data compression system that leverages recurrent neural networks.”

“Greg (CTO) spent 11 years at Qualcomm where he contributed to the development of their LLVM toolchain. Before leaving Qualcomm to found Solana, he rose to the position of Senior Staff Software Engineer, leading the web and messaging infrastructure team.”

Use Cases

Solana is designed for decentralized applications that demand high throughput. Its architecture enables transactions to be ordered as they enter the network, rather than by block. Examples provided by Solana Labs:

  • Decentralized exchanges (DEXes) & marketplaces in need of fair transaction ordering (to prevent front-running)
  • Payments & gaming via sub-second transaction confirmation
  • Micropayments via low transaction costs (~$0.0001USD/tx)
  • Distributed storage

Network Token

Solana’s token, SOL, will be used for staking and transaction fees.

Staking
The network will be secured by bonded validator nodes that put SOL at stake in order to participate in the network. Participants receive block rewards and transaction fees. Token holders may also earn rewards by delegating tokens to reputable validators.

Transaction fees
Every transaction on the network will involve a fee that incentivizes validators and replicators, while protecting the network from spam attacks. The fee rate will vary.

Token Distribution

The supply cap is set at 500M SOL, but the initial token supply and distribution have yet to be determined.

Funding

Solana Labs recently announced that they raised $20 million in a Series A round led by Multicoin Capital, with participation from Distributed Global, Blocktower Capital, Foundation Capital, Blockchange VC, Slow Ventures, NCG Ventures, Passport Capital and Rockaway Ventures.

Token Minting

New SOL tokens will be created based on an inflation rate that varies each epoch, based on two main factors:

  1. Staking participation rate – the current fraction of staked SOLs out of the current total circulating supply
  2. The global time since the first block

The initial annual inflation rate is expected to be set around 10 to 15% of the circulating supply, and programmed to decrease by between 10 to 20% per year. The team’s aim is to bottom out the annual inflation rate of 2% over the years to keep incentivizing validators. Inflation will increase when fewer tokens are staked to incentive participation and network security.

Staking

Solana Labs is aiming to have thousands of nodes active at the network’s maturity, so there is no restriction on the number of nodes. Participants must stake SOL tokens as a security bond, and the unbonding period has not yet been determined. Leader selection/rotation is based on stake-weight, so we should expect minimum or maximum stake thresholds. There appears to be no advantage for an entity to run multiple nodes.

There will be two types of clients involved in the consensus mechanism:

  1. Validators — verify and submit transactions
  2. Replicators — provide storage space to store the growing blockchain, meaning validators will only need to store the most recent transactions, rather than the full ledger

Staking Rewards for Validators

Rewards will be SOL tokens, and the number will depend on the network’s inflation rate, the global amount of SOL staked, the volume of network fees, and for delegators, the validator’s commission rate.

Validators will not have custody over delegator rewards. Rewards will be held in a smart contract and may withdrawn at any time by delegators. Thus rewards will not earn compounding rewards until they are staked. There are reportedly plans for auto-delegation for replicators, a feature that may be extended to validators.

The annual inflation percent to be distributed to validator nodes will be a function of:

  • the fraction of staked SOLs versus the total circulating supply
  • the global time since the first block
  • the availability and participation rate of the validator

Half of the transaction fees are to be burnt, with the remaining fees going to the current leader processing the transaction.

Staking Rewards for Replicators

Anyone may offer the network storage space, and may use basic hardware such as a laptop to become a replicator. Replicators will earn SOL token rewards proportional to the number of successfully validated Proof of Replications provided to the network, thus the amount of storage provided.

Tracking Staking Rewards for Tax Reporting

Currently no tools or ability to track staking rewards for tax reporting.

Staking risks

The validator and its delegators’ tokens are at risk of being slashed. Downtime will not be punished by slashing, but both signing illegal transactions and voting for an inferior fork will result in a loss of tokens (slashed). Partial slashing may be implemented in the case of multiple validators being slashed during the same time period.

Governance

Long-term governance will be conducted under the Solana Foundation, a Swiss non-profit entity established in June 2019. The foundation’s board will be elected representatives from the various stakeholder communities within the Solana network, such as validators, replicators, users, developers and token holders. The Solana Foundation will focus on efforts to grow the network ecosystem through grants and decentralized governance processes. Solana Labs intends to begin the process of transferring network governance to the Solana Foundation in 2020.

Project status

Solana Labs is preparing to launch Tour de SOL, an incentivized testnet and competition. The point of Tour de SOL is to test the stability and performance of the network, to test its design and parameters, and to harden the network’s design prior to mainnet launch. These tests will be critical to building confidence in Solana’s innovations.

Figment joined 49 other external nodes on July 25 for Solana’s first attemptat booting a fully decentralized cluster in preparation for Tour de SOL. The next attempt is scheduled for August 6, 2019.

Tour de SOL is planned to run from September until November, leading up to the launch of the mainnet. The Tour de SOL schedule may change, so the forum is the best place to keep up to date.

Reminder: Upcoming Staking AMA

Staking Hub will be hosting an AMA with Anatoly Yakovenko and Eric Williams to discuss everything Solana with an emphasis on staking.

Join us! Thursday, August 8 at 11am PT / 2pm ET / 8pm CET