Conversation with the founder of Solana: What does Solana do to promote the adoption of cryptocurrency?
This article is a compilation of dialogues on Circle's podcast "Money Movement". This week we invited Anatoly Yakovenko, the co-founder of Circle's blockchain partner Solana, to discuss the development of Solana's compatible wallet and payment experience, and Solana's expansion roadmap , cryptocurrency adoption and fee markets, KPIs for Solana, and more.
Deep Tide TechFlow is authorized by Circle to compile and forward.
interviewer:
interviewer:Hello everyone, welcome to Money Movement. Today we have Anatoly Yakovenko, co-founder of Solana Labs. It's a pleasure to have you here and discuss many issues with us.
Anatoly Yakovenko：interviewer:
interviewer:It's been a big year for Solana. Regarding the state of Solana, when you think about the KPIs, what are the key metrics that you're looking at? What is more important? Where are you today?
Anatoly：The most important metrics are real users, those who use the web.interviewer:
interviewer:Active signers.
Anatoly：interviewer:
interviewer:I know Metaplex is hot. Seriously, scalability is where Solana's strengths really show. Coupled with high-performance user experience and economic feasibility, a large number of DApp developers and creators are attracted here.
Anatoly：Another point that is also quite important is the number of stablecoins issued.interviewer:
interviewer:I agree with this view. We have been working together for a year and a half or more now, and I think more and more projects will be built on top of USDC and Solana. People are really going to start thinking about it as something that lights up mainstream apps and mainstream payments. I know we can talk about Solana Pay, we can talk specifically about this use case, but it seems people are concerned about how to actually deliver on the promise of digital cash and digital cash payments being available on the Internet? Coincidentally, today USDC and Solana are a very good example. How do you solve the user experience, not just solve the problem of transaction settlement?
Anatoly：interviewer:
interviewer:Yes. We're trying to do our job well, build trust and credibility, and give the market a really robust infrastructure to get consistent access. I'm interested in a lot of things happening in the developer community. I think a lot of your success is due to being active in the development community, supporting them, holding hackathons, bringing people together, actually maybe that's a good KPI as well, you can talk about that . Like, how did you start running these events, or what and where was your first hackathon.
Anatoly：interviewer:
interviewer:Yes. I remember.
Anatoly：The number of teams participating in basically every hackathon since then has doubled.More teams completed a project than all other hackathons combined. To me it's really cool. That's close to 370 teams.
Can we break 1000 in Riptide? Can we have 1000 teams build something and compete for prizes, get funding and stuff like that? It’s almost a little bit easier at first, because just mimic what Ethereum is doing, and then we know we need D5, we need NFT or something, just do the same thing. But now that we've matured into the next phase, I think Solana has taken the lead on some innovations.
interviewer:
interviewer:The first product we did was Circle Pay, which was like we did dollars on Bitcoin. Although there will be some scalability issues, it is now widely open. We certainly see a lot of startups trying to use our API and then in turn build wallet products, but do you think there will be a lot of payment related projects in the future at Riptide?
Anatoly：Yes, we saw Solana Pay when it was announced. Solana Pay is a very simple thing. Literally, it's just Bit 21. Do you know what Bit 21 of Bitcoin is?
For those who don't know what that is, it's a very simple URL specification for how to request a payment from a wallet. This is a way for merchants to generate QR codes. First, it's a URL link, and then the link tells the wallet, hey, I want to pay this particular merchant this amount for this item, and then it shows that on the UI. This integration makes it easy for merchants to send you requests. It's not as hard as science, anyone can do it.
We found that when we have the opportunity to establish a standard at some point, like incubating Metaplex on Solana, this is a very simple matter. The emergence of the NFT standard has stimulated a lot of development and innovation, and the growth rate has far exceeded our initial expectations, and amazing things have happened.
interviewer:
interviewer:We could talk a lot about this, but like in the early days of the internet, if you were a content creator, you couldn't possibly have a direct relationship with people. You have to go through some channels, you have to publish in magazines, you have to go to book publishers, they distribute at Barnes & Noble or record labels or TV networks or cable TV and so on. All these distributions are the same. So basically, in the early days of the Internet (content creators and content audiences) it was difficult to have a direct relationship. The same is true for businesses. If you create a product, you have to find distribution through retail, but then we can actually build a website and do direct distribution, or you can use a marketplace to get global distribution, and these types of things are starting in all of these areas Appeared.
In some ways, payments are the same thing. A business may appear to accept direct debit, but it doesn't. Like if I walk into a store and give a $20 bill, it's actually a direct payment, no middleman, it's there, it's the final settlement. If [the business] wants to accept a payment, you have like seven middlemen between you and the actual money you get, and the money goes through various levels of incentive systems and complex procedures. In some ways, though, to those who might be holding their Phantom wallet, scanning a QR code and confirming the transaction to the payer, it will feel like Apple Pay or some other payment method. For them, it's like,"i'm just paying", but it’s as good as cash for merchants. It's really, really powerful.
Anatoly：interviewer:
interviewer:Yes, it is. There will be a lot of incentives for businesses to do this. And I thought, maybe relate that to the other question about what's going on with Riptide and your hackathons and what you're seeing and paying for there, what do you think is -- if you sit here with the developers and the Talking to the other listeners, what problems do you think need to be addressed if you are building a Solana-compatible wallet or payment experience? What problems should developers focus on solving? I have some ideas too, but I'm very interested in yours.
Anatoly：I think the UX can make it simple enough for the average user to use.That means you have to be careful about security, telling users they probably shouldn't be storing thousands of dollars in this wallet. The simpler you make your security assumptions, the more you start to communicate to users the limits of what you should trust in this particular security model, which is a very difficult challenge. I think from a UX point of view, there needs to be a reason for consumers to use our product instead of Venmo, which is a very difficult...Right now, Venmo has everyone, it's very ruled It is difficult to break, so you must find your own position.
interviewer:
interviewer:I think Cash App actually has a higher MAU figure than Venmo.
Anatoly：I didn't know this, but it surprised me.
interviewer:
interviewer:Yes. I totally agree, and it seems like this is one of the objections I've heard in the past as well. The point is that if you solve the payment problem of making it fast and cheap, users don't care because users want to be rewarded. Now, if a business can take it, they can save 3% or 2% of the cost, so they might actually be able to afford the incentive. So what are these incentives? Are these incentives like cashback in the form of USDC? Or it is a form of reward tokens, using NFT for rewards, and then you will get certificates, from which you can accumulate more value, and then there will be different forms of Affinity.
It seems like at the intersection of stablecoin payments, NFTs working together, can actually create incentive models and actually build customer relationships. It's better than those abstract patterns like I get my chase points or whatever. By leveraging NFTs and cryptocurrency payments, you can actually build some longer-lasting businesses.
Anatoly：interviewer:
interviewer:Yes, regarding NFT, a ticket is an NFT, and a coupon is an NFT. All of these things are essentially NFTs. I think now people can say, "Hey, I'm actually going to build a coupon protocol, and anyone can implement a coupon protocol, and the coupon protocol supports USDC, and it can generate a specific type of coupon NFT". Imagine maybe someone could do that at your hackathon. Then you mix those things together and start doing some pretty interesting stuff. All these interesting things are likely to be realized. Another reason is that everyone loves credit.
Another reason people use credit cards is because they like credit. People like to borrow money, I think there is an overall question, which is the buy-as-you-go phenomenon, is there a way to build BNPL on the chain, use things like verifiable identity credentials, verifiable credit scores, etc., to prove to smart contracts . Then let the D5 protocol provide someone with a credit guarantee on timely payment. This could again be a protocol, which could then be woven together by the people building such applications.
Anatoly：I think it's one of the most exciting opportunities, but it's serious work. This would be a company to invest in.
interviewer:
interviewer:I think both. I think our general view is, first of all, we just want to facilitate really broad adoption of USDC and other things that we think are important standards and identities, like Solana Pay or payment protocol standards. It's important that developers can use these things and build all kinds of things, and we want to support those things and invest in that. At the same time, we definitely want to try to solve some problems for enterprises and be able to provide services through Circle accounts and Circle APIs to deal with some of these problem spaces.
I think we're all interested in seeing the proliferation of creativity around these problem spaces, because in the end, it's really valuable to help make it work. Second, we certainly want to continue to increase our value. Today we do offer a payments API and a spending API. Our payments API can handle cryptocurrency payments as well as traditional Rails payments. We'd like to see a real improvement in payments with Crypto Rails. But our view is that it's not something that can be done alone because it's only interesting when there's a lot of interoperability and people are free to explore.
Anyone creating digital wallets or smart contracts, point-of-sale devices or any of these things should be non-proprietary. I think we're interested in creating standards and implementing them ourselves.
Anatoly：Yes.
interviewer:Yes.
Anatoly: interviewer:
interviewer:Yes. I think if you want to do all of these things on top of Crypto and smart contracts, and also have user-controlled wallets that can do these things, it takes a lot of stuff. I think you need provable identity, and you can get one from Coinbase or FTX or Square or whoever. You can go find a service. People just know I'm dealing with a real person. Also, I think you also need to have avenues to claim identities that are cryptographically proven and can be presented as credentials and verified by smart contracts without compromising privacy. Like, I want to prove the credit score on-chain.
It's kind of an Oracle issue, but I think it's specific to identity. This is a very important building block. When you have this building block, people can start building applications or smart contracts, can start making decisions based on real-world data and identities, which is what you need when you underwrite someone's credit. In theory, it's like you have liquidity providers on the D5 protocol, and risk takers with insurance pools. You can imagine this scenario, there are liquidity providers and risk takers, and with a little more data, they can provide unsecured underwriting.
This is the next thing. If you look at what has been implemented in D5 so far, you can see that there are some patterns that can be applied there. Actually, I think one of the things is the recurring payment issue, which is equivalent to having a smart contract that can access the balance, and I can sweep it in an automated way. Like, if I use a company, I have linked my bank account and they take a certain amount of debit from my bank to pay my balance, allowing recurring sweeps in smart contracts and digital wallets. I think that's what you need to fix. These seem to be solvable problems.
Anatoly：Do you think that consumer protections like chargebacks are critical to this? I'm trying to understand what a credit card is.In a decentralized world, we could have a different protocol for each piece that will be put together.
Interviewer: Yes. Ultimately, returns and refunds or returns and seller fraud are risks. If there is a market for that risk, you can price that risk, and someone is willing to provide the required liquidity for that risk, you could theoretically do that on-chain as well. You can simply say that there is a risk of seller fraud. This is basically where some of the fees come when you use PayPal. Why is it more expensive to use PayPal? Why is it more expensive to do business with American Express? That's because there's an insurance product built into it, and that's the price of insurance.
Also, why not have these insurance products work in an on-chain protocol that the market can interact with and not have to tie it to a specific closed-loop payment system, but be more open. I think these are the pricing and underwriting of risk and providing liquidity against that risk, which is the problem. We seem to have a way to do this without requiring a full closed-loop model.
Anatoly：interviewer:
interviewer:Me too. It's an exciting time when people start to tackle these problems. Maybe change it a little bit and you'll be able to draw conclusions. I'm really excited about the work Solana is doing in this space with USDC and other things, and excited about what we can continue to do together.
It basically amounts to a scalability war in our eyes, where are we in this process? I think we have resilience and robustness, which is obviously critical. So, in terms of architecture for scalability itself, what do you think the improvements that are happening in terms of bandwidth and HPC mean for Solana or other work that you're doing on the architecture? How willing are you to talk openly about this on the scalability roadmap?
Anatoly：All source code is open first and GitHub second. If you look closely, you can spot everything that's going on. The exciting stuff is basically all in 1.9, and we're currently also effectively doing scale testing. We redesigned the stats system, which is how memory is stored. It is no longer dependent on RAM. We've been able to efficiently simulate a collection running close to 8 billion accounts in about 4 megabytes, of which about 1 billion accounts are about 500 megabytes state and stable. You can run SSDs here and grow, unlimited.
interviewer:
interviewer:The need for hardware and the throughput of the hardware outpaces the adoption of...
Anatoly：interviewer:
interviewer:We know what happens like that.
Anatoly：I guess in the future we might see some point where there is a very rapid inflection point in the adoption curve of cryptocurrencies and the global monthly active users of cryptocurrencies may increase from 5 million to 500 million. When that happens, I think the point comes, we don't just have to be software ready. Why are we testing these? Why study these when no one needs them? That's because we want to do it on hardware, and when there's an influx of users, that's what happens on Solana. Things like that and the reliable staff may have been watching our development with QUIC.
This protocol looks like a complex TCP, but it is actually simplified. Its developer was Google, almost 10 years ago. The difference between TCP and QUIC is that QUIC is built on top of UDP. It allows information to be passed out of order. It doesn't suffer from the sluggishness you see when making a connection, and because it's a lot of parts, it's already been blogged about. QUIC enables this fast response with low latency, while providing the same security advantages as TCP. This is an important part of our efforts to improve reliability. After that, we continued to study dynamic fees.
The challenge with Solana is that we don't know how the fee market should work on such a systeminterviewer:
interviewer:It feels very interesting.
Anatoly：It's pointless if rates go up globally just because of one event in one part of the country, even though it doesn't really touch anything.interviewer:
interviewer:It's so much fun! This really helps with a lot of things.
Anatoly：One of my favorite things about it - the basics to the second half of the development. So far we have seen how the blockchain works. Two years ago, when these activities were not yet on the horizon, it was impossible to foresee what the solutions would be. How do they use this chain when we don't know the types of applications and what user building looks like? In fact, I think we can solve these problems now.
Interviewer: Sounds good. How do you think about tools, will there be more and more tools in the future? Where have you seen the growth in tools? That's obviously a hot topic that people talk about because these are new platforms.
Anatoly：I think we made the best choice to use rust as the main language because it's a very rich, expressive language. It is a modern language with a modern type system. I've been waiting for Armani, he's an amazing developer, not part of Solana, but able to work in the Serum ecosystem, using rust to build the best application environment for Dove. This has happened over the last 6 months or so, from having people manually write out which account goes where and whatnot, to building a very rich type system. This system is very secure, effectively providing very tight security, which is as good as formally verified in your smart contract definition.
interviewer:
interviewer:This is great! So happy to hear that. According to press reports in the media, talent has slowly moved from Web2 to Web3. Both Solana and Circle have hired a lot of really interesting people from some of the big Web2 companies. I can attest that this is true and that is exactly what is happening right now.
Anatoly：interviewer:
interviewer:That's right. There are positions ranging from individual engineer to senior leadership. I think that's really a huge leading indicator of how big Web3 is going to be going forward, because we're all very eager to build the next great internet project. At this point, I think one of the things that people focus on is that when some mainstream company decides what we're going to do, they also decide what we're going to do on this platform or that platform, and I really hate to use "mainstream "this phrase.
You probably know a lot of stuff that you can't talk about, but is there something that surprises you or something, or that developers or companies like. We did some research and here are some of our thoughts.
Anatoly：interviewer:
interviewer:We have great APIs.
Anatoly：It is very simple to do. I think it's a very simple step forward for a big bank. The NFT thing is pretty surprising because I think even at Rip there are a lot of people who are genuinely focused on making money for those smaller creators. That's actually what the KPI looks like to me - when I look at my own ecosystem, how many of these creators are actually able to get financial support from the activity of these platforms. They see NFTs as an opportunity for individual creators to release some digital items that could potentially generate income and monetize their work, which seems to be very much in line with what a lot of Web2 companies want to do.
interviewer:
interviewer:Yes. I want to go back to the topic of the ecosystem, or the growth of validator nodes. Did you notice what happened to the network itself?
Anatoly：interviewer:
interviewer:That's great.
Anatoly：interviewer:
interviewer:You know we're getting ready to be a national digital currency bank. We work with our regulatory counterparts and with the U.S. Treasury or whatever: when they think about dollar market infrastructure, they ask about reliability, they ask about security, they ask about uptime, they ask if All of this raises the question of what would happen if Russia decided to attack the network to destroy the dollar. These are like real conversations. I'm just giving you a small example here.
These are real situations that must be considered. Maybe we can do that on the air, but we need someone who can explain to us that three years from now, or five years from now, maybe a trillion dollars in circulation, and our idea is widely adopted. Why are we the most secure infrastructure in the world?
Anatoly：interviewer:
interviewer:This is the ultimate resilience.
Anatoly：interviewer:
interviewer:The money is also in other people's databases. But as long as you guarantee the integrity of this transaction, you have the actual proof of tokens, and I will pay for this.
Anatoly：For some things, that's fine: it at least ensures that no one can convince you that I'm spending my own money. Establishing this level of security is very important because only then can you start talking about other things. What happens if there is a chain split? How do we deal with this problem? If this problem occurs now, then Russia can destroy a bunch of nodes, they can create a chain split. Now with one ledger, Circle can accept transfers in USDC and another. Those processes and reconciliations, and the amount of safety and insurance you need, based on which amounts are at risk, are finite calculable numbers.
We can start to address these questions and see what is the cost of using this technology? What are the risks of this happening?interviewer:
interviewer:How about the Circle CTO's bank.
Anatoly：interviewer:
interviewer:These are not just conversations that should be having, I think the Internet will continue to grow in size as more and more people begin to choose to embrace blockchain. If you look back later on what you're most excited about next year, if we talk again in 12 months, I'm sure I'll schedule another interview like this in 12 months, what are you most excited about?
Anatoly：We're actively trying to get all these new entrepreneurs to launch their projects, launch their products. That's the most important thing we're working on. We're in talks with larger companies to help them make technology choices. What I want to see is if we can actually get 1,000 teams building something together in this hackathon in the future, maybe even 10,000, can we make this bigger. Because if that’s what’s happening right now, if it does get to a point where there are thousands of developers building something, then 100 million users isn’t a dream. No one can stop this wave.
interviewer:
interviewer:I think so too. One of my favorite things to say is that a lot of times people, when they think about something, especially USDC, they're like "oh ok. It's faster, cheaper, safer to pay with this" or whatever , but that's not the point of the question. The point is that USDC is a programmable dollar on the Internet, and it can be adapted to any application. I think we don't actually know what people are going to invent, we don't know what kind of creativity people are going to have. Thinking about other things that people are creating that you can interact with is the thing that I'm most excited about.
I'm very interested in what I don't know but what I have, so I think a big part of what we do is make people aware that they have these tools, these capabilities. I think USDC is like a dollar with internet superpowers, what can you build with it? Whatever you can build has to be cool. It was a pleasure to have this conversation with you and I look forward to meeting you next time.
Anatoly：Of course no problem, waiting anytime.
