Visa’s Exploration of Solana: Unlocking the Future of Payments with Blockchain
Blockchain technology has long been hailed as a game-changer in the world of finance and payments. Yet, for years, the challenge of scaling these networks to support secure, high-throughput, and low-cost transactions has persisted.
In the last year, Visa has closely monitored the technical innovations in blockchain scalability, and they’re increasingly optimistic about the progress made on the Solana blockchain.
Enough so, that earlier this month Visa expanded their stablecoin settlement pilot to Solana to see if the blockchain can support the demands of modern corporate treasury operations — and published an article explaining their decision making.
Visa is looking to harness the power of blockchain networks to enhance their own existing infrastructure and create new products for commerce and money movement.
The Solana blockchain network has caught their attention for several compelling reasons — below is a summary of their analysis — where they come to the same conclusions that motivated us to build LiquidProp on Solana in the first place.
Transaction Throughput
As a global payments network, Visa can execute over 65,000 transactions per second. Solana, while not yet at Visa’s scale, averages 400 user-generated transactions per second and can surge to over 4,000 during peak demand. This impressive throughput makes Solana a viable candidate for testing and piloting payment use cases, in contrast to Ethereum’s 12 TPS and Bitcoin’s 7 TPS.
Parallel Transaction Processing
Solana’s unique architecture allows for parallel transaction processing. Transactions impacting separate accounts can be executed simultaneously, enhancing network efficiency. This parallel execution extends to smart contracts, or “programs,” enabling non-conflicting transactions to run concurrently. Unlike Ethereum’s single-threaded model, Solana’s multi-threaded approach prevents congestion in one part of the network from affecting overall performance.
Low and Predictable Transaction Costs
Solana stands out with its affordable and predictable transaction fees, usually less than $0.001. In contrast, Bitcoin and Ethereum experience fluctuating fees driven by transaction demand. Predictable costs make Solana an attractive network for exploring efficiencies and cost savings in payment operations.
Cost Predictability through Localized Fee Markets
Solana’s localized fee market is a novel approach. It allows transactions that don’t overlap to execute on separate threads, akin to vehicles on separate roads. This design ensures that congestion in one account doesn’t impact others, creating a fee market that responds to specific use case demands. This stability contrasts with networks where congestion can lead to soaring fees for all users.
Transaction Finality
Solana targets rapid transaction finality with a slot time of 400 milliseconds, compared to Ethereum’s sometimes lengthy wait times during congestion. Solana uses “optimistic confirmation” to achieve finality quickly, considering a block finalized if validators representing more than two-thirds of delegated stake validators have voted on it. This mechanism dramatically reduces transaction confirmation times.
Availability
Availability is crucial for a payments network. Solana boasts an impressive 1,893 active validators, along with 925 additional nodes. A high number of nodes enhances network resilience and redundancy, ensuring continuous operation, even in the face of technical challenges. Solana’s diverse node geography and infrastructure-provider distribution further fortify its stability.
Multiple Validator Clients
Solana is one of the few chains with multiple independent validator clients, reducing the risk of a single software flaw crippling the network. This diversity enhances network stability and performance, as evidenced by the introduction of the Firedancer validator client, capable of achieving 600,000 TPS.
Meeting Modern Demands
Solana’s technological advantages, including high throughput, low costs, and resiliency, make it an enticing platform for payments. Visa’s decision to expand its stablecoin settlement pilot to include Solana demonstrates their confidence in its capabilities to meet the demands of modern corporate treasury operations.
In conclusion, Visa’s exploration of blockchain scalability has led them to Solana, a network offering remarkable speed, scalability, and low costs. Solana’s innovative features, combined with its transaction predictability and rapid finality, position it as a formidable candidate for revolutionizing payment systems.
As blockchain technology continues to evolve, Solana stands at the forefront of the payments ecosystem, promising a more efficient and accessible future for global commerce. The future of payments is evolving, and Solana is leading the way.
It’s encouraging for us at LiquidProp to see players like Visa coming onto the scene — less than a month before our platform goes live — reassuring us that we are indeed in the right place, at the right time.
