Many speculated on Solana's death following the collapse of the FTX exchange. This, however, was an exaggeration. Certainly, the pre-existing relationship with FTX caused the ecosystem to suffer following the collapse, but Solana has demonstrated that it is not a puppet in the hands of FTX founder Sam Bankman-Fried.
"Despite the recent price increase that appears to have been driven by speculation, the fundamental ecosystem remains quite strong," said Tom Dunleavy, senior research analyst at data company Messari.
Coin98 Insight spoke with Austin Federa, Head of Strategy at Solana Foundation, about the ecosystem development plan as well as upcoming trends in DeFi at the recent Solana Hacker House event in Ho Chi Minh City. The Spotlight is a Coin98 Insights exclusive interview series with industry builders on hot market topics.
Solana and FTX are not as close as people think
- Greetings, Austin. A lot of people in Vietnam, and maybe even in other countries, want to know: How did Solana overcome the post-FTX crisis?
Austin: The FTX crash has less of an impact on Solana than you might think.
Sam Bankman-Fried (SBF) did help the network out in the beginning. Additionally, the FTX group's introduction of Serum, the world's first blockchain-based centralized limit order book, was a fantastic advancement in the industry. The last major construction on Solana, however, may have been this. They changed their strategy after that and began engaging in political maneuvering in the nation's capital.
We haven't had much of a working relationship with them in the year or so since then. People mistakenly believe that SBF and Solana are affiliated because SBF was instrumental in bringing Solana to the attention of the crypto community. The reality is a little different. FTX favored Aptos and Polygon over Solana when allocating capital.
Simply pointing out that the FTX collapse has made the ecosystem more decentralized and populated by validators. This demonstrates that FTX plays no significant role in the evolution of the network. In terms of the day-to-day functioning of the network, they were not crucial to the success of Solana.
- So, in the aftermath of the demise of FTX and other major players, what positive signals are Solana and the market as a whole receiving?
Austin: We have just come through a fairly tumultuous period, both last year and at the start of this year, with many losses, particularly in the community. But the best part is that they have worked well together. We now have more validators than we did at the start of the year, or even in November 2022.
Furthermore, the energy of the meetings - Solana's annual conference held every year - is extremely potent. Over 1500 people attended the recent Hacker House event in Turkey. And over 1,000 people registered for this event in Ho Chi Minh City, and we were thrilled to see so many people excited about building projects on Solana like this.
- The million-dollar question for any blockchain venture is how Solana plans to attract so many users?
Austin: Many people are actively pursuing large-scale collaborations, such as attracting Instagram content creators or prominent Web 2.0 firms. Statistically speaking, I believe that the vast majority of these endeavors fail.
In reality, blockchain's actual user base cannot be developed in Web 2. DeFi groups, similar to NFT projects with much smaller communities, are not a website to connect to the blockchain. However, the Web 2 business model relies on having as many users and data points as possible in order to make a profit.
Web3 takes a new approach, and as a result, its layout looks very different. One of the benefits of Web 3 is that it makes it possible to build a protocol with tens of thousands, hundreds of thousands, or even millions of users. Compared to Ethereum, Uniswap has a relatively small user base, but it is a wildly successful protocol.
According to Solana, the goal isn't to bring in just a few massive communities, like everyone on Twitter. Our main goal is to aid and fund the growth of 10,000 smaller projects. They're the ones making something that will actually appeal to a certain group.
Then they will know what it's like to use Solana. They may go further and try out Orca and DeFi, or they may visit for an NFT project and end up testing out some of the other network-based features.
The concept seems to me to be very similar to that of constructing a city. When one person is in charge of a city's layout, it rarely turns out better than when everyone pitches in.
- So, how does Solana Mobile fit into this 'user city-building' strategy?
Austin: Most of the world accesses the internet via mobile phones. For example, I have a laptop, desktop, and smart TV, but I spend the majority of my time on my phone. This is especially true in developing markets, where the majority of people, for example, do not own computers but do own mobile phones.
Blockchain is currently restricted to desktop computers. It's locked in Chrome with a small extension in the corner. So we want to incorporate blockchain into existing Android apps. And we believe that Solana Mobile, an open-source software stack, is the best way to accomplish this.
Certainly, selling 100 million phones is not our goal. Of course, that would be fantastic, but the main goal is to show Google, Samsung, and all other phone companies that Web3 is something they should incorporate into their phones.
Just like NFC (often used in phone payment services), or the camera, or any other feature that we now consider indispensable for phones. They began as oddities that only appeared on one or two phones. Foldable phones, for example, were once thought to be a strange idea, but now everyone is working on them.
As a result, we hope that developers worldwide will embrace Solana's mobile stack and incorporate it into their phone lines. If you are an original equipment manufacturer (OEM), for example, you can add this stack to your Android phone.
The real game has begun. We are not selling phones; rather, we are creating an appealing platform for other manufacturers to take advantage of, potentially driving other phone companies out of the game.
“The service must be easy enough for your mother to use”
- There is talk of a new kind of "superchain" appearing in the market right now. Will Solana ride this tide or zero in on one chain at a time?
Austin: Sharding, as we call it, is a technique used by most other chains to speed up their technology. Ultimately, a Layer-2 is a sharding environment in which the transaction and network state load is moved to another location to improve network performance.
The fundamental principle, however, has always been to construct the quickest network possible and to function in a global network state. Ethereum is the global state as it stands right now, and trust between programs is established through their composability. However, this fundamental composability in the ecosystem is broken the moment you introduce sharding, Layer-2, a subnet, or anything similar.
However, this does not mean that efforts to create DeFi on other chains will be abandoned. The trust assumptions you make will be very different, making it much more challenging when they do.
Solana is currently the quickest blockchain on the road to creating a global network infrastructure. This is a significant benefit, in my opinion, because most recently introduced supply chains focus on improving just one or two areas. Solana's philosophy, meanwhile, is that if we can become the best blockchain environment for the common purpose, we'll be the place where programmers want to come and build.
You can see that Solana has the highest developer growth rate by looking at the Electric Capital report from last December. When it comes to the total number of developers, the ecosystem is in second place. Wow, that's incredible.
- What future opportunities can Solana capitalize on, given its current advantages? And what market trends can we anticipate in the near future?
Austin: DeFi is currently struggling on all fronts. If you examine the TVL of all the major chains, you will notice that it is decreasing, as will the number of users. However, this is not surprising in light of rising interest rates and the perception that DeFi opportunities are riskier.
DeFi may be less risky, especially in light of recent bank failures in the United States. When compared, it is evident that DeFi is extremely resilient.
As a result, the greatest opportunity lies in the development of more complex DeFi products on Solana, as everything can currently be completed very cheaply and rapidly.
In terms of the number of games being developed on the network, the gaming industry on Solana is a tremendous success. I believe Solana is the blockchain with the most game projects at present. It is very encouraging.
However, I am particularly excited about the concept of a decentralized physical infrastructure network (DeFIN), also known as token incentivized physical infrastructure. This is the underlying concept behind Helium, Hivemapper, wireless networks, and other technologies that encourage people to build infrastructure in their homes.
The idea is that people would install small mobile phone antennas in their homes, resulting in a competitive network with large service providers.
- Can housewives, for example, use this service and install antennas inside their homes, as you suggested?
Austin: Obviously. Simply place the device against a window or the side of your house. If you live in an apartment building, you can place it on a balcony or similar area and point it towards a busy area with a lot of people passing by. The device is then connected to your home internet network, and you earn tokens by providing data to people passing by.
For example, my phone has two SIM cards, one of which is on the Helium network. When I pass by a Helium access point (hotspot), my phone will connect to it and pay a fee to use the Helium network's data. Currently, network speed is not as good as that of traditional network service providers, but we will get there eventually.
When you look at current network service providers, you can see how large they are and how much money they make from user fees each month. Meanwhile, Helium charges less than half the price of these companies in the United States. So it will be very interesting to see how far this technology can advance in the near future.