Why Solana is poised to dominate altcoin season? Here is how Sol Strategies drive SOL adoption

Solana has just crossed the $200 mark, solidifying its position as a leading platform in the blockchain industry. Meanwhile, Sol Strategies, a publicly listed company, is setting its sights on becoming a major driver of this accelerated adoption.

Before diving deeper, let’s talk about Sol Strategies (formerly Cypherpunk Holdings). This company isn’t just a “MicroStrategy for Solana” or a proxy ETF; it also serves as a network validator and venture capital firm.

Shareholders in Sol Strategies benefit not only from revenue generated through network validation but also from planned acquisitions within the Solana ecosystem.

The company’s strategy is built on a firm belief in the resilience and efficiency of the Solana blockchain.

To get a clearer picture, we spoke with Leah Wald, CEO of Sol Strategies, and posed critical, in-depth questions about blockchain performance, their development plans, and how they aim to realize their vision of bringing a high-value decentralized network framework to mainstream industries.

As expected, Sol Strategies has conducted thorough due diligence on the Solana protocol, making them one of the most knowledgeable stakeholders regarding key points on Solana’s roadmap, including Firedancer and Solana Mobile.

.@solstrategies_ CEO @LeahWald highlights surging institutional interest in SOL staking, with top firms like 3iQ and VanEck diving in. As Solana grows, so does demand for scalable, staked ETPs—a game-changer for institutional DeFi adoptionhttps://t.co/C2eEvMskY1

— Tony G (@TonyGuoga) October 29, 2024

Solana’s DeFi TVL grew by 26% QoQ to $5.7 billion, ranking it third among networks, surpassing Tron in late September.https://t.co/kXnnp1RHQi pic.twitter.com/Oa1eTIr7he

— Sol Strategies (CSE: HODL | OTC: CYFRF) (@solstrategies_) November 7, 2024

Are Solana’s Network Outages a Thing of the Past?

We began our interview by addressing Solana’s history of network outages—a significant stumbling block for any blockchain network.

Imagine running a decentralized ride-hailing business with no intermediaries taking a cut of drivers’ earnings and reduced costs for passengers. It sounds revolutionary, but such a business model is doomed if the underlying network is prone to failures.

Solana has a track record of security vulnerabilities and outages—experiencing nine major or partial disruptions since its inception. Network congestion has also been a key challenge. Can Solana finally put these issues behind it?

Recent performance suggests challenges remain: regarding network congestion and transaction (tx) failures, the Jupiter aggregator reported a tx failure rate of up to 83% at times.

Additionally, network congestion has caused transaction failure rates as high as 75% at certain points. Over the 30 days leading up to October 17, the average successful transactions per second (tps) recorded was 758, even though Solana’s official explorer lists the current tps as 3,561.

For comparison, Ethereum operates at a relatively slow (and expensive) 15-30 tps, though its Surge upgrade aims for a theoretical tps of up to 100,000.

Has Solana done enough to move beyond these hurdles and establish itself as a truly reliable blockchain network? Time will tell.

LW: It’s Been 266 Days Since the Last Partial Outage (February 6), Reflecting Solana’s Ability to Address These Issues

Regarding transaction (TX) failures, reported failure rates may not directly correlate with the experience of regular users compared to those engaging in arbitrage or other high-frequency techniques. From our perspective, the user experience has been positive, with no failures in our regular institutional use cases.

It’s true that Solana has faced challenges with outages and network congestion—reasonable hurdles for a network pushing the boundaries of performance.

However, the Solana team has made significant strides in addressing these issues, particularly with recent updates that enhance network resilience and reduce the likelihood of future outages.

Scalability has always been a concern for Layer 1 blockchains, but Solana’s roadmap inspires confidence. Ongoing development on solutions like Firedancer and transaction processing enhancements suggests that these problems will be resolved as the network matures.

We Asked Leah Wald About the Following Efficiency-Boosting Solutions

The new Firedancer Validator Client is set to increase theoretical TPS from 50k-600k to 1 million. Firedancer has already surpassed 1 million TPS on Testnet and is written in C, offering critical client diversification.

However, implementing Firedancer comes with challenges, including transaction propagation, consensus scalability, and execution throughput to mitigate spam and DDoS attacks.

LW:
“Firedancer is a game changer. By introducing a client written in C, it adds crucial diversity and enhances transaction throughput, as demonstrated in testing. The challenges in implementation—such as transaction propagation and consensus scalability—are being actively addressed, and this is a solution we believe will further solidify Solana’s position as a leader in high-performance blockchain infrastructure.”

Weighted Staking-Based Quality of Service:

LW:
“This is a critical step to ensure the network can handle high transaction volumes without sacrificing performance. It aligns with Solana’s ethos of valuing participation and contributions to the network.”

Updates Including V1.18, QUIC, Fee Market System & Priority Fees, Agave Validator Client:

LW:
“These updates have already demonstrated improvements in transaction success rates and network efficiency. By introducing transaction prioritization and a more sophisticated fee structure, Solana can handle periods of high demand while maintaining transaction speed.”

What’s Your View on the Risks of Centralization?

For instance, there are concerns about the centralization of Solana’s dApp Store. With a relatively small number of validators, doesn’t centralization pose a threat to stability? Additionally, the dominance of vote transactions, which account for 85% of network activity, raises worries about centralization.

LW:
“While validator centralization is a valid concern, we believe efforts to decentralize the network, increase the number of validators, and diversify client software with initiatives like Firedancer will help mitigate this risk. Solana’s focus on reducing the dominance of vote transactions is also crucial to ensure the network remains healthy and decentralized.”

Concerns about decentralization are inherently difficult to address because quantified metrics or measurements are rarely applied. For example, four mining pools currently control over 75% of Bitcoin’s hashrate, yet that doesn’t necessarily mean Bitcoin is centralized.

Essentially, we view these networks as adapting to the forces of centralization. Network participants have incentives for the network to succeed and are generally inclined to act accordingly.

At present, we have greater confidence in Solana’s ability to remain decentralized through the use of dPOS (delegated proof of stake) and MeV tip sharing (maximum extractable value as a measure of profit from transaction ordering by miners/validators), compared to the topology of some other networks, which tend to be dominated by a few LST pools (liquid staking tokens) controlling a large proportion of the stake.