The origins of Solana: How to turn ideas into reality?

Author: Jeff February, Blockworks; Translator: Wuzhu, Golden Finance

Every great innovation starts with a problem. For Solana, the problem is obvious. Blockchain is too slow, too expensive, and too difficult to be adopted by the mainstream. Ethereum faces congestion problems, Bitcoin is too rigid for complex applications, and no one else has made any meaningful progress in solving the scalability problem. For an engineer, this would become a daunting technical challenge, prompting him to set out to build his own decentralized network to process transactions at Internet speeds.

In 2017, Anatoly Yakovenko, an experienced Qualcomm engineer, turned his attention to Web3. He was attracted by its potential for decentralized finance and reshaping the Internet. While the technology is promising, after nearly a decade of relative triumph, blockchain has begun to wither due to a fatal flaw: it scales too slowly. This inefficiency is a fundamental bottleneck. It clearly hinders mass adoption in areas such as real-time gaming, decentralized finance, physical infrastructure networks, AI reasoning, and autonomous machine coordination.

The problem was that blockchains lacked a built-in clock. Each node in a decentralized system confirms transactions sequentially, requiring full network consensus to complete. This process is slow, which makes blockchains unsuitable for high-speed applications. Yakovenko's breakthrough came with the introduction of Proof of History (PoH), a conceptual cryptographic method that timestamps transactions before they enter a block, creating a verifiable sequence of events.

Unlike traditional proof of concept, where nodes process transactions sequentially, PoH enables simultaneous processing. This innovation provided rocket fuel for efficiency, unlocking unprecedented throughput and eliminating congestion. Yakovenko assembled a team of engineers that included Greg Fitzgerald (also from Qualcomm) and Raj Gokal. They founded Solana Labs in 2018, inspired by the California beach town where Yakovenko often surfed.

In its early days, Solana Labs launched through a private placement and raised about $20 million from venture capitalists and early cryptocurrency investors. The team built and tested a prototype network that demonstrated the potential of PoH, with benchmarks showing that it could process more than 50,000 transactions per second — orders of magnitude faster than Ethereum and Bitcoin.

Solana officially launched its mainnet beta in March 2020, when the Covid-19 pandemic caused chaos in global markets. Despite the bad timing, the network attracted the attention of developers and investors for its promise of high-speed, low-cost transactions. The ability to process transactions for fractions of a cent makes it an ideal platform for DeFi applications, gaming platforms, and a host of experimental decentralized tools—all of which were previously limited by Ethereum’s slow speeds and high gas fees.

In June 2021, Solana Labs received $314 million in funding led by Andreessen Horowitz (a16z) and Polychain Capital. The legitimacy that this runway brought to the ecosystem allowed it to expand and innovate rapidly. Solana soon became home to Serum (DEX), Raydium (AMM liquidity provider), Mango Markets (margin trading protocol), and more. In late 2021, Solana’s price surged to a high of $260—up from $0.50 just 18 months earlier—solidifying its position as a top-five cryptocurrency by market cap. Investor confidence soared, and Solana’s momentum seemed unstoppable. By the end of 2021, Solana had grown from an ambitious experiment to a major force in crypto. However, behind its meteoric rise lie unseen challenges that will soon test the network’s resilience and stability.

A look ahead to the next article in our Solana series: How the collapse of one of cryptocurrency’s biggest players sent shockwaves through the Web3 ecosystem, and why many believe Solana won’t survive.