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Solana Rating Review

Stable+

Investment Rating

Expiry date : Expired 14 Nov 2018

Rating report

Based on our analysis and issues identified, we have assigned the Solana project a “Stable +” rating.

Disclaimer: We draw attention to the fact that the project is at an early stage (its ICO is not scheduled until Q1 2019). ICO details or token metrics are not specified in the white paper or on the project website. Therefore, it is not possible to draw conclusions regarding token economics, distribution scheme, use of proceeds, bounty program, etc. On the project’s official GitHub profile there is no smart contract code available yet. However, according to the team, they are currently focused on technical aspects of the project, and as the project is still more than 5 months away from its ICO, we do not consider this a risk as of July 24, 2018.  

The project has the following strengths:

●    A potentially strong competitive position and market exposure (an innovative and inexpensive way to achieve scalability - Proof of History).

●    A significant and fast-growing market.

●    The expertise of the core team.

●    A strong technical whitepaper.

●    Initial testnet (MVP) available on GitHub.

●    Significant community interest and hype around the project, despite its early stage.

However, there are also a number of risks still associated with this ICO project:

Team composition risks

We note that the team lacks blockchain expertise or competence in cryptography. The project also lacks advisors. On the project’s website there are no links to LinkedIn profiles and one of the team members, also a co-founder, is simultaneously listed as co-founder & CDO of the Motion project until March, 2018; however, there is no information available about this project. The project currently does not have any advisors.

Incomprehensive whitepaper

The whitepaper lacks market and competitor analysis, token metrics and project economics, marketing and business development plans – this is partially due to the project being at an early stage. We note that this risk may decrease once the team is closer to the actual ICO date and relevant information is disclosed.

Commercial risks

The infrastructure space is starting to get more and more crowded, and the Solana project is arriving relatively late in the game. We note that the whitepaper, and the website in its current state, do not specify any features helping Solana to stand out against its competitors. Considering the strong academic and technical background and experience of the team, as well as the fact that the team is working from Silicon Valley enabling them to collaborate with other startups in an ecosystem, they have a good chance to gain an upper hand in this competitive space. This could partially offset these commercial risks.

Unclear project economy

The team does not provide any detailed projected uses for proceeds from the ICO or information on fees to be charged for services; therefore, potential revenue streams are unclear. We note that this risk is likely to decrease in the future once the team is closer to the actual ICO date and relevant information about token metrics is disclosed.

Based on our analysis and taking into consideration all the risks associated with the Solana project, as of July 24, 2018, we assign Solana a “Stable +” rating. We would like to note that once these major issues are resolved by the team (i.e. ICO details, token metrics, clarification of marketing activities etc.), the project rating will need to be reassessed as the risks linked to it may change.

Project & ICO information

Solana is building an innovative high-performance blockchain, with up to 710k transactions per second on a 1 gigabit network without data partitioning with current hardware. The proposed blockchain architecture is based on:

●    Proof of History (PoH): Time encoded as data that allows for simple and efficient proofs and protocols.

●    Performant System Architecture: The network is arranged for maximum throughput and high availability. Smart contracts bytecode is based on the Berkeley Packet Filter, designed for fast execution.

●    Proof of Replication (PoRep): A fast-streaming Proof of Replication designed for storing a large distributed ledger.

The combination of PoRep and PoH provides a defense against forgery of the ledger with respect to time (ordering) and storage, therefore it improves efficiency and scalability. Consensus is independent from transaction flow. Transactions flow through the network independent of consensus and are limited only by hardware. According to the team, it has already achieved a throughput of 250k transactions per second on a single-node testnet with a peak at 400k.

Website

 

Whitepaper

 

Telegram

 

Twitter                                                                                                                                    

 

LinkedIn

 

Reddit

 

Medium

 

YouTube

 

GitHub

 

We draw attention to the fact that the ICO details and token metrics are not specified in the whitepaper or on the project website. Therefore, it is impossible to draw conclusions regarding token economics, distribution scheme, use of proceeds, bounty program, etc. Given that the project is in its early stage, this is acceptable as of July 24, 2018.

The roadmap states that the token distribution event is to be held in Q1 2019 after the live mainnet is released in Q4 2018, which is a positive factor.

Description of services & their applicability

Solana is building the architecture for a new blockchain based on Proof of History (PoH), which is a proof for verifying the order and the passage of time between events and message ordering. PoH is designed to create a ledger with verifiable event times. Analogously to Google’s TrueTime, which uses the synchronized atomic clocks as a trusted source of time and ordering, Solana has created a cryptographically secure, trustless time source and built a blockchain around it. By applying PoH to the blockchain, times and events can be verified by nodes without witnessing them directly. This dramatically optimizes the scalability and reduces messaging overheads.

Solana’s approach takes the Proof of Stake (PoS) as its consensus algorithm and improves on this introducing PoH + PoRep to improve efficiency and scalability, instead of overlaying additional complexities such as sharding, which could compromise security.

According to the website, potential use cases might include the following:

●  Decentralized exchanges.

●  Payments.

●  Distributed Web Services and Storage.

●  Distributed Ad Exchanges.

●  Smart contracts.

Based on information provided in the Solana newsletter on Medium, Solana has managed to form partnerships with two projects — GlobalID and Yaka Labs (led by a friend of Solana, the former Ripple CRO Greg Kidd). These projects aim to deliver portable, private, secure identity for individual and group interactions and deliver payments at scale. It is mentioned that Solana plans to form partnerships with decentralized exchanges, ads, marketplaces, and others. Details will be announced.

The Solana project has a comprehensive and detailed whitepaper when it comes to technical features, however it lacks direct competitor analysis, ICO details, token and project economics, forecast marketing activities and details of partnership plans.

Roadmap

The project team has provided the following roadmap:

The project’s roadmap says that a prototype testnet (single node) is to be released in February 2018, and a multinode testnet in June 2018. It is also mentioned in the whitepaper that public beta will be released in September, 2018. The live mainnet will be ready by Q4 2018.

We note that the team has published the code on its official GitHub profile, which is regularly updated.

The roadmap lacks information about the pre-sale round, however there is a registration form on the project website. The token distribution event is planned to be held in Q1, 2019, but there is no current detailed information about sales dates or token metrics. According to the team details are not available yet as their current focus is on building the community and technology.

The other issue with the roadmap which could be considered a disadvantage is that it covers only the technical aspects of the project and does not specify the business development process – e.g. when and how marketing activities will be performed, how many participants the company intends to reach by the end of 2018 and in 2019, etc.

Market outlook

Market analysis

According to Grand View Research, the global blockchain technology market is expected to reach USD 885.4 million in 2019. The forecast for the US blockchain technology market across industries is the following:

The total blockchain technology market includes all possible blockchain platforms, not only infrastructure platforms like Ethereum, EOS and Solana.

For the purpose of analysis of the macro-level factors affecting the Solana project a modified PESTEL framework will be used. The PESTEL framework analyzes Political, Economic, Social, Technological, Environmental and Legal factors. As far as blockchain projects are concerned, Environmental and Social factors are usually not applicable or have relatively small impact.

●  Political –  infrastructure blockchain projects like Solana usually do not bear political risks.

●  Economic – the market niche for infrastructural blockchain platforms is significant and the projects concerned usually demonstrate strong performance in terms of economics.

●  Technological factors – given the immaturity of the blockchain market as a whole, development of infrastructure blockchain platforms is a good idea, as the market needs such solutions at its development stage.

●  Legal – infrastructure blockchain projects like Solana usually do not bear legal risks.

Competitive landscape

We will use Porter’s Five Forces framework to perform an initial competition assessment for Solana.

Threat of new entrants - High

The overall threat of new entrants is high, as new infrastructure projects in blockchain come out very often and the market is not yet saturated. Some of Solana’s direct competitors are launching their mainnets in the next few months.

Threat of substitutes - Medium

The threat of substitutes is medium in level, as new infrastructure platforms are released often; however, transitioning from one to another is not an easy process.

Bargaining power of customers - Low

The key advantage of the Solana project is its innovative and inexpensive means of achieving scalability compared to many other platforms.

Bargaining power of suppliers - Low

Since there is only labor (developers) and expertise (and maybe node holders) on the supply side for the Solana project, the bargaining power of suppliers can be assessed as relatively low.

Industry rivalry - High

As of July 2018 Solana has some direct competitors in the blockchain market and some indirect competitors; please refer to the summary table below:

Industry rivalry

 

Solana

Dfinity

Hashgraph

EOS

Ethereum

Project type

Infrastructure

Infrastructure

Infrastructure

Infrastructure

Infrastructure

Key functions / features

Proof of History (PoH) + Proof of Replication (PoRep)

Threshold relay (PoS), Unlimited capacity, interoperable, self-governing

BFT, gossip about gossip, virtual voting

dPoS, High performance, no transaction fees

PoW (PoS expected late 2018), the de facto industry standard

Key users

Developers, enterprises

Developers, enterprises

Developers, enterprises

Developers, enterprises

Developers, individual users, enterprises

Development stage

Initial testnet

Copper stage

Testing phase

Pre-release (EOS.IO Dawn 3.0)

Released

ICO status

N/A

N/A

ICO ended

ICO ended

ICO ended

Funds raised during the ICO/Hard cap

N/A

USD 4 million/ N/A

USD 18 million / N/A

USD 197 million / N/A

USD  18.4 million / N/A

Market capitalization

N/A

N/A

N/A

USD 7.6 billion

USD 48 billion

Product launch

Q4 2018

N/A

No roadmap

June 2018 (EOS.IO)

N/A

As of July 2018, the market for Solana is very competitive. Competitors are all trying to solve the same problems, such as scalability, low cost and security, which increases the risk for potential investors. There could of course be more than one way to achieve scalability in a blockchain network, so competition is good for the market and we also note that the Solana project proposes another innovative and low cost way to tackle this issue, distinct from its competitors, which is promising for potential investors.

Solana is aiming to overcome the performance limitations of existing blockchain platforms. From a technical perspective, each platform and consensus algorithm has its own pros and cons; performance issues are addressed as follows:

●  Solana – consensus is independent from the transaction flow, i.e. transactions are only limited by hardware throughput and not the actual size of the network. The current testnet reached 250,000 TPS.  Even though this was reached only on the testnet, the result is impressive.

●  Dfinity – this solution lies within a so-called Blockchain Nervous System, which is self-learning and, in theory, is infinitely scalable. However, a 100% working prototype has not yet been released.

●  Hashgraph will solve the problem through median timestamps. In this case, a block is transferred through a predetermined number of nodes and after having collected the required signatures, is broadcasted to the whole network.

●  EOS will utilize dPoS and achieve high throughput through horizontal scalability and parallel architecture. In theory, millions of TPS are achievable. As of the date of our analysis, the EOS mainnet is being deployed.

●  The Ethereum team is planning to shift from PoW to PoS by the end of 2018, and they are also looking into state sharding and the Plasma framework as well as some other solutions. Combined, these solutions may increase the Ethereum network’s throughput thousands of times more than its current 15 TPS. However, the above solutions will most likely not be implemented until at least 2019.

As can be seen from above, Solana with its pros and cons has a modest potential competitive advantage.

Team

The Solana project is represented by the following team members:

Anatoly Yakovenko

Position

Founder & CEO

Total experience

16+ years

Relevant experience

Yes

Relevant education

Yes

Professional achievements

Software Engineer at Dropbox Co-Founder at Alescere 4 patents

LinkedIn

Yes

Connections

500+

Endorsements / Recommendations

Yes

 

Greg Fitzgerald

Position

CTO

Total experience

17+ years

Relevant experience

Yes

Relevant education

Yes

Professional achievements

Senior Staff Software Engineer at Qualcomm Boulder

LinkedIn

Yes

Connections

500+

Endorsements / Recommendations

Yes


 

Raj Gokal

Position

Core Contributor

Total experience

8+ years

Relevant experience

Yes

Relevant education

Yes

Professional achievements

Director of Product at Omada Health

Co-Founder of Sano

1 publication

LinkedIn

Yes

Connections

500+

Endorsements / Recommendations

Yes

 

Eric Williams

Position

Chief Scientist

Total experience

15+ years

Relevant experience

Yes

Relevant education

Yes

Professional achievements

Co-Founder of Motion

Vice President of Data Science and Analytics at Omada Health

4 honors & awards

LinkedIn

Yes

Connections

500+

Endorsements / Recommendations

Yes

 

Stephen Akridge

Position

Engineering

Total experience

11+ years

Relevant experience

Yes

Relevant education

Yes

Professional achievements

Senior Software Engineer at Salesforce

Staff Engineer at Qualcomm

LinkedIn

Yes

Connections

155

Endorsements / Recommendations

Yes

 

Alan Yu

Position

Partnerships

Total experience

11+ years

Relevant experience

Yes

Relevant education

Yes

Professional achievements

Founder of Orderly

Account Executive at Google

LinkedIn

Yes

Connections

500+

Endorsements / Recommendations

Yes

   

Michael Vines

Position

Principal Engineer

Total experience

16+ years

Relevant experience

Yes

Relevant education

Yes

Professional achievements

Founder and Vice President of Engineering at Silk Labs

Senior Director of Technology at Qualcomm Innovation Center Inc.

3 patents

LinkedIn

Yes

Connections

319

Endorsements / Recommendations

Yes

 

Rob Walker

Position

Principal Engineer

Total experience

23+ years

Relevant experience

Yes

Relevant education

Yes

Professional achievements

Senior Director of Engineering at Qualcomm Incorporated

LinkedIn

Yes

Connections

275

Endorsements / Recommendations

Yes

 

Pankaj Garg

Position

Principal Engineer

Total experience

20+ years

Relevant experience

Yes

Relevant education

Yes

Professional achievements

Principal Engineer/Manager at Qualcomm Innovation Center

Principal Staff Software Engineer at Motorola

8 patents

LinkedIn

Yes

Connections

198

Endorsements / Recommendations

Yes

 

The project team consists of nine people with extensive experience in the tech field (they have previously worked for Qualcomm, Dropbox, Intel, Salesforce, etc). However, we draw attention to the lack of blockchain expertise.

Eric Williams (Chief Scientist) was co-founder & CDO of the Motion project until March, 2018; there is no information available on this project.

The project does not have any advisors.

On the project’s website there are no links to LinkedIn profiles, but all team members confirm their involvement with the Solana project.

Despite the fact that the project is at a very early development stage, Solana has managed to form partnerships with two other projects — GlobalID and Yaka Labs. These projects aim to deliver portable, private, secure identity for individual and group interactions as well as payments at scale.

Token and token price factor analytics

There is no information regarding ICO and token metrics as of July 24, 2018, therefore, a token analysis cannot be performed with any reasonable assurance. Closer to the ICO date, when the relevant information is disclosed, additional risks may come to the attention of stakeholders.

Investment risk analysis

 

RISK

DESCRIPTION

LEVEL

ICO details, terms and conditions cannot be verified. Smart contract code not available on GitHub.

We draw attention to the fact that the project is at an early stage (its ICO is not scheduled until Q1 2019). ICO details or token metrics are not specified in the white paper or on the project website. Therefore, it is not possible to draw conclusions regarding token economics, distribution scheme, use of proceeds, bounty program, etc. On the project’s official GitHub profile there is no smart contract code available yet. However, according to the team, they are currently focused on technical aspects of the project, and as the project is still more than 5 months away from its ICO, we do not consider this a risk as of July 24, 2018.

Disclaimer

Team composition and expertise

We note that the team lacks blockchain expertise or competence in cryptography. The project also lacks advisors. On the project’s website there are no links to LinkedIn profiles and one of the team members, also a co-founder, is simultaneously listed as co-founder & CDO of the Motion project until March, 2018; however, there is no information available about this project. The project currently does not have any advisors.

Medium

Commercial risks

The infrastructure space is starting to be more and more crowded and the Solana project arrives relatively late in the game. The whitepaper and website in its current state do not specify any features to help Solana to stand out against its competitors. Considering the strong academic and technical background and experience of the team, as well as the fact that the team is based in Silicon Valley, enabling them to collaborate with other startups in an ecosystem, they have the opportunity to gain an upper hand in this competitive space, which could partially offset this risk.                                   

Medium

Unclear project economy

The team does not disclose any detailed intended use of proceeds from the ICO, platform service fees are not specified, therefore potential revenue streams are unclear. In other words, as of July 24, 2018 it is unclear how the project will be monetized. We note that this risk is likely to lessen closer to the actual ICO date and when the relevant information about token metrics is disclosed.

Medium

Incomprehensive whitepaper

We note that the whitepaper has the following issues:

●  An absence of direct competitor analysis. As the infrastructure industry gets more crowded it is crucial to hold a competitive analysis and to emphasize the advantages of the Solana project.

●  Token and project economics are not clear (e.g. token metrics are not specified, pre-sale and public sale dates are not defined, etc.). It is unclear how the project will be monetized once launched.

●  Planned marketing activities and details of partnership plans are not covered in the whitepaper; it is impossible to analyze or draw relevant conclusions regarding potential market exposure.

This risk may decrease closer to the actual ICO date and when the relevant information is disclosed.

Medium

Incomprehensive roadmap

The roadmap does not contain any information about the pre-sale round. Another potential disadvantage is that the roadmap covers only technical aspects of the project and does not specify the business development process – e.g. when and how marketing activities will be performed, how many participants the company intends to reach by the end of 2018 and by 2019, etc. These risks are likely to decrease closer to the actual ICO date and when an updated version of whitepaper is released and/or the website is updated.

Low

 


 

The information contained in the document is for informational purposes only. ICORating received monetary compensation from the entity rated in this report for completing the ratings report.  

However, the entity rated in this report did not have the opportunity to approve this rating report before the report was published, nor did the rated entity have the opportunity to edit or remove this report once it was published. The views expressed in this document are solely those of the ICORating Team, based on data obtained from open access and information that developers provided to the team through Skype, email or other means of communication.

Our goal is to increase the transparency and reliability of the young ICO market and to minimize the risk of fraud. We appreciate feedback with constructive comments, suggestions and ideas on how to make the analysis more comprehensive and informative.