Institutional analysis of Solana's four technical developments: The SOL ecosystem has indeed improved.

The cryptocurrency research firm Delphi Digital has released a summary report on the recent upward trend of Solana, analyzing the current and future technical optimizations of Solana by the team and community, providing participants with more information on the development of the Solana ecosystem. The report is now available for reference.

Solana's Unique Development

The report suggests that Solana deviates fundamentally from the norms of blockchain development: while the mainstream path has been towards scalability through composability and modular blockchains, Solana focuses on enhancing efficiency by improving hardware specifications and using a single blockchain framework, demonstrating low latency and high TPS capabilities.

Due to Solana's unique technical specifications compared to its competitors, discussions on Solana's technical development direction are less common. This article summarizes Solana's recent and future technical and application iterations since its launch, focusing on the following issues:

• Independent gas fee market

• Efficient node client

• MEV market without mempool

• Compressed NFT cNFT

This article provides a brief overview, for more information, please refer to the full report.

Independent Gas Fee Market

In the Ethereum EVM system, each operation incurs a specific cost, primarily determined by the amount of computation and time required.

For example, initiating an ETH token transfer on Ethereum requires 21,000 units of gas, authorizing token contracts requires about 41,000 units of gas, and Uniswap transactions require about 127,000 units of gas. The more complex the transaction, the more gas it consumes.

All these transactions have the same base fee. Although the cost of ETH transfers is always about 1/6 of the gas needed for Uniswap transactions, the total transaction fees actually paid will increase or decrease in sync with the base fee measured in gwei, meaning all transaction types will become more expensive proportionally during network congestion.

However, the operation of Solana's SVM is significantly different. The transaction cost in SVM is fixed, regardless of the number of compute units CU it consumes. On Solana, whether it's token transfers or transactions using AMM contracts, the cost is a constant 0.000005 SOL, which is highly inefficient in resource allocation.

The Solana team has recognized the fixed fee as a flaw and has begun redesigning its fee market since the end of 2021, although many parts are still in progress but gradually underway. By utilizing parallel transaction mechanisms and an independent fee market, validators can prioritize and execute transaction information through priority fees, allowing validators to prioritize processing transactions with higher rewards.

Efficient Node Client

Firedancer is a new Solana node client that brings two significant benefits to Solana:

• Performance improvement: Although Firedancer is currently in the testing phase, test results show it can handle transaction information at 21.8 Gbps on a four-core processor, compared to Solana Labs' existing client targeting 1 Gbps, thus expected to enhance the performance of existing clients.

• Client diversification: Currently, Solana is almost 100% reliant on the team's client, which is centralizing compared to Ethereum's various clients. Firedancer brings some diversity, marking the first step towards Solana's ecosystem diversification improvement.

MEV Market without Mempool

As mentioned earlier, Solana's base fee is a fixed amount, at 0.000005 SOL/tx, which makes Solana susceptible to spam transactions due to its low transaction cost. Particularly, MEV searchers' front-running often involves a large number of failed transactions, and without proper containment measures, the block space occupied by failed arbitrage transactions will affect network performance.

A mechanism similar to Flashbot called Jito can effectively address this issue by improving MEV-induced performance issues through auctioning and aggregating bundle transaction information. This can have two major benefits:

• Reducing block space occupied by spam transaction information: minimizing the sending of a large amount of useless transaction information

• Increasing validator income: obtaining these profits through auctions

However, conducting auctions on Solana is not as simple as on Ethereum or other blockchains. On Ethereum, with a block time of approximately 12 seconds, nodes have ample time to auction and fetch transactions from the mempool before packaging them, while Solana lacks a mempool and transfers transaction information via the Gulf Stream protocol directly to the Leader responsible for the current block. There is no time for auctions to run under this continuous time framework, and transactions are not sorted before execution. Without a mempool, MEV searchers cannot identify transaction information until it is actually packaged and executed on the chain.

Therefore, the Jito MEV client runs its pseudo-mempool, conducting auctions every 200 milliseconds. Using Jito, MEV searchers can see incoming transactions, simulate the upcoming scenario, and create a bundle of transaction information to ensure atomic execution. These bundles are prioritized and delivered to the Leader responsible for the current block through a separate processing pipeline, allowing MEV searchers to profit from the auction.

Compressed NFT cNFT

Compressed NFT involves establishing and storing the hash value of off-chain data on the chain.

Ordinary NFTs store all metadata in token data stored in Metamask. These attributes include asset owners, creators, URIs, royalties, etc.

Through compression, the metadata of each NFT is hashed into a Merkle Tree, with the only content stored on the chain being Merkle loot. This design eliminates the need to create an account for each NFT like traditional NFTs, significantly reducing costs.

Solana is Indeed Getting Better

The report notes that while Solana has faced many challenges and the node hardware threshold issue seems severe, it is important to remember that Solana has only a 3-year history.

Solana's emergence in a bull market has been both a blessing and a curse. Launching before the pandemic and the DeFi bull market, a year later, the DeFi sector accumulated billions of dollars TVL, leading to Solana accumulating too many assets before its protocol matured, resulting in the significant retracement seen today.

Over the past year, anyone who has used the chain would attest that Solana has noticeably improved. Transactions are less likely to fail frequently, a fee market unseen in the past has emerged, optimizations with Jito auctions, and network ecosystem, discussions around fee-related issues are being addressed, diversified clients have appeared, Solana is indeed moving in a positive direction. It is believed that the protocol will have a new outlook in the future.