Anatoly Yakovenko's startup developed Solana, a layer-1 blockchain that led to a multi-billion-dollar crypto ecosystem in less than five years. The software that Solana Labs created allowed founders to build seven crypto unicorns and the layer-1 later notched itself as the ninth largest blockchainby market cap in the industry.
The 41-year-old's idea began at a San Francisco cafe with two coffees, a beer, and a night of working until 4 a.m., cofounder Yakovenko told Insider. Crypto's ecosystem looked very different at the time and Yakovenko, who worked as a systems engineer at semi-conductor giant Qualcomm, was taking notes.
Ethereum had gone live just two years earlier and its token was trading near $7 at the start of 2017. Meanwhile, its network was clogged and slowed down by early blockchain game CryptoKitties, better thought of as "decentralized Tamagotchi." And MetaMask, the now-popular Ethereum wallet, couldn't go longer than a few weeks without user complaints.
"I had a eureka moment," Yakovenko said, adding that he could develop something to improve some of the technical issues other blockchains faced. "That's what really pushed me over the edge."
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Thus ensues the "proof-of-history" protocol, which is what sets Solana's blockchain apart from Bitcoin or Ethereum. The protocol develops a kind of "synchronized clock that, in essence, assigns a timestamp for each transaction and disables the ability for miners and bots to decide the order of which transactions get recorded onto the blockchain," according to TechCrunch. Solana runs on proof-of-stake and the Nakamoto Consensus, but the proof-of-history is an accelerator added on to this. This, per Yakovenko, allows Solana to have cheaper fees and quicker transactions times.
Solana is currently processing 2,745 transactions per second, per its website, while Ethereum can do roughly 30 transactions in the same time frame on its network. Ethereum, however, still has a far larger grasp on the nascent space, as the second largest crypto by market value. The network also has a series of upgrades called The Merge which could give it another boost over its alleged competitor.
Raj Gokal later joined Yakovenko as cofounder, along with Qualcomm alumni Greg Fitzgerald and Stephen Akridge. Yakovenko says part of the reason for Solana's success is attributed to bringing on "rockstars" that he was able to pull from his network.
"We have the best team in crypto at the time, in terms of experience and understanding of how network protocols work and how operating systems work," Yakovenko said.
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Solana's do or die moment
The project's success, however, was not linear.
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Solana's mainnet went live in March, 2020. Its auction was three days after the coronavirus was declared a global pandemic and the same week of the infamous "Black Thursday" crash, where bitcoin slashed half of its value in a day.
"That was a really, really stressful time. We barely got everything to work and the macro seemed like everything was going to die," he said. "It was kind of a do or die moment for us and for the network."
Yakovenko said the company had no more than 22 months of runway at a time, adding that they were just trying to survive for years before the last bull market.
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"We launched at the bottom," he said. "I think that part of the reason why it succeeded was because the people that joined our community were the real true believers and die hards. They were paying attention to crypto as the world was kind of setting on fire."
Small boutiques were early investors in Solana like Multicoin. And some of the earliest token buyers received a 4,300-fold increase in their investment. Other ventures firms like Andreessen Horowitz began diversifying portfolios with Solana much later in June 2021, when it closed a $314 million private token sale.
In 2021, Solana's ecosystem began picking up traction. Startups with unicorn valuations built on the blockchain including non-fungible token marketplace Magic Eden, move-to-earn game StepN, decentralized exchange Serum, wallet Phantom, and more.
"It's just not something that I expected," Yakovenko said. "I don't know if the momentum is sustainable, but I would love to see more of those trailblazers like these grow really quickly."
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Crypto billionaire Sam Bankman-Fried, who founded Serum, which is built on Solana, previously told Fortune in an email that the layer-1 has a chance to become a key layer of infrastructure for the future of crypto. "They were by far the most serious [layer 1] we talked to about continuing to scale their blockchain and expand its opportunities," Bankman-Fried said.
Price action isn't a sole indicator of market health, but Solana's native token, SOL, has jumped 85.42% in the past year, according to Messari. In tandem with broader crypto markets and the macro environment, the altcoin has declined 56.56% in the past three months.
Critics says Solana's network, however, is too centralized due to its token distribution.The layer-1 also continues to experience outages for hours at a time. In June, validators in the network were not processing new blocks for several hours, resulting in many decentralized apps going offline.
Moving forward, Yakovenko is bullish on both the future of crypto and Solana. He says he wants to help onboard the next one billion users into the space with a web3 mobile phone, called Saga.
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"Almost 7 billion people use smartphones around the world and more than 100 million people hold digital assets - and both of those numbers will continue to grow," Yakovenko said in a statement on June 23.
