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Ankita Virani
Ankita Virani

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Building on Solana: Low-Latency Blockchain for DeFi, Gaming, and Tokenization

#architecture #blockchain #performance #web3

Introduction

Solana is one of the most ambitious Layer‑1 blockchains in the Web3 ecosystem. Launched in 2020, it was designed to solve the blockchain trilemma: achieving high scalability, low latency, and decentralized security simultaneously.

Unlike Bitcoin or pre-Merge Ethereum, Solana is engineered for extremely high throughput, capable of handling thousands of transactions per second (TPS) at a fraction of a cent per transaction. Its unique architecture—combining Proof of History (PoH) with Proof of Stake (PoS)—creates a high-speed, low-latency network capable of supporting DeFi, NFTs, gaming, and real-world asset tokenization.

Origins and Founders

Solana’s inception began in 2017 with Anatoly Yakovenko, a former Qualcomm engineer. He identified a fundamental limitation in existing blockchain networks: scaling without compromising security or decentralization was nearly impossible. His solution was Proof of History (PoH), a cryptographic innovation that provides a verifiable order of events on-chain.

  • Founders: Anatoly Yakovenko (CEO), Raj Gokal (COO), Greg Fitzgerald (Lead Engineer)
  • Foundation: Solana Foundation (established 2018) – manages grants, governance, and ecosystem development
  • Mainnet Launch: March 16, 2020
  • Initial Growth: NFT boom in 2021 (Degenerate Ape Academy, Serum DEX)

Solana quickly became popular due to low fees, high throughput, and near-instant finality, attracting developers for DeFi protocols, NFT marketplaces, and gaming platforms.

Core Technology and Architecture

Solana’s performance derives from a combination of innovative consensus mechanisms, parallel processing, and monolithic architecture. Unlike Ethereum’s Layer‑2 scaling solutions, Solana keeps consensus, execution, and data availability entirely on-chain.

1. Hybrid Consensus: Proof of History + Proof of Stake

Proof of History (PoH)

  • Functions as a decentralized clock for timestamping events.
  • Uses Verifiable Delay Functions (VDFs) to generate sequential hashes.
  • Reduces validator communication overhead for transaction ordering, lowering latency.
  • Enables thousands of TPS (up to ~65,000 theoretical).

Proof of Stake (PoS) with Tower BFT

  • Validators stake SOL tokens to participate in block validation.
  • Tower BFT leverages PoH timestamps for fast finality.
  • Validators work in clusters, enabling parallel transaction processing for higher efficiency.

2. Core Components Enabling High Performance

Solana’s ecosystem of innovations includes:

Component Purpose Benefit
Sealevel Parallel smart contract execution Supports multiple simultaneous transactions
Turbine Data propagation using shreds Efficient block propagation
Gulf Stream Mempool-less transaction forwarding Faster confirmations, reduced latency
Pipeline Transaction processing optimization Streamlined block creation
Cloudbreak Horizontally-scaled account database Rapid state access for high-volume operations
Archivers Decentralized storage of historical data Reduces validator storage requirements
Validator Clusters Collaborative node operation Higher throughput and security

3. Transaction Flow

Transactions follow a sequential yet parallelized pipeline:

  1. Ordered through PoH for deterministic timestamps
  2. Validated by PoS consensus
  3. Executed and finalized in blocks via Sealevel and Pipeline

Transaction Flow

This architecture allows thousands of TPS with minimal fees.

4. Smart Contracts (Programs)

  • Written in Rust, C, or C++, compiled to BPF bytecode.
  • Solana Program Library (SPL) provides standards similar to ERC-20/ERC-721 for asset and token management.
  • Accounts are stateless and rent-based, minimizing on-chain storage costs. 
use solana_program::{
    account_info::AccountInfo,
    entrypoint,
    entrypoint::ProgramResult,
    msg,
    pubkey::Pubkey,
};

entrypoint!(process_instruction);

fn process_instruction(
    _program_id: &Pubkey,
    _accounts: &[AccountInfo],
    _instruction_data: &[u8],
) -> ProgramResult {
    msg!("Hello, Solana!");
    Ok(())
}
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SOL Token and Economics

Utility of SOL

  • Transaction fees and smart contract execution
  • Staking rewards for validators
  • Governance: voting on network upgrades
  • Collateral in DeFi applications

Tokenomics

Allocation Purpose
Seed Sale Early investors
Founders/Team Core team incentives
Solana Foundation Grants, ecosystem growth
Validators & Community Staking rewards
Reserve Future development
  • Circulating Supply: ~543M (mid-2025)
  • Total Supply: ~610M
  • Inflation: Starts at 8%, decreasing 15% annually to ~1.5%
  • Fee Burn: ~50% of transaction fees burned

5. Solana Wallet Example

Rust Wallet Generation:

use solana_sdk::signature::{Keypair, Signer};
use solana_sdk::pubkey::Pubkey;

fn main() {
    let keypair: Keypair = Keypair::new();
    let public_key: Pubkey = keypair.pubkey();

    println!("New Wallet Generated!");
    println!("Public Key: {}", public_key);
}
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JavaScript/TypeScript:

import { Keypair } from '@solana/web3.js';

const wallet = Keypair.generate();
console.log("Public Key:", wallet.publicKey.toBase58());
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Ecosystem and Use Cases

1. Decentralized Finance (DeFi)

  • DEXs: Jupiter, Raydium
  • Lending & Staking: Marinade, Jito
  • TVL (2025): ~$9.5B
  • Features: low-latency swaps, high-frequency trading

2. Non-Fungible Tokens (NFTs)

  • Marketplaces: Magic Eden, Tensor
  • Low minting fees, real-time asset updates

3. Gaming & Web3 Applications

  • Titles: Star Atlas, STEPN
  • Supports microtransactions and in-game asset updates

4. Payments & Real-World Assets

  • Solana Pay: merchant payments
  • Tokenized assets: USDC, PYUSD
  • Bridges Web3 and traditional finance

Comparison with Ethereum

Feature Solana Ethereum
TPS 2,400–4,000 15–30
Fees $0.00026 ~$0.30+
Consensus PoH + PoS PoS
Smart Contracts Rust/C Solidity
Ecosystem Rapidly growing Mature
Stability Occasional outages More stable

Challenges and Criticisms

  • Network outages from high-demand periods or validator bugs
  • Centralization risks due to hardware-intensive validator requirements
  • Regulatory scrutiny on SOL as a security
  • Inflation and volatility from uncapped supply

Recent Developments (2025)

  • Firedancer Validator Client: improved decentralization
  • Solana Seeker Mobile: on-chain identity & dApp integration
  • Institutional adoption: SOL ETFs, PayPal USDC issuance
  • 300% increase in active wallets, approaching Ethereum-level TPS

Future Outlook

  • Adoption of ZK-proofs for privacy and scalability
  • Full on-chain governance evolution
  • DePIN and AI-integrated applications
  • Continued institutional adoption of tokenized assets
  • Expanding DeFi, NFT, and gaming ecosystems

Analysts predict SOL price potential > $200 with sustained adoption and ecosystem growth.

Conclusion

Solana is more than a high-speed blockchain; it is a scalable, low-cost Layer-1 platform bridging DeFi, NFTs, gaming, and real-world assets. Its innovative architecture—PoH + PoS, Sealevel, and other optimizations—demonstrates that throughput, decentralization, and security can coexist.

For developers, it provides fast smart contract execution. For investors, a growing ecosystem signals potential. Solana is shaping the future of high-performance decentralized applications.

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