Solana’s high degree of centralisation has meant that the blockchain constantly makes headlines for all the wrong reasons.
Solana suffers yet another outage
It isn’t uncommon for the Solana blockchain to suffer outages and go offline, and this time the reason that the network had to rebooted was thanks to one node thanks to only one misconfigured node.
The Solana mainnet network will be restarted at slot 153139220, the last confirmed slot.
It appears a misconfigured node caused an unrecoverable partition in the network.
Validators, please participate in finding consensus on the relevant data.
— Laine ❤️ stakewiz.com (@laine_sa_) October 1, 2022
Solana’s blockchain remains extremely centralised
Proponents of blockchain technology, particularly Bitcoin, will often explain the importance of decentralisation and immutability, and the lack of a single point of failure.
Solana has flipped all of these ideas on its head and had instead opted for a business model in which extremely high degrees of centralisation are valued over the immutability and security of the chain.
“Turn it off and on again”
Those who wish to invest for the long term, and those who wish to have a relatively low velocity of money (because they are saving or investing rather than trading) ought to have a high degree of confidence that the blockchain that they are using is secure.
Solana, like a television set from the 1990s or a Nintendo 64, issued instructions to validators explaining how they should restart the blockchain by turning it off and on again.
This isn’t the first time that the Solana blockchain has been compromised, and almost certainly won’t be the last – unlike Bitcoin, Solana was not build with security and decentralisation in mind, and this is one of the pitfalls that the blockchain is thus suffering from.
Solana’s misleading statistics
Solana has become well-known for massaging their statistics, and in many instances simply fabricating them.
In this instance, it has been shown that Solana has once again either lied or unknowingly misled their community.
A report that was issued only as recently as August this year stated that Solana’s blockchain has a Nakamoto Coefficient of 31, meaning that for there to be significant problems with the blockchain 31 nodes would have to be compromised.
This had been criticised by many people, who claimed that a Nakamoto Coefficient of 31 represents an extremely centralised blockchain with such weak security assurances that rational actors would steer clear, and instead opt for more secure alternatives.
However, this debacle has shown that rather than having a Nakamoto Coefficient of 31, Solana actually has a Nakamoto Coefficient of one.
This isn’t the first time that the Solana community has been intentionally misleading about the capabilities of their blockchain.
Earlier this year it was revealed that a huge amount of Solana’s TVL had been fabricated and exaggerated, as many DeFi protocols (run by the same people) were intentionally counting TVL twice, or several times.
Emin Gun Sirer, the CEO of Ava Labs, has also made his voice heard many times that Solana’s transaction throughput is greatly exaggerated and that he laments how misleading their marketing campaigns have been in the past.
Solana can still work for enterprise
Recently proposed EU regulation (which was leaked) sets out a series of new rules that blockchains and companies will be forced to comply with if they wish to operate successfully.
This regulation has been concerning for some in the industry, particularly that which pertains to yield on cryptocurrencies.
The regulation states that blockchains whose coins earn a yield for security the network have fewer legal loopholes to join through than yield awarded to tokens on top of those blockchains.
There are mixed feelings about how this regulation may affect the EU: some believe that regulation can be stiffening and cripple an industry whilst it is still young, and others believe that regulatory clarity can invite far more innovation to take place than before.
The regulation may be difficult for Solana, especially if the US also take a hard line and declares SOL to be a security.
The regulatory uncertainty, in addition to the fact that markets prefer to function 24/7 with very little going wrong at a fundamental level, make DeFi on Solana an unattractive propisition when compared with more trusted blockchains, like Ethereum.
However, for applications that don’t necessarily require as much security as the financial industry (such as the gaming industry), Solana’s high transaction throughput may prove to be very enticing.
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