The Solana Foundation recently published the Validator Health Report (on August 10, 2022).
Solana is a public, open-source blockchain that “anyone in the world can build on.”
Their mandate at the Solana Foundation is “to support the decentralization, security, resilience, and adoption of the Solana blockchain.”
They run a range of programs in support of this mission, “ranging from creating documentation for validators to issuing grants for projects furthering network decentralization.”
They also “monitor the health and resilience of the Solana network.”
Their approach to date in commenting on the health of the network has been “focused on surfacing data that make it easy for the community to monitor key metrics, like validator count or the length of network outages.”
As the network continues to mature and broaden its user base, they think it’s important “to provide the Solana ecosystem and broader Web3 community with more context on how [they] think about the health of the network.”
In the coming months, the Solana Foundation will “release a series of pieces that touch on various components of network health, including network performance, software, and client updates.”
In this initial report, they delve into the validator network and key metrics they track “to assess its health.”
As noted in the update, the Solana network is “formed by a collection of individuals and entities that choose to run Solana validator software.”
Anyone in the world “can view, download, modify the validator source code, and run the software to participate in the operation and security of the network.”
As clarified in a blog post, there is “no single entity that controls how the network runs, or what kinds of applications or services can be built or used on top of the network.”
In this way, Solana is “permissionless”, meaning that “nobody needs anyone’s permission to participate, develop, extend or use the network.”
As mentioned in the update, a growing community of core developers “write, test and publish a version of the Solana validator software that is free to use for the community of validator operators.”
Currently, the Solana blockchain “consists of over 3,400 validators on six different continents.”
The long term success of Solana is “dependent on a strong, healthy validator network.”
A large, diverse set of validator operators “are essential to maintain a resilient, distributed and credibly neutral network for the world to use.”
There are many ways “to assess the health of the validator network.”
Some of the metrics we track include:
- Total Validator Count: Every validator independently verifies the current state of the blockchain data and any new transactions that are proposed to the network. The total validator count represents the number of separate copies of the current network state that exists on computers all over the world. A high validator count indicates greater guarantees of permanently survivable data storage and network function and recovery, in the event of a catastrophic event or major data loss.
- Nakamoto Coefficient: This metric, first coined by Balaji Srinivasan, is defined as the minimum number of nodes that must collude or become compromised to stop or selectively alter block production in a network, thereby “censoring” all or part of the network. A high Nakamoto Coefficient is desired to ensure a censorship-resistant network, meaning any user can be ensured that their usage of the network will never be hampered.
- Distribution: A blockchain with many validators and a high Nakamoto Coefficient is still vulnerable to external factors that can influence the functioning of a blockchain. Here, we look at the role of geography, data center ownership, and entity control over validators to better understand Solana’s resilience in the case of exogenous variables.
As mentioned in the blog post, blockchains with more validators “tend to be more resilient. When a user performs a transaction on a blockchain, they want to be confident that their transaction will be recorded.”
Ideally, each transaction on a blockchain is “recorded on every validator on that chain, which is why a higher number of validators is important: The more times that a transaction is recorded, the more confident a user can be that their transaction won’t be tampered with.”
There are two types of validators on the Solana network:
- Consensus nodes: Consensus nodes are central to the functioning of the network by providing two essential functions: creating and proposing new blocks to the rest of the network, and voting on the validity of new blocks proposed by other nodes on the network.
- Each block contains many transactions that are submitted by various users and applications on the network. Every consensus node independently verifies all new transactions in a proposed block before voting on its validity. The more nodes that participate in this consensus process, the more confidence a user or third party has that a change to the network or a transaction was verified by a large population.
- RPC nodes: Remote Procedure Call nodes are an application’s gateway to the Solana infrastructure. RPC node operators can offer API, indexing, or other services to provide a convenient interface for users and applications to the core Solana network. These are often commissioned or run by individual applications and are dedicated to that program’s particular task, rather than maintaining consensus on the blockchain. RPC nodes, like consensus nodes, all independently verify all new blocks and changes to the network.
A large number of nodes is “critical for the health of the network.”
There’s “no brightline for how many nodes is enough.”
What’s important is that:
Users feel confident that their transaction “will be recorded, no matter what.”
This is why it’s important “to have a large number of copies of the current “state” available on many nodes, and that they exist in a broad distribution across the world.” The “state” tracks “the latest balance of each wallet, updated in real time and always up to date.”
Nodes operate “independently of each other.” A failure of a single node or set of nodes (say, run by a single entity or in a particular geography) “should not impact the functioning of the network.”
Users can “verify the accuracy of transactions by looking at other nodes. If a single node goes down or has an issue recording a transaction, users can rely on other nodes to verify the accuracy of the blockchain.”
As noted in the blog post, the Solana Mainnet Beta network “went live in March 2020.”
Since then, it’s grown “into a network of over 3,400 validators across six continents, including over 1,900 consensus nodes,” An average of 95 new consensus nodes and 99 RPC nodes “have joined the network every month since June 2021.”
Going on to discuss the Solana network’s health in terms of its Nakamoto Coefficient, the update noted that users of a blockchain “must be confident that any valid transaction they submit will be included in a block and then confirmed through consensus.”
If a group of consensus nodes “becomes compromised or acts maliciously in a coordinated manner, it can attempt to alter or prevent the network from achieving consensus on new blocks.”
The Nakamoto Coefficient is “a common way to measure a blockchain’s resilience against such behavior.”
The Nakamoto Coefficient is “a metric first proposed by Balaji Srinivasan, and is defined as the minimum number of nodes that would need to be compromised to alter or stop consensus in a network, thereby preventing some or all new blocks (and therefore the transactions within them) from being confirmed.”
This process is “known as censorship, and could impact the entire network, or some subset of users or applications.” In proof of stake networks, the Nakamoto Coefficient is “the minimum number of nodes required to represent at least 33.4% of voting power.”
Preventing any blockchain from reaching this point “is critical for maintaining its usability and keeping it censorship resistant.”
As mentioned in the update:
“Consider: A business or state actor wants to maintain a monopoly over a certain type of app on a chain. If they can strike a deal with validators who represent 33.34% of the stake on a blockchain, they can stop the entire blockchain from accepting transactions from competitive businesses by refusing to vote on blocks containing the censored transactions.”
What Drives Nakamoto Coefficient?
On Proof of Stake networks such as Solana, “consensus nodes compete with one another to attract stake, which is a mechanism by which people or programs can direct some of their tokens to be associated with a particular validator or validators.”
Different blockchains “implement various incentives or strategies to encourage staking. While the details differ across blockchains, the core principle is the same for most Proof of Stake networks: a validator’s voting “weight” or voting “power” is proportional to the amount of stake associated with it.”
Therefore, validators which have more stake “can have a greater influence on the outcome of the consensus process and block production than validators with less stake.”
As stake is not evenly distributed across all validators, “this results in the existence of a cohort of the most highly staked validators on the network, which collectively represent 33% of the voting power.”
How Solana is doing:
On Solana, the Nakamoto Coefficient “is 31.”
This means “the lowest number of validators that would have to collude to censor the network is 31.” This number has “grown steadily since the chain’s launch in March 2020 and continues to rise, and its growth is a key indicator of the health of the network.”
As noted in the blog post, the Nakamoto Coefficient is important, but “paints an incomplete picture of the resilience of a blockchain.”
A compromise of the Nakamoto Coefficient “would impact the blockchain’s real-time ability to guarantee that new blocks be voted on and added to the chain.”
In the event that the Nakamoto Coefficient is compromised, the blockchain “could recover by excising the affected validators and restarting consensus without them.” A successful recovery “depends on a large total validator count, which is why the first metric in this report is important.”
There are also “other exogenous factors that impact the resilience of a blockchain. We discuss those in the next and final section.”
The Nakamoto Coefficient is “a critical metric, but doesn’t capture the human element involved in running a blockchain.”
One of the least appreciated aspects of validator network health is “the role of exogenous factors, such as geopolitics, natural disasters, and corporate interests.”
A global, resilient blockchain has “to continue operating, no matter the events in a given part of the world.”
Consider the following:
“A dissident facing retribution from a dictatorial regime has to feel confident she can access funds, even if that regime chooses to shut down servers running a chain in-country.”
Or the following:
“A natural disaster disrupts all the nodes in a particular region. Users of a blockchain in any part of the world still need to feel confident that chain will keep running, even when many validators are unexpectedly knocked offline.”
As clarified in the update, anyone can “run a Solana node.”
But because Solana “requires highly performant hardware, validator operators will often rent server space from privately run data centers to run their nodes.” This is “not unusual; the majority of the computing power on most blockchains is done on privately owned servers in large data centers.”
The option “to rent privately owned servers has made it significantly easier for anyone to run a validator of any blockchain.” However, the risk of using private data centers to run validators means that the owners of data centers “have disproportionate power over the functioning of a blockchain.”
It’s important that “stake on a blockchain is relatively distributed among private companies that rent server space, in order to minimize the risk that a single company can compromise a chain.”
Stake on Solana is “relatively distributed among ASNs, with no one autonomous system hosting anything close to 33.3% of active stake.”
The Solana Foundation “continues to monitor this distribution over private data centers and encourages users to continue distributing their stake to a broader set of data centers.”
There are reportedly “over 1,9003 block-producing nodes on the Solana network, but that doesn’t mean that 1,900 separate entities are running each of these nodes.”
Several companies “have built businesses off of running multiple validators on multiple chains.”
In many ways, this is “healthy for blockchains: It means that people have a strong business interest in investing in the security and resilience of a chain.” However, it’s critical that “no one entity builds up too much control over the validator network of a chain, even if they are running multiple validators.”
The Solana Foundation has “verified that of 1,915 consensus-producing validators, at least 1,688 (88.14%) are run by independent entities (updated as of August 1, 2022).” The remainder may also “be independent of each other, but the Solana Foundation has not verified this.”
The Solana Foundation is “continuously working to improve the health of the validator network by providing tools and education to our global community of validators and stakers.”
In particular, they recognize that “continuing to encourage broader distribution of stake across data centers and entities is critical to the health of the validator network.” They will “continue to monitor this data and report on it regularly.”