Solana (SOL), a layer 1 proof-of-stake blockchain, has introduced version 1.16, which improves user privacy through “confidential transfers.” This update includes encrypted Solana Program Library (SPL) token transactions, ensuring confidentiality rather than anonymity.
The acceptance of version 1.16 by Solana’s network of validators has reached a majority after ten months of development. audit by Halborn, a blockchain security company.
Solana Labs introduces a privacy-enhancing update
According to the announcement created by Solana’s infrastructure provider Helius. The update has undergone rigorous testing, with v1.16 running on testnet since June 7, 2023.
Volunteer and Canary nodes reportedly played a crucial role in identifying and resolving issues during the testing phase. Solana Labs has also deployed canary nodes on mainnet beta to monitor the stability of v1.16 under real-world conditions.
Solana uses a feature gate system to prevent consensus-breaking changes so that validators with older versions don’t leave the canonical chain.
Additionally, changes that break consensus now require a Solana Improvement Document (SIMD) and greater transparency through documentation.
Confidential Transfers, introduced by Token2022, uses zero-knowledge proofs to encrypt balances and transaction amounts of SPL tokens, prioritizing user privacy.
Looking ahead, Solana Labs plans to have a more flexible release cycle, targeting smaller releases approximately every three months.
Room for growth
According to a Nansen reportSolana has witnessed a significant increase in its Total Value Locked (TVL) this year, almost doubling since the beginning of 2023, and currently boasts a TVL of 30.95 million SOL.
Monthly transactions on the Solana network have remained relatively stable, with an increase in the number of voting transactions, which include both voting and non-voting transactions.
Additionally, Nansen highlights that Solana has implemented innovative solutions, such as state compression and insulated reimbursement markets, to address prominent issues within its technology suite.
One notable solution, state compression, has significantly reduced the cost of minting non-fungible token (NFT) on Solana by over 2,000 times.
State compression enables affordable NFT coins
For example, the cost of creating 1 million NFTs before the introduction of state compression would have been approximately $253,000. In contrast, if state compression is enabled, the cost is significantly reduced to just $113.
For comparison, producing a similar collection size on Ethereum would cost about $33.6 million, and on Polygon it would be about $32,800.
Furthermore, the liquid staking landscape on Solana is growing rapidly, with leading platforms such as Marinade Finance, Lido Finance and Jito taking the forefront.
However, despite this growth, the current amount of SOL staked in Solana’s liquid staking protocols is less than 3% of total SOL staked, indicating significant room for expansion.
It is worth noting that Nansen’s report raises concerns about the uncertainty surrounding FTX/Alameda’s SOL holdings, as FTX holds over 71.8 million SOL, representing approximately 17% of circulating supply and 13% of total offering.
While this situation may pose temporary risks to Solana’s growth trajectory, it is essential to closely monitor its impact.
On the other hand, the protocol’s native token, SOL, continues to show significant gains across all time frames. The token is trading at $23.68, reflecting an increase of over 4% in the past 24 hours.
Featured image from Shutterstock, chart from TradingView.com