When people first learn about Minima, one of their first reactions is: How are you different from blockchain XYZ.
While we believe that it’s difficult to compare Minima to other blockchains that don’t share the same vision of decentralization, we understand that the question comes from wanting to make sense of our protocol. Therefore, we’ll start publishing posts that offer precisely that — an overview of how another protocol works, including a comparison to Minima.
We will start with Solana. Solana was among the fastest-growing networks last year and has now accumulated more than $42 billion in marketcap with countless projects deploying on top of it.
History
Solana was announced in 2017 by Anatoly Yakovenko, a former contributor to Qualcomm and DropBox, by publishing the Solana Whitepaper. Anatoly is a software engineer with vast experience in compression algorithms and distributed systems who leveraged his expertise to build Solana with his CTO Greg Fitzgerald.
In February 2018, the team released the first Testnet of Solana. 2 years later, in 2020, the Beta mainnet we’re using today was released.
Funding
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Solana raised $5 million in a seed round to bootstrap their launch. Later in their Series A, the team received $20 million from institutional investors. Through a listing on CoinList, the Solana team raised a further $1.76 million from retail crypto investors.
Technology
A blockchain stands and falls with its technology. Solana describes itself as a programmable blockchain and advertises a throughput of up to 65,000 transactions per second. How is that achieved?
It’s achieved through the combination of various components that together define the Solana blockchain architecture.
Proof-of-Stake: TowerBFT
Solana has opted for a Proof-of-Stake consensus algorithm which means that the network is secured by stakers locking up their coins. The more coins one has, the higher the probability of being picked as the next validator.
The implementation of PoS that Solana is running on is called TowerBFT, an optimized version of practical Byzantine Fault Tolerance (pBFT).
Byzantine Fault Tolerance broadly describes that a network is resilient to attacks when up to ⅓ of the network participants are acting dishonestly.
Practical Byzantine Fault tolerance is an iteration where nodes are not all equal but in sequential order. One node is a primary node, with other nodes acting as backup. All nodes communicate with each other to ensure consensus. Rounds of communication establish consensus. You can find a more detailed explanation of BFT and pBFT here.
TowerBFT is an optimized version of it to ensure fast consensus and high transaction throughput. Proof-of-History complements it.
Proof-of-History
While the naming makes it sound like a consensus algorithm, Proof-of-History addresses the problem of agreeing on a time in distributed systems. It is not the consensus algorithm but a cryptographic clock.
In technical terms, it is a novel Verifiable Delay Function that ensures that block producers have waited a sufficient amount of time for the network to move forward. On Solana, each transaction is timestamped and then encrypted using SHA 256, the same hashing algorithm used by bitcoin.
Periodically the network will sample the count and the hashes of SHA-256 to ensure their validity and that the entire network agrees on the same transaction history, therefore Proof-of-History.
Turbine
Turbine is a protocol that helps the network handle its block propagation. Turbine splits data packets that need to be transferred between nodes into smaller data packets, increasing processing speed and helping keep bandwidth requirements low.
Sealevel
Sealevel is the technology that enables parallel processing of transactions on the network.
Gulf Stream
Mempools are where transactions wait to be included in the next block. You can think of them as a waiting room for unconfirmed transactions. Gulf Stream is Solana’s answer to reduce unconfirmed transactions by catching and forwarding them to the network’s end. It also reduces the memory load of validator nodes.
Pipelining
Pipelining is an optimized way of processing the input data stream hitting the network. Their CTO compares it to doing laundry, where all the steps are completed in order but by different units in the same device.
Cloudbreak
Cloudbreak describes horizontally scaled state architecture (spreading the computational state horizontally), increasing how many transactions the network can handle. The data structure implemented through Cloudbreak allows sequential writes and concurrent reads between the 32 threads that any modern SSD supports.
Archivers
While on other networks, validators have to store the transaction history of the ledger, that job is outsourced to a different type of node on Solana: Archivers. Across all archivers, Solana’s entire history and state is stored in a distributed way. To ensure that archivers really store the data, they frequently have to confirm using Proof-of-Replication, a concept inspired by filecoin. For their efforts, archivers are paid in Solanas native token: SOL.
Let’s talk about Scalability
While the list of technologies used in Solana is impressive, their main selling point is scalability. However, scalability is not only about how many transactions a second a network can handle, but also about how fast it can adapt to a fast increase in demand.
According to Eric Wall, CIO at Arcane Assets the solution to the scalability problem of blockchain is not to build bigger roads meaning making Layer-1s that handle more throughput using bigger blocks, fewer validators, or expensive hardware. The reason is induced demand. If you offer a blockchain with low transaction fees, it’s great for users. They will start using it and as the network experiences an increase in demand, eventually existing scalability limits are met.
Eventually, we will see transaction fees go up as users bid for their transactions to be included in the ledger. And it’s already happening on other L1s like Avalanche and Polygon.
Even assuming that Solana will manage to keep fees low, it introduces another problem: bots. The primary reason we don’t experience much Spam on networks like Bitcoin or Ethereum is that it’d be prohibitively expensive for anyone to spam the network.
So how does Solana compare to Minima?
Consensus Algorithm
Solana: A variation of POS, called TowerBFT with validators who hold stake in the network securing it
Minima: A variation of PoW (Proof-of-Work) called TxPOW where all nodes contribute a small amount of work which is combined to a blocks’ worth of PoW.
Scalability
Solana: While the marketing number is somewhere between 50,000–65,000 tps, the actual amount of transactions that are validated on the network is around 3,000 tps. That’s not to say 50,000 isn’t possible, but among others, it does count internal transactions such as rounds of voting to come to consensus.
Additionally, the Solana network has experienced 4 outages in the last 8 months, many caused by a spike in demand that exhausted validators’ memory capacity and in one instance even led to a complete shutdown of the network, and a hard fork to get it back online. You can read more on that outage here. It’s probably little consolation to those traders that got liquidated during one of the outages that the network is still in mainnet beta.
Minima: Minima takes into account over a decade of insights observing blockchain, and how they address scalability. On-chain doesn’t scale. Off-chain does. That’s why the Minima protocol combines multiple layers.
The baselayer Minima is run by every node in the network. On top of that, any Layer-2 can be established that allows users to directly connect in a peer-to-peer manner, just like the Lightning Network. This allows millions of transactions to be settled, without being limited by on-chain factors such as block size, or consensus algorithm.
Decentralization
The holy grail for any blockchain is true decentralization. The team behind Solana likes to quote their Nakamoto Coefficient, which many even in the Bitcoin community aren’t familiar with. The coefficient is meant to measure decentralization in a quantitative manner by defining how many sub-systems of a system one would have to control, to control the entire system.
Solana: has a Nakamoto Coefficient of 19. That is the number of validators on the Solana Blockchain that controls more than 33% of the staked supply, and could therefore attack the network.
When it comes to the count of validators in total, currently 1,576 validators are running the Solana network. That’s not very high for a network that’s aiming to be decentralized.
Unfortunately, it’s unclear how many Archivers are storing the state and transaction history of the Solana blockchain.
Minima: Over 44,000 full validating and constructing nodes.
Security
While the Blockchain trilemma suggests that a blockchain can achieve two out of the following three: decentralization, security, and scalability the reality is more nuanced. Decentralization has a direct impact on the security of a network. The more participants hold up a network, the harder it is to attack. How many entities does it take to attack the network?
Solana: 19 (the top validators)
Minima: Over 22,000 individuals (51% of the network participants)
Sustainability
The discussion around the sustainability of cryptocurrencies is fuelled by the perceived “waste” of energy to secure the Bitcoin network. Proof-of-Stake networks like Solana in general don’t consume much energy to secure the network but rely on financial security in the form of stake instead.
“As a proof of stake network, the security of the network is not dependent on energy usage. On Solana, there is no need for energy-intensive mining, meaning the network is extremely environmentally efficient.” — Solana Energy Use Report: November 2021
Sustainability isn’t just about carbon footprint. It also includes the ability for future generations to easily use the protocols created.
Solana: The Solana Energy Report concluded that “the entire Solana network — with 1,196 validator nodes and an estimated 20,000,000 transactions — uses an estimated 3,186,000 kWh per year. This is the equivalent of the average electricity usage of 986 American households.”
What the report fails to mention is that running Solana requires dedicated Hardware, which can be outdated soon leading to an increase in e-waste.
If we think about sustainability in terms of making the protocol easily accessible and usable for future generations, the question is how fast will technology catch up to store 1 TB of new blockchain history every year. And already the network is struggling with increased demand, only the future can tell if the network manages to stay online during times of high traffic.
Minima: Minima is a Proof-of-Work blockchain where each user runs a full validating and constructing node on their phone. Instead of relying on dedicated hardware, everyone can easily contribute through small amounts of energy to process their transactions.
The aggregate of individuals’ energy consumption is a significant amount securing the network. While currently in testnet we estimate that once we hit our first milestone of 1 million nodes, Minima will consume 912,500 kWh. Significantly less than Solana, despite a higher number of full nodes.
As every Minima node requires only a little amount of energy, it’s easier for users to source sustainably. (More on that here). When looking at sustainability in terms of longevity, Minima is quantum-secure and complete on mainnet launch. This means that any business and user relying on the network will find a solid foundation to build and rely on.
Tokenomics
Tokenomics describe how native platform tokens are allocated, issued, and used. Both Solana and Minima are underpinned by their native coins, Sol and Minima respectively.
Solana: In May 2021, the research firm Messari was among the first to highlight how token allocation in various protocols including Solana suggest centralization of ownership. Solana has allocated 48% directly to insiders, and 13% to their foundation. Not all of these tokens are directly tradeable, some are vested over months.
Overall, Solana follows an inflationary model with a maximum supply of 1,000,000,000 SOL and a long-term inflation rate of 1.5%.
Minima: Minima is giving away 51% of the token allocation to the community. More importantly, anyone holding Minima doesn’t have any control over the network. How much Minima one owns doesn’t negatively impact the decentralization of the protocol, as we discuss here.
You can also find more on our tokenomics here.
In terms of token model, Minima is deflationary, with a flexible token burn mechanism, built into the protocol, which adjusts to cater to network traffic and over time reduces the supply of Minima in circulation.
Ultimately, it is up to you to choose what you want to invest your time, money, and effort in. At Minima we side with Gavin Woods in believing that if a [normal] user cannot run a full node, “then it’s just another bank.”
Blockchain’s biggest goal is to serve the people using it. We believe that is best achieved by putting power and responsibility into everyone’s hands.