In the recent market downturn, investors are either shilly-shallying, wondering if the bull cycle is over, or painfully clearing positions, but a team is making big moves.
It is reported by The Block that, on May 21, 2021, FTX Exchange is raising $1 billion in its latest funding round, which would take its valuation to $20 billion. On June 6, FTX Exchange announced signing a naming rights deal with U.S. professional esports organization TSM for $210 million.
On June 9, Solana Labs, a public chain development team, closes a $314 million funding round, according to The Block.
Behind FTX and Solana, there is a key person — Sam Bankman-Fried, a vegan worth tens of billions of dollars. His story with the crypto industry starts from the year of his graduation.
Sam’s growth in the crypto industry
In 2013, like many other fresh graduates, Sam Bankman-Fried, an “ordinary” MIT student who was about to graduate with a degree in Physics, had misgivings in career choices. By chance, he listened to a speech by Will McCaskill, co-founder of Giving What We Can, 80,000 Hours, and The Center for Effective Altruism, who mentioned that people could exert a positive impact on the world by making money during the “80,000 hours” in the workplace. Deeply influenced by his father who believes in utilitarianism since his childhood, Sam aspires to devote himself to making the world a better place, and following veganism is one of the practices. This speech has dawned on him that the key to making the world better lies in “positive changes”, not “whether he is the one who creates the changes with his own hands”.
Sam decided to “make money for donation”. After graduating in 2014, referred by a partner at The Center for Effective Altruism, he joined Jane Street Capital, a quantitative proprietary trading firm on Wall Street, which promised him a high salary. In the first few years in the workplace, Sam made a lot of money and donated hundreds of thousands of dollars to some influential organizations to fund projects promoting animal welfare and seeking a long-term future.
Sam had his first introduction to cryptocurrency when working at Jane Street, and founded Alameda Research with his colleagues at The Center for Effective Altruism. It is now one of the world’s largest cryptocurrency market makers and manages approximately US$1 billion with a daily trading volume of around US$1.5–2 billion.
Unlike many Bitcoin investors who became billionaires by hoarding coins in the early days, Sam made his fortune from Bitcoin arbitrage. At the beginning of 2018, he saw a 30% premium between Bitcoin on the Korean exchange and the US market but failed to implement the arbitrage plan due to South Korea’s foreign exchange control. Then he turned to Japan where there was a price difference as well. Within a month or so, he earned his first pot of gold of $750 million from the lucrative Bitcoin arbitrage opportunities in Japan.
But Sam’s ambitions for cryptocurrency went beyond Alameda Research. He founded the derivatives cryptocurrency exchange FTX in 2019, and then in 2021, he created Serum, a decentralized derivatives exchange.
Sam and Solana
Followers of Sam Bankman-Fried’s Twitter must have found a close connection between him and the Solana ecosystem where some projects even bear his title. It is worth mentioning that Sam was not the founder of Solana. Instead, the company was founded at the end of 2017 by former engineers of Qualcomm, Intel, and Dropbox.
Serum is the first link between Sam and Solana. Once in an interview, he mentioned the underlying reason behind his preference for Solana over Ethereum when building the decentralized FTX. It is because Solana uses a unique consensus protocol known as Proof of History (PoH) to deliver scalability, and, despite being less decentralized than Ethereum, it offers more opportunities for participation compared with blockchains that are more scalable. According to the data website The Block, as of the date of publication, the transaction volume of Serum DEX peaked in May 2021, with a monthly transaction volume of around $1.63 billion.
Solana’s extraordinary performance
Whether in SOL, ecosystem construction, or media publicity, Solana has achieved dazzling performance. As of June 2021, Solana’s native token SOL, which was listed more than a year ago on the mainnet, ranks among the top 15 in CoinMarketCap’s ranking list by market capitalization and is observed with a rebound faster than the average in every slump. In the summer of 2021, Solana frequently hit the headline for the popular Hackathon Competition. According to Solana’s official website, it now has over 200 ecological partners.
The author believes that there are three key factors behind Solana’s success: technology, operation, and capital.
From a technical perspective, Solana claims to build a Web-level blockchain, which aims to deliver scalability without sacrificing decentralization or security and support all fast, secure and scalable DApps.
Solana uses technologies such as the Proof of History for scaling, which bring along a low cost (a negligible transaction fee of 0.00005 SOL for each transfer), high performance (TPS up to 500,000), and fast speed (0.4 seconds for block confirmation). In most cases, the TPS of Solana’s blockchain is maintained at around 1,000, far below the full load limit. While maintaining high performance, Solana has also realized decentralization to some extent, as evidenced by the over 500 nodes around the world.
But for developers and users, there is still room for improvement in Solana’s technology. On the one hand, Solana now supports the Rust language and the C language, but the two, especially the former, mean a threshold to most developers. On the other hand, Solona’s wallet currently developed is somewhat user-unfriendly, but Solana also revealed its intention of optimization.
In terms of operation, the online hackathon in 2021 can be considered as part of Solana’s global layout strategy. According to Solana, this competition has received over 13,000 applicants and more than 350 teams of projects covering DeFi, NFT, Web3, and other segments. In addition to the $1 million global prize pool, participants from different countries/regions also have the
l A $125,000 prize pool sponsored by Serum and Raydium for the China Division;
l A $50,000 prize pool sponsored by Devfoli and CoinDCX for the India Division;
l A $180,000 prize pool sponsored by Hacken for the Eastern Europe Division;
l A $25,000 prize pool sponsored by BRZ for the Brazil Division;
l A $25,000 prize pool sponsored by Blockchain Nigeria and Bundle for the Africa Division; and
l A $25,000 prize pool sponsored by Kyber and Coin98 for the Vietnam Division.
In addition to hackathons, Solana has also offered grants and workshops to inspire more high-quality projects.
Take a look at its capital. As of June 2021, Solana has a total of 13 ecological funds, including Coin98 Ecosystem Fund, Hashkey, Rok Capital, NGC Ventures, BRZ Ecosystem Fund, Blocksync Ventures, CoinDCX Ecosystem Fund, Math Global Foundation, Huobi Ecosystem, OKEx Blockdream Ventures, Hacken & Gate.io Ecosystem Fund, MXC Ecosystem Fund, and Gate Labs (listed in no particular order). In addition, many of Solana’s ecological projects are backed by cryptocurrency investment institutions such as Alameda Research, Multicoin Capital, and Three Arrow Capital.
In general, technology forms the backbone of Solana’s ecosystem, while operation and capital are the icings on the cake.
Solana’s scalability frees developers from issues such as network congestion and high transaction fees facing DApps, thereby attracting some developers. However, the good underlying technology will become meaningless without interactive experience. Therefore, at this stage when the technical foundation is consolidated, Solana needs to make itself noticed by more developers through large-scale publicity and also draw abundant funds to attract a large number of developers to the public chain. Obviously, Solana has made it.
As Solana receives increasing projects, with arbitrary combinations of the protocols, explosive growth in both the number of projects and the capital size will be observed. At that time, security and stability should come first, and Solana will once again focus on technology upgrades, stable scaling of blockchain performance, and improvement of development tools.