Original author: @hosseeb
Original translation: TechFlow
Note from DeepChao: On the occasion of Solana’s fifth anniversary, Dragonfly Capital partner @hosseeb posted a tweet today, recalling how he missed the opportunity to participate in Solana’s seed round investment at a price of $0.04 per unit in 2018, and missed out on more than a thousand times of returns. He also attached the original investment memo to express his nostalgia. In addition, we have also excerpted the discussion between Solana co-founder Toly and Hosseeb under this tweet.
The following are the original details:
I turned down the opportunity to invest in @solana’s seed round at $0.04 in early 2018.
At the current price, this is equivalent to missing out on a 3,250-fold return.
Solana was one of the first projects I evaluated as a junior VC. At the time, I was endearingly naive and confident, and I wrote memos for every project I passed on.
Rereading that memo now is peak junior VC cringe. We were all obsessed with finding the “Ethereum killer”, consensus protocols, and what technology would replace EVM/eWASM.
So, here is the completely unedited memo - the worst investment miss of my career.
Happy Birthday, Solana! 🎂
Memorandum Contents
1. After reading the white paper, my shorthand notes are as follows:
Their big innovation is Proof of History (PoH). Essentially this is a verifiable time delay function that employs sequential hashing, similar to sequential proof of work. In other words, a time maintainer is elected that continuously iterates hashing a value and publishes all intermediate hashes. Since this process must be performed serially on a single core and cannot be parallelized, nodes should be able to predict the amount of time that passes between consecutive hashes (presumably based on their knowledge of the performance of their hardware?).
PoH nodes also mix any current state (such as transactions to be submitted) into these hashes. This creates a history of events that can be reliably timestamped.
If a PoH node has problems or cannot be guaranteed to be online, they proposed a solution that allows multiple PoH nodes to periodically mix states with each other.
A group of validator nodes replay and verify the operations of the PoH node (the verification process can be more efficiently parallelized through the MapReduce architecture). These validators use PoS to reach consensus through a Casper-like protocol. If a PoH node is found to have Byzantine problems or misbehavior, the validator node can elect a new PoH node to replace it.
It looks like they will be developing payment and smart contract capabilities.
They claim to be able to reach 710,000 TPS and have achieved 35,000 TPS on a single-node test network.
2. My thoughts:
Their numbers are completely bullshit. 710,000 TPS is ridiculous; even Google searches are less than 100,000 per second. This data is placed in the most prominent position on their website, which makes me very wary.
I take back my previous comment that the whitepaper is well written. The high-level content is good, but the technical details are very lacking and vague. As a description of a consensus protocol, the rigor is disappointing.
The team is mainly composed of low-level engineers from Qualcomm. The CEO and CTO mainly work on operating systems, embedded systems, GPU optimization and compilers. Their background in distributed systems and cryptography is obviously not strong enough, which is obvious in the paper. The handling of Byzantine fault tolerance is poor. Reminds me of the white paper of Raiblocks/Nano (they are also low-level engineers).
And the following content in the white paper makes me doubt:
[Original Solana Whitepaper, Section 5.12]
PoH allows network validators to observe past events and their timing with some degree of certainty. When the PoH generator produces a stream of messages, all validators are required to submit their signatures on the state within 500 ms. This number can be reduced further depending on network conditions. Since every validation is fed into the stream, everyone in the network can verify that all validators submitted their votes within the specified timeout without directly observing the voting process.
This is not a consensus protocol. Assuming a 500 ms limit on message passing for consensus is fairly problematic and does not meaningfully achieve Byzantine fault tolerance. And how do they measure 500 ms? How do the other nodes in the system come to consensus on the elapse of 500 ms, given that they will estimate the elapsed time based on the number of iterated hashes performed? Furthermore, how will they account for deviations in clock speeds over time due to hardware improvements, hardware failures, or noise? The problem of time in distributed systems is incredibly complex, and I dont think they realize how hard it is.
Besides, who cares about time? Is this a big problem in the blockchain space? Are people not happy with the granularity of 15s/1s block times (like in things like DFINITY)? I don’t think it’s a problem, the complexity and confusion they introduced into the protocol doesn’t seem to add much value.
They have a section devoted to attacks and incentive misalignment. Their response to the attacks is completely unconvincing and again lacks rigor or detail.
They have a whole section on Proof of Replication, just like Filecoin. What the heck? Tell me about your consensus protocol and how you implement transactions, accounts, and what features your blockchain will have. I dont care about Proof of Data Storage.
There is also a long paragraph describing smart contracts, but it just says that they will use LLVM as a backend to support multiple platforms. But nothing else is mentioned.
Lots of talk about GPUs and parallelization. This betrays a strange sense of focus - if they need to implement a BFT consensus protocol and a usable smart contract platform, they shouldnt be obsessed with parallel processing of their packet format. I remember them doing the same in the presentation I saw - spent most of the time talking about how to use these node processing optimizations and almost no time actually describing their consensus protocol.
Conclusion: I will never invest in this project
Interestingly, five years later, when Haseeb @hosseeb tweeted his congratulations to Solana for having a place in the crypto space and joked about how he had missed a big opportunity when he was young, Solana co-founder Toly @aeyakovenko replied to the tweet : “All your concerns were indeed reasonable. This is essentially a bet - a bet on whether we can solve these problems while maintaining the underlying advantages that other teams don’t have.”
Haseeb then replied to Toly: I think this is the lesson. Your obsession with low-level optimization and unique attack angles is something that other teams dont have. This kind of extreme use of strengths and avoiding weaknesses is the most important thing. I didnt realize this at the time.
