Why Visa Chose Solana
In a deep dive into the Solana blockchain network, Visa elucidated its reasons for selecting Solana as a part of its stablecoin settlement pilot today. Visa announced last week that they are expanding their stablecoin pilot to Solana, as part of their ongoing efforts to modernize cross-border money transfers through blockchain technology.
Impressive Transaction Throughput
Visa’s exploration, penned by Mustafa Bedawala and Arjuna Wijeyekoon, underscores Solana’s impressive transaction throughput. While not matching Visa’s capacity of 65,000 transactions per second, Solana boasts an average of 400 user-generated transactions per second, which can surge to over 2,000 during high demand periods. In comparison, Ethereum manages an average of just 12 transactions per second.
A foundational element of Solana’s high transaction throughput is its ability to process transactions in parallel, unlike Ethereum which processes transactions sequentially. This parallel transaction processing ensures efficient support for payment and settlement scenarios, mitigating network congestion.
Low and Predictable Transaction Costs
Solana’s low and predictable transaction costs make it an attractive option for payment operations. Typically, SOL’s transaction fees are less than $0.001, contrasting with the fluctuating fees of Bitcoin and Ethereum based on network demand. Solana’s localized fee market ensures that congestion in one account doesn’t impact others.
Transaction Finality
SOL targets a slot time of 400 milliseconds, making it significantly faster than many competitors. Most Solana applications use “optimistic confirmation” for quicker transaction confirmations, enhancing speed and reliability.
Network Availability
As of July 2023, Solana has 1,893 active validators and 925 RPC nodes across 40 countries, ensuring network resilience. The diversity of validator clients enhances stability, reducing the risk of software flaws destabilizing the network.
Meeting Modern Demands
Visa’s decision to integrate Solana is rooted in its technological advantages, including high throughput, low costs, and significant node presence. Visa aims to assess if SOL can meet the demands of modern corporate treasury operations through its stablecoin settlement pilot.
This move by Visa follows its previous integration of the Ethereum blockchain for USDC transfers in a 2021 pilot project in Australia. With the recent extension of its payment function with the stablecoin USDC to Solana, Visa positions itself at the forefront of blockchain-based payment solutions, aiming to enhance cross-border settlement speed.
At press time, SOL traded at $18.06 after bouncing off the 61.8% Fibonacci retracement level.
