USD Coin (USDC) is the fastest-growing fully reserved dollar stablecoin in the crypto capital markets. While USDC was initially launched on Ethereum, Circle’s long-term goal for USDC is to become a chain-agnostic ecosystem powering value transfer using many different blockchains.
In line with this ambition, Circle supports USDC dollar stablecoins on a variety of blockchain networks. One of the most recent additions is Solana, a scalable blockchain that can process tens of thousands of transactions per second with almost instant finality.
What Is Solana?
Solana is a public blockchain network built around scalability and speed. Like Ethereum, Solana supports smart contracts and decentralized finance applications (DeFi).
Solana’s main highlight is a hybrid consensus mechanism that combines Proof of Stake (PoS) with Proof of History (PoH). The latter is an essential feature of the ecosystem as it integrates timestamps in each transaction. The timestamps allow nodes to determine the sequence of transactions and events. This algorithm acts as a cryptographic clock for the chain.
Initially, the PoH feature was part of the PoS, but it eventually became a separate consensus mechanism to make Solana more scalable and secure.
While Solana’s architecture is quite complex, the idea is that the PoH algorithm helps create historical records that prove certain events (transactions) had occurred at specific moments in time. The records can then be implemented or referred to in future operations. Thanks to the PoH mechanism, the blockchain can achieve almost instant finality and thus ensure high scalability.
Solana and its timekeeping system are the brainchild of Anatoly Yakovenko, who first described the project in 2017. Before building Solana, Yakovenko worked at Qualcomm. He was joined by colleague Greg Fitzgerald, and the duo first tested the concept in February 2018. After the testnet went live, Solana raised $20 million in a Series A funding round in 2019.
Yakovenko, Fitzgerald, and other Qualcomm veterans, along with former Apple engineers and executives, formed Solana Labs, which remains the primary contributor to development of the Solana network. The Solana mainnet beta was launched in March 2020 and has expanded rapidly, with Solana’s market cap rising to nearly $12 billion in May 2021.
Why Did Circle Choose Solana?
The Solana mainnet launched just a year ago, but network fundamentals made it a natural choice for fast, secure, and scalable USDC. Solana is a public blockchain that delivers impressive scalability while maintaining a high degree of decentralization and security.
The Solana network can process up to 50,000 transactions per second. By contrast, Ethereum can currently only process up to 15 transactions per second.
Solana high-speed is packaged with instant finality and low fees. The network also enables composability between ecosystem projects by maintaining a single global state, so there is no need for a second layer or sharding to scale the system.
Circle also puts special emphasis on speed and low-cost transactions, which is why it found Solana as one of the best chains to host USDC. The circulating supply of USDC on Solana stands at over $500 million, second only to USDC on Ethereum.
USDC on Solana was launched in January of this year and has seen rapid adoption among crypto exchanges, DeFi platforms like Serum and Oxygen Protocol, and multiple native wallets, such as Solong, Bonfida, and Binance’s Trust Wallet.
Solana Introduces Eight Key Blockchain Innovations
To deliver high throughput and low costs, Solana relies on eight core innovations to build the ideal blockchain network:
- Proof of History – The main feature of Solana. It acts as a clock to help validators reach consensus in a more secure environment.
- Tower BFT – Proof of Stake (PoS) consensus mechanism that leverages the PoH feature.
- Turbine – A block propagation protocol meant to solve the Blockchain Trilemma, in which scalability is achieved without compromising the other two key elements of a blockchain, security and decentralization.
- Gulf Stream – A mempool-less transaction forwarding protocol. The main goal of this feature is to speed up transactions by reducing processing time. For example, Bitcoin’s mempool, which includes all unconfirmed transactions at any given time, are managed quite slowly. On Solana, the Gulf Stream helps the network address the mempool’s hundreds of thousands of transactions within seconds. The feature makes it possible to anticipate a small number of upcoming validating leaders so that they can already start handling transactions even before they begin generating blocks.
- Sealevel – The world’s first parallel smart contract’s run-time. It makes it possible to identify all non-overlapping transactions and process them simultaneously.
- Pipeline – This transaction processing unit mimics the optimization mechanism of a CPU to validate massive blocks of transactions and replicate them across the network.
- Cloudbreak – Using Cloudbreak, Solana scales its network horizontally while maintaining a single global state. There is no need for additional layers that may compromise security or make the ecosystem unnecessarily more complex and fragmented.
- Archivers – A distributed ledger store for petabytes of blockchain data storage.
USDC is the fastest-growing, most secure and stable stablecoin, making it a natural fit to leverage the best-performing chains that take blockchain scalability to the next level.
With USDC on Solana, businesses and developers can easily integrate this ecosystem and benefit from Circle products and APIs. Learn more about Multi-Chain USDC.
