From garage to $50 billion market capitalization: The encryption legend of Solana's founder

Author: Thejaswini, Source: Token Dispatch

Anatoly Yakovenko was very annoyed at the time.

It was 2017 when a news report stated: The Bitcoin conference announced it would stop accepting Bitcoin payments because the transaction fees had soared to $60-70 per transaction. This global top cryptocurrency event was unable to use cryptocurrency.

So he did what any frustrated engineer would do - walked into Café Soleil in San Francisco, ordered two cups of coffee and a bottle of beer, and stayed up until four in the morning thinking: why is Bitcoin so slow?

Between the second cup of espresso and the last sip of beer, Yakovenko experienced his "Eureka moment": a method of encoding the passage of time into a data structure. At that time, he didn't know it was called a "verifiable delay function," couldn't search for it on Google, and even thought he had invented a completely new concept.

In a sense, he did achieve it.

When Solana launched in 2020, it could handle 65,000 transactions per second. Today, this blockchain, built by Yakovenko in his garage, has a peak market value of over 50 billion dollars.

The Birth of a Systems Thinker

Yakovenko's blockchain journey began with an immigration story. Born in Ukraine in 1981, he moved to the United States with his family in the early 1990s, becoming part of the Eastern European wave of immigrants seeking technological opportunities.

In his youth, the precision and power of the C language attracted him. "There is a magical power in writing code to solve world-class problems," he said while reminiscing about his first programming experience during the internet bubble era.

While studying computer science at the University of Illinois at Urbana-Champaign, Yakovenko founded his first startup, Alescere, in the early 2000s—providing VoIP systems for small and medium-sized enterprises. Although the company failed, it allowed him to gain key experience in real-time network protocols.

In 2003, with entrepreneurial experience, Yakovenko joined Qualcomm in San Diego. A standard engineering position evolved into a journey lasting 13 years, during which he solved the company’s most challenging technical problems.

His work involves everything from the instant messaging server of QChat to the BREW mobile operating system, ultimately becoming a senior engineering manager. He also optimized the communication methods between different processors. Yakovenko became an expert in "safely extending operating system services and protection domains to auxiliary processors," essentially studying how to make different parts of computer systems work together without dragging each other down.

His patent portfolio during this period was like a blueprint for his later blockchain work: "exposing host operating system services to coprocessors" and "extending protection domains to coprocessors." His focus was on minimizing overhead and improving coordination efficiency between distributed components.

"I started to think about how we at Qualcomm use wireless protocols to address the scalability of such issues, and it was this that led me to delve deeper into it," he recalled.

He once worked on cellular base station technology that used a technique called "Time Division Multiple Access," which is a method of coordinating multiple signals by carefully managing time. In 2017, after working at Qualcomm for over a decade, Yakovenko began working at Dropbox on compression and distributed systems. But what really changed everything was his side project.

He and the former GPU head Stephen Akridge, who also worked at Qualcomm, built hardware for deep learning in their spare time while mining to offset costs. The original intention of this project was about machine learning, not blockchain innovation.

However, as Yakovenko watched their mining equipment coordinate with thousands of other computers, one question always troubled him: why is Proof-of-Work so inefficient?

At that time, the transaction fees for Bitcoin had soared to $60-70 per transaction. This was supposed to be a peer-to-peer electronic cash network, yet it could not handle basic payments. The events of the Bitcoin conference further fueled his concerns.

All of this ultimately gave rise to that night of epiphany at Café Soleil.

Breakthrough of Proof of History

Imagine this: 10,000 people trying to agree on the time something happened. Everyone is arguing, and the scene is chaotic.

This is basically how Bitcoin works. But the issues with Bitcoin run deeper than just "noise."

A new block is generated every 10 minutes for Bitcoin, which is a careful balance struck between security and speed. If the speed were faster, there's a risk of the network splitting into competing versions. If the speed were slower, transactions would take a considerable amount of time. This 10-minute time frame means that Bitcoin can only process about 7 transactions per second.

In comparison, Visa processes about 24,000 transactions per second.

The real crux of the matter is that in a distributed system made up of thousands of computers around the world, there is no central clock. Each computer's clock runs at slightly different speeds. Network messages take time to transmit. The order of events may appear different depending on your location.

Thousands of Bitcoin computers spend most of their time debating these fundamental questions: "Did this transaction occur before that transaction?" "What time was this block created?" "Which version of the blockchain is correct?"

The more computers that join, the more debates there are.

Yakovenko had an idea. What if there is no need to debate time?

What if the blockchain had its own built-in, tamper-proof clock? Every transaction would automatically receive a timestamp that anyone could independently verify.

In this way, thousands of computers no longer need to constantly send messages to reach a consensus on time; they only need to check the same tamper-proof clock to immediately know the order of events.

There are no endless back-and-forth arguments, only a precisely timed crypto stopwatch.

He calls it "Proof of History."

Replace arguments with computation. Instead of having thousands of conversations about time synchronization, just check the clock directly. It's that simple.

Build Solana

With this breakthrough, Yakovenko co-founded Solana Labs in 2018 with Greg Fitzgerald (another former Qualcomm employee) and Raj Gokal. The company name is derived from their surfing moments at Solana Beach in California.

The founders wake up every day, surf first, then bike to work, code all day, and then return to the beach.

They were developing during the "crypto winter" of 2018-2019, when funds were scarce and market enthusiasm had long faded. But Yakovenko sees this as an advantage. They could focus on the engineering itself, without the influence of hype and pressure.

He recalled, "It's like the meteor that killed the dinosaurs. At that time, it was indeed a crypto winter, and you saw many teams disbanding. We have always been relatively conservative, never raising large amounts of money, only having about two years of operating funds, so we were always thinking 'we need to get this thing done as quickly as possible, really focusing on the core product that we believe can make a difference.'"

The team not only built a "historical proof." They also created a complete set of innovative ecosystems to support high throughput:

• Sealevel: A parallel smart contract runtime that allows the blockchain to execute multiple transactions simultaneously by pre-declaring the accounts that transactions will touch.
• Turbine: A BitTorrent-inspired system that uses erasure coding and a random, stake-weighted tree structure to propagate transaction data across the network.
• Gulf Stream: A transaction forwarding system without a memory pool that can send transactions to future leaders before the leader starts generating blocks.
• Cloudbreak: A horizontal account storage system designed for high concurrent access.

Each innovation addresses different bottlenecks. Together, they create something unprecedented—a blockchain that becomes faster as it scales.

On March 16, 2020, the world was falling apart. Stock markets were crashing, countries were locked down, and startups were failing everywhere. However, Yakovenko chose this day to launch Solana. A few months later, it turned out he had chosen the perfect time to launch the fastest blockchain in the world.

By the end of 2020, Solana had processed 8.3 billion transactions, created 54 million blocks, and attracted integrations from over 100 projects in fields such as DeFi, gaming, and Web3. The number of validators grew to over 300 nodes worldwide, which is an impressive figure for a network that has been live for less than a year.

Developers are starting to build applications on slower blockchains that were previously impossible: high-frequency trading systems, real-time games, and social media platforms, which has become possible for the first time in blockchain history.

Downtime Incident

Success has brought new challenges. Solana's high throughput has made it a target for malicious traffic and exposed systemic weaknesses.

• September 14, 2021: During a Grape IDO, a surge in trading volume caused a network fork, resulting in 17 hours of downtime.
• May 1, 2022: The automated NFT "blind minting" robot caused a consensus crash, resulting in the network being offline for 7-8 hours.
• May 31, 2022: A vulnerability in offline transaction processing caused 4.5 hours of downtime.
• October 1, 2022: A configuration error caused a 6-hour downtime.

Critics seize on these events to prove that Solana sacrifices decentralization for speed. This "monolithic" design means that when something goes wrong in one place, the entire system can crash completely.

The team's response to this is to implement systematic improvements. Better deduplication, improved nonce handling, fixing errors in fork selection, and introducing protocols like QUIC to enhance network reliability.

In November 2022, Solana faced its biggest challenge - the collapse of FTX.

Sam Bankman-Fried was once one of the most prominent supporters of Solana, and panic quickly spread when his exchange collapsed. Investors widely believed that anything associated with FTX would fail. As people rushed to sell, the price of Solana tokens plummeted.

The Solana community does not wait for others to solve problems.

FTX once controlled a popular trading platform called Serum, which many Solana users relied on. When FTX collapsed, this platform essentially became an "orphan." No one knows where it will go from here.

In just a few hours, Solana developers and community members took action. They copied all the code from Serum and created their own version called OpenBook, completely independent of FTX.

This technical term is called "forking," which means creating a new version that operates in exactly the same way, but ownership is no longer an issue.

Throughout the entire crisis, Solana itself never stopped working.

Despite the price crash and the spread of panic, the blockchain continues to process transactions. There is no downtime and no technical failures.

Unlike traditional companies, the arrest of their CEOs may lead to the collapse of the company, whereas Solana has grown larger than any individual or company that supports it. This technology and community can survive independently.

Looking to the Future

At 44 years old, Yakovenko has built something remarkable while maintaining a unique quality that combines engineering pragmatism with crypto idealism, which is a common trait among successful blockchain founders.

He advocates what he calls "wise rules," such as lawmakers should try using technology before regulating it.

Strangely, despite his hope for the introduction of crypto-friendly policies, he opposed Trump's idea of establishing a government crypto reserve.

He believes that this is too centralized, which is a principled stance that makes you wonder whether he is really suited for politics. He would rather see innovation thrive organically than see the government control digital currency, even if those people happen to like the blockchain he created.

His ultimate vision is to establish Solana as the global financial infrastructure, allowing information and funds to flow at the speed of light.

Even though Solana competes directly with Ethereum in the so-called "blockchain wars" of the crypto world, Yakovenko rejects tribalist thinking. He firmly believes that different blockchains can coexist and complement each other, rather than fighting to the death. In this industry, people often predict that a competitor's protocol will "go to zero" due to minor technical differences, and his perspective seems remarkably mature.

Through an insight that now seems obvious in hindsight, but once confused everyone, Yakovenko built one of the world's most powerful distributed computers.

That is to turn time itself into a blockchain data structure.

He estimates that his net worth is between 500 million and 800 million dollars, having achieved financial success that allows him to focus on building rather than wealth accumulation.

But the form of verification that can best prove its value in the financial sector is coming: external funding.

Four publicly traded companies now hold over $591 million worth of Solana tokens in their corporate treasuries, with Upexi leading the way by accumulating 1.9 million SOL tokens in just four months. SOL Strategies has adopted a more systematic dollar-cost averaging approach. Classover Holdings announced a potential $500 million investment plan in Solana, while Solana has also been listed as a strategic asset alongside Bitcoin and Ethereum in the proposed U.S. Strategic Crypto Reserve by Trump.

The adoption by institutions indicates that Yakovenko's vision of building Solana as a global financial infrastructure may not be as far-fetched as it sounds.

As institutions like Franklin Templeton apply for Solana spot ETFs, four listed companies hold $591 million in SOL (including Upexi hoarding 1.9 million coins for four months), Yakovenko's vision is gaining capital validation. When companies start viewing SOL as equivalent to U.S. Treasuries, that late-night inspiration at Café Soleil may truly reshape the financial system.

This is the story of the founder of Solana.