Visa: After considering many blockchains, why did you finally choose Solana as the payment network?

作宇：Mustafa Bedawala、Arjuna Wijeekoon

Compiled by: Babywhale, Foresight News

Blockchain networks have long been recognized as innovative payment infrastructure. For years, they have struggled to scale to support the secure, high-throughput, low-cost transactions that payment companies need and consumers expect. Over the past year, the Visa team has been paying close attention to the technological innovation behind blockchain scalability and is pleased with the significant progress being made in Layer 2 networks on top of Ethereum, as well as alternative blockchain networks. Our goal is to gain a deep understanding of the technical features of blockchain networks and try to leverage them to help enhance our existing networks and build new products that can be used for commerce and money movement.

While we believe multiple blockchain networks are likely to emerge in the payments ecosystem, we see the potential for Solana to become one of the networks driving mainstream payment flows. Solana has a promising future in payments due to the network's high speed, scalability, and low transaction costs, which helps make it a top candidate for an efficient blockchain settlement network using stablecoins such as USDC. Solana contains many key features and novel innovations worth checking out for anyone interested in payments technology.

Visa-scale transaction throughput

As a global payments network, Visa is capable of executing more than 65,000 transactions per second. While Solana has not yet reached the processing efficiency of Visa, Solana can process an average of 400 user-generated transactions per second (TPS) and often surges to 2,000 TPS during peak demand periods, allowing it to test and pilot payment use cases. In comparison, Ethereum’s average TPS is 12, while Bitcoin’s is 7.

**Parallel transaction processing:**Solana's high-throughput basic design enables it to process transactions in parallel, helping to significantly improve network efficiency. Transactions in different independent accounts can be executed simultaneously, allowing Solana to effectively support payment and settlement scenarios where transactions mainly occur between two different parties or where one party pays multiple parties.

Smart contracts can also be executed in parallel in Solana. Transactions specify the state or account they interact with, allowing validators to run non-conflicting transactions simultaneously. Unlike other chains such as Ethereum that use a single-threaded model, Solana uses a multi-threaded approach to achieve parallel transaction execution. In short, Solana’s architecture allows multiple transactions to be processed simultaneously, helping to prevent congestion in one part of the network from impacting overall network performance.

Transaction costs are low and predictable, helping to improve payment efficiency

Cost-wise, Solana’s transaction fees are not only low (usually less than $0.001), but also predictable. This predictable low cost makes it a network that can explore efficiencies and cost savings in existing payments operations. In Figure 1 below, Solana has a significant cost advantage compared to Bitcoin and Ethereum, whose fees can fluctuate unpredictably based on the demand for transactions performed on the network. For payments companies, a network with unpredictable transaction costs can make it difficult to manage costs in products and can lead to a poor consumer experience.

Figure 1: Transaction fees in US dollars

Cost predictability through localized fee marketplace: Solana’s localized fee marketplace is unique among blockchains. This innovation is closely related to Solana's parallel processing capabilities, where transactions that do not overlap with each other are executed on separate threads, just like vehicles driving on separate roads. Network congestion is a significant reason for increased fees in other blockchain networks and can have a negative impact on the entire system. The popularity of NFTs may lead to network congestion, making consumer P2P transactions that may occur at the same time more expensive or even economically ineffective.

Figure 2: Solana compared to Ethereum and other blockchain network fee mechanisms

Solana’s mechanism helps ensure that transaction congestion in one account does not affect transactions in other accounts. If an account generates high demand for a specific asset (such as an NFT), only that specific account's fees will increase, and the fees of other accounts will not be affected. This creates a fee market based on use case demand, where transaction costs temporarily rise when demand for a specific asset surges, while fees for other transactions on the chain are not affected. By allowing computations using different states to run in parallel, Solana can create fee markets based on "state competition" rather than having a single global fee market.

Transaction completion expected by consumers

Transaction completeness measures how quickly users expect their actions to be confirmed on the blockchain network. For payments, transaction confirmation time is as important as network throughput. For example, Ethereum has an average TPS of approximately 12; however, due to gas limits and smart contract requirements during congestion, users may experience several minutes of wait time before transactions are confirmed. Solana's target time slot is 400 milliseconds, but the actual range can be 500 to 600 milliseconds.

The vast majority of applications on Solana use "optimistic confirmation" to determine their final results. This is a mechanism used by Solana to achieve finality without waiting for all validators to vote on the block. In this case, if validators representing more than two-thirds of the delegated stake validators vote for a block, and the block without optimistic confirmation is rolled back or fails to be finalized, the zone Blocks can be considered finalized. This mechanism allows Solana to achieve finality in a much shorter time than many other blockchains. Fast transaction completion speed can lead to a better payment experience. In comparison, Bitcoin transaction confirmation requires 6 blocks to be confirmed, which may take up to an hour.

Table 1: Number of block confirmations and time required to confirm transactions on different blockchains

Availability: large number of nodes and multiple validator clients

A payment network can only be effective if users can always initiate and execute transactions when they need to pay. For a blockchain network, availability is best measured by the number of independent participants or nodes that collectively support the network for users to initiate transactions. As of July 2023, the Solana network has an impressive 1,893 active validators, or entities responsible for block production and voting. In addition, there are 925 RPC nodes, which may not create blocks themselves but maintain local transaction records. The large number of nodes in a blockchain network enhances its resiliency and redundancy. As long as a sufficient number of nodes remain running, even if some nodes encounter problems or go offline, the network can still operate without data loss. The Solana community also focuses on diversity of node geographies and infrastructure providers to make the network more robust to events such as natural disasters or changes in service provider access policies. The Solana network has nodes in more than 40 different countries, as well as hundreds of independent hosts and diverse geographies. This helps ensure smooth and reliable operation, even in the face of technical challenges.

Validator clients are software tools that enable node operators to act as validators on PoS blockchains. The diversity of validator clients increases the resiliency of the network. While one client might have a bug or vulnerability, another might not, which reduces the chance of a single software flaw bringing down the network. Solana initially ran on the validator client launched by Solana Labs. In August 2022, Jito Labs launched the second validator client Jito-Solana. Soon after, Jump Crypto also launched Firedancer (in beta), a standalone C++ validator client.

Firedancer stands out for its potential to deliver significant performance enhancements, as demonstrated by a live demonstration achieving 600k TPS. The purpose of having different validator clients is to keep the network stable. Outside of Ethereum, Solana is one of the few blockchains to have multiple, fully independent validator clients.

Meet the needs of the times

Solana's unique technical advantages, including the high throughput of parallel processing, the low cost of localized fee markets, and the high resiliency of large numbers of nodes and multi-node clients, together create a scalable blockchain platform with a trusted Pay for the value proposition. These are some of the reasons why we decided to expand the stablecoin settlement pilot to include transactions on the Solana network. As we pilot stablecoin settlement capabilities on Solana, we plan to test Solana’s ability to meet the needs of modern enterprise financial operations.