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Edited by Kabir903 at 22-12-2023 04:51 AM
Solana's Past Year
Anatoly reflects on the challenges Solana faced in the past year, particularly dealing with the negative publicity surrounding the FTX incident. He adds that being part of the ecosystem feels different, as if it's propelling them forward. After witnessing how the community responded to challenges, he has a more positive outlook on the Solana ecosystem. Despite difficulties, the team remains committed to building an ecosystem rather than creating its own blockchain.
Anatoly mentions his tendency to overthink worst-case scenarios, while Raj Gokal (Solana co-founder) excels in positively reimagining situations. Having a partner who balances optimism and pessimism is crucial for finding better solutions.
He emphasizes that building on Solana is not just for financial incentives; many teams have different motivations. Some teams operate counter-cyclically to the crypto market, focusing more on product development than short-term market fluctuations.
Solana and Application Layer
Anatoly suggests that startups should plan an 18-month cycle to prove their value and progress. Proving Product-Market Fit (PMF) within this timeframe is crucial. Even with more operational time, an 18-month cycle should be considered.
He uses the example of the Backpack team, whose founders transformed personal impact and emotion into harder work instead of expanding the team. Their dedication led to significant growth, a strong community, and a successful product. Strategic decisions at each stage contributed to their success.
Solana's chain provides a cheap, fast, and scalable solution, allowing developers to focus on applications rather than scaling technology. However, despite some overlap with scaling technologies like ZK, the main focus is on improving the application layer. Due to Solana's already low costs, fundraising for Layer 2 solutions is challenging.
He adds that Solana's low costs make fundraising for Layer 2 challenging. Ethereum's expensive L1 and L2 solutions provide valid arguments. Solana's focus is on building applications people will use, not adding more layers or frameworks.
Anatoly mentions that compressing NFTs for on-chain asset tracking offers an economically efficient solution. Applications like ticketing and loyalty points can benefit from blockchain-based cost-effective asset tracking. The concept of compression has been discussed for a while, and real-life applications are often stranger than fiction.
He adds that artists with a large fan base can monetize their art by having followers pay subscription fees. NFTs create scarcity and rarity for digital art, allowing artists to provide unique pieces to their audience.
Anatoly believes that instead of focusing on the decline in prices of limited edition NFTs, building relationships between artists and followers will bring more innovative applications. The true potential of NFTs is not fully understood yet, but this technology has the potential to create incredible applications.
He suggests that, as with the early days of the internet when people had to learn about links, understanding encrypted wallets has a learning curve. As more people become familiar with wallets and cryptocurrencies, wider adoption of NFTs will occur.
Companies like Instagram can benefit by incorporating compressed NFTs into their platforms. There is still untapped potential for innovative applications using NFT technology.
Solana and DeFi
Anatoly states that DeFi on Solana has seen significant growth, especially on platforms like marginfi, Solend, Jupiter, and Jito. These platforms continue to build and mature even during bear markets and challenging events.
He adds that DeFi represents decentralized lending, trading, staking, and other markets. The intersection of L1 staking security with DeFi applications like Jito creates interesting opportunities to earn additional rewards.
DeFi is considered the most critical application in the crypto space, as it represents penetration into traditional finance. While adoption may be challenging due to people's reluctance to relinquish financial control, DeFi is inevitably going to play a crucial role in future finance.
Anatoly mentions that integrating DeFi into the blockchain network creates a positive feedback loop between validators and application users. This connection leads to greater decentralization, faster transaction speeds, and a more interconnected ecosystem.
He says that Backpack, a new exchange, aims to create a better exchange than FDA through multi-party computation (MPC) for super transparency and proof of customer funds. Although centralized exchanges are more closely connected to fiat than the DeFi track, he hopes this will change in the future.
Cube, another exchange launched by Solana Labs' former engineering director Bartosz, focuses on security and implements MPC for customer funds.
He adds that both Backpack and Cube aim to prevent past failures by prioritizing security and innovation.
Solana and NFTs
Anatoly states that projects like Mad Lads with strong teams can continue to realize their vision, attracting more users. Other factors, including faster trends and innovation, have also propelled the growth of the NFT space compared to general cryptocurrencies.
He mentions that the decentralized goal is to eliminate single points of failure, where one challenge is multiple teams achieving the same L1. Ethereum achieved significant decentralization by having four different L1 implementations, albeit slowing progress. Measurable decentralization is crucial for assessing the likelihood of unrecoverable network failures, vital for building a robust system.
Firedancer, a team of high-frequency trading experts, focuses on optimizing the underlying protocol without making any changes. Their goal is to demonstrate that adding more cores to any part of the system will improve performance without altering the underlying protocol. The current focus is on showcasing the scalability of existing hardware components. Once the full client runs, there will be no single point of failure, a significant milestone.
Firedancer allows testing and identifying bottlenecks in the system, facilitating optimization work. When necessary, the lab and Firedancer team can review and accept proposed algorithm changes. Scalability of the network depends on software improvements and validators upgrading their hardware.
He adds that Visa's transaction processing speed cannot match the TPS of high-frequency trading or traditional exchanges. Solana's goal is to create a super-optimized state machine capable of meeting the securities industry's demands. As demand grows, hardware upgrades are expected to occur naturally, ensuring continuous improvement in network performance.
Composable computer systems like Solana can expand to support various functions simultaneously, including Visa, NFTs, and Jupiter. It allows efficient trading between different markets. For example, in Jupiter, you can exchange 20 cents, touching five different markets because it's more cost-effective.
He emphasizes that traditional financial systems have inefficient delays in transmitting information from one geographical location to another. By providing comparable price discovery capabilities and being cheaper and faster than centralized systems, Solana has the potential to be competitive in financial markets.
Regulation and Final Thoughts
Anatoly expresses the hope for faster progress in U.S. regulation. He believes that the Market Structure Bill and Stablecoin Bill will guide other countries, leading to global standardized regulation. However, progress has been slow so far, with only partial measures implemented.
He states that labeling Solana and other projects as securities without proper legal rulings creates uncertainty, making it challenging to address regulatory challenges. Despite these challenges, having a presence in the U.S. provides an advantage when dealing with regulatory bodies. Demonstrating tangible benefits of crypto projects, such as providing affordable data plans through technologies like Helium, can help gain support from U.S. Congress members.
He adds that compliance with U.S. laws is inevitable for any crypto company, regardless of its initial location. He believes that starting a crypto company in the U.S. has an equal chance of success compared to starting elsewhere.
Anatoly thinks that companies like Google Play Store are
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Post time 16-12-2023 22:02:57
