What is proof-of-history, and how does it work?

The need for proof-of-history, explained

As someone who has spent countless hours delving into the intricacies of various blockchain systems, I must admit that Solana’s approach to consensus and transaction processing is nothing short of impressive. The way they’ve managed to eliminate the need for a mempool using their unique Proof of History (PoH) mechanism is truly innovative.

In a decentralized system such as a blockchain, maintaining a unified sequence of transactions is a substantial hurdle. Typically, blockchains manage this synchronization by broadcasting blocks across the entire network. Yet, this method can introduce delays and prolong the confirmation of transactions, particularly as more devices participate in the network.

Anatoly Yakovenko, creator of Solana, recognized an issue called the “clock problem” and proposed a cryptographic method to tackle it by timestamping every transaction in a way that’s verifiable. This timestamping enables Solana to establish a chronological sequence of events without needing continuous network agreement on time or order. The unique solution, referred to as Proof-of-History, has become a defining characteristic of Solana, enabling it to maintain high speeds while preserving decentralization.

Solana is currently generating a lot of buzz as one of the leading layer-1 blockchains, largely because it offers exceptionally fast transaction rates and affordable costs. Underpinning its high-speed operation is a unique idea called Proof-of-History (PoH), which serves as the foundation for this powerful platform.

Instead of relying completely on consensus methods such as Proof-of-Work (PoW) like Bitcoin or Proof-of-Stake (PoS) like Ethereum, Solana utilizes a mix of Proof-of-History (PoH) and Proof-of-Stake to create a system that offers high speed and low latency.

As a researcher delving into blockchain technology, I can attest that this one-of-a-kind blend sets Solana apart from its peers, enabling it to process an impressive number of transactions per second. This unique trait effectively addresses and alleviates the significant bottlenecks encountered by other chains in their daily operations.

How proof-of-history (PoH) works

Proof-of-history operates by setting up a cryptographic timekeeper that dates every transaction, resulting in a sequence of events that verifies the exact time each transaction took place.

In this method, a Verifiable Delay Function (VDF) – specifically, one that leverages the SHA-256 hashing function in Solana’s context – is employed to generate a unbroken, sequential chain of hashes. Each hash is linked to the one preceding it, creating a distinct timeline.

One distinctive feature of PoH (Proof of History) is that each hash produced is both verifiable and reliant on the one that preceded it. This chain of hashes functions like a “clock” that all network nodes can synchronize with, enabling them to concur on transaction sequence without requiring direct communication. By validating blocks and transactions in a pre-determined order, nodes can expedite the entire process.

How PoH speeds up consensus on Solana

PoH (Proof of History) facilitates Solana with quicker and more efficient consensus by arranging transactions ahead of time. This results in short block times and the ability to process numerous transactions every second, potentially reaching thousands.

In conventional Proof-of-Stake (PoS) or Proof-of-Work (PoW) systems, the creation of blocks is facilitated by a system-wide agreement, where there’s a need for accord regarding each block’s timestamp and sequence.

PoH (Proof of History) enables Solana to bypass the consensus step through pre-ordering transactions. In simpler terms, this means that validators can immediately process transactions as they come in, without needing to wait for a network-wide agreement. This results in less communication being needed and faster, more efficient validation processes.

With Proof of History (PoH), Solana can achieve consensus far more swiftly as each node has access to a verifiable chronology that’s identical. This results in consistent and speedy block times – Solana often achieves 400-millisecond block times, which is quicker than numerous centralized systems. By tackling the synchronization problem, PoH empowers Solana to handle thousands of transactions per second with a high level of accuracy.

Interaction between proof-of-history and proof-of-stake

As a data analyst, I find that while Proof of History (PoH) outlines the sequence and timing of transactions, Proof of Stake (PoS) is responsible for the election of validators and maintaining the network’s overall security.

As a researcher studying Solana’s Proof of Stake system, I can share that validators in this network are chosen based on their investment, or stake. The larger the stake, the higher the chances a validator gets selected to append new blocks. This process of choosing validators based on their staked amount ensures the network’s security by making sure the interests of validators are closely tied with the overall health and well-being of the network.

PoH and PoS work together seamlessly. Here’s how:

• PoH provides the ordered list of events, while PoS determines who gets to add them to the blockchain. 
• The elected validator, also known as the “leader,” collects and orders transactions in line with PoH’s timestamps. This synergy between PoH and PoS allows Solana to maintain both speed and security, a balance that has been challenging for many other blockchains to achieve.

Role of the lead validator in block creation on Solana

In the context of Solana, a key validator, often referred to as the “lead,” is chosen to construct blocks within a specific timeframe, known as a slot. It’s this lead validator’s job to arrange and timestamp transactions in accordance with the Proof-of-History (PoH) timeline.

Using Proof of History (PoH), the leader ensures that every transaction is assigned a unique position or timestamp, thereby obviating the necessity for additional validators to verify the sequential order of transactions actively. This method simplifies the process and improves efficiency in the blockchain system.

Once the lead validator has created the block, it is then verified by other nodes. 

Because the block aligns with the Proof-of-History (PoH) schedule, verifying it happens swiftly and effectively. The key task of the primary verifier in Solana’s system is indispensable for its scalability, as it guarantees that blocks are swiftly generated and validated at high speeds.

The sequence of agreement unites Proof of History (PoH) and Proof of Stake (PoS), thereby creating a blockchain with high speed and minimal delay.

• Step 1: Validator leaders on Solana are chosen based on a stake-weighted system, where validators with larger Solana (SOL) stakes are more likely to be selected as leaders. This means entities that invest more in the network are more likely to be responsible for block production, promoting an alignment of incentives with network security.
• Step 2: The PoH consensus mechanism sets up a rotation schedule for leaders. The schedule is known in advance, and each leader is assigned a “slot,” which is a brief period (about 400 milliseconds) in which they will gather transactions and produce a block. This predictable rotation allows validators to anticipate when they will act as leaders, making it easier to prepare for upcoming responsibilities.
• Step 3: During its assigned slot, the leader gathers transactions from the network. The PoH mechanism enables the leader to timestamp each transaction with a unique cryptographic signature, creating an ordered sequence of transactions. This ordering is integral to PoH, allowing transactions to be verified and validated by other nodes in the correct sequence.
• Step 4: The leader then organizes the ordered transactions into a block, embedding a timestamp that aligns with the PoH sequence. This sequence acts as a historical record that confirms the transaction order without requiring every validator to reach a consensus on each transaction individually. The PoH timestamp also serves as proof that the transactions were processed in real-time, providing a verifiable ledger.
• Step 5: Once the block is created, the leader broadcasts it to the rest of the network using Solana’s Turbine protocol. Turbine divides the data into smaller packets and distributes them across validators, ensuring efficient propagation even with high transaction volumes.
• Step 6: Other validators receive the block and validate it against the PoH sequence, confirming that the timestamped order aligns with the expected historical record. Since the transactions are already pre-ordered by the leader, validators can quickly check the sequence without needing additional communication for ordering, accelerating the validation process.
• Step 7: After the block is validated, it is added to the blockchain, finalizing the transaction records. The role of the leader then rotates to the next scheduled validator, who begins collecting transactions for the following slot. This cycle continues and allows Solana to achieve continuous block production and maintain high throughput.

Additional innovations on Solana: Turbine and Pipelining

Beyond PoH, Solana also makes use of additional technological advancements such as Turbine and Pipelining to enhance performance even more.

In large networks, the flow of data may get sluggish and clogged, causing delays and backups. Turbine addresses this issue by dividing data into smaller chunks and sending them simultaneously across various nodes, much like BitTorrent divides files. This method keeps latency minimal and ensures high data transfer rates, particularly in a worldwide network.

In simpler terms, Solana’s pipeline design lets multiple phases of transaction handling occur at once. By distributing these tasks among available resources, it allows transactions to move smoothly without delay, boosting efficiency and capacity.

By merging Turbine and Pipelining technologies with Proof-of-History (PoH), Solana efficiently handles transactions at a fast pace, avoiding the typical chokepoints that conventional blockchains often encounter.

Why Solana has no mempool

On most blockchain networks, a mempool serves as a temporary storage for transactions that haven’t been confirmed yet. Solana, on the other hand, operates differently because it doesn’t use the traditional mempool due to its Proof of History (PoH) consensus mechanism. In Solana’s system, transactions are immediately timestamped once they enter the network, enabling them to be processed in real-time without needing a mempool for queueing purposes.

In real-time processing, there’s no need for a queue (mempool) because transactions aren’t made to wait their turn — they’re either swiftly accepted and organized or quickly discarded. By doing away with the mempool, Solana significantly decreases latency and guarantees that transactions are processed promptly, which is crucial for preserving its fast-paced performance.

Does PoH allow Solana to function without a mempool?

PoH’s unique timestamping function is what enables Solana to operate without a mempool.

Because PoH incorporates an inbuilt sequence for transactions, validators can promptly process transactions without requiring temporary storage. This instantaneous sorting streamlines the transaction process and enables the network to manage large volumes more efficiently, eliminating the complexity of maintaining a queue (or mempool) for transaction management.

Using Solana’s design ensures both swift performance and a well-managed balance between validator responsibilities, network security, and congestion prevention – making it one of the quickest blockchains currently operational.

Block leaders — a centralization vector in Solana’s PoH consensus model?

Choosing the same validators often as leaders in the Proof-of-Stake (PoS) mechanism might lead to a concentration of block production, thereby decreasing the variety of validators and amplifying risks associated with Maximal Extractable Value (MEV) extraction.

As a crypto investor, I understand that network leaders play a pivotal role in facilitating and verifying transactions within our digital ecosystem. However, if the same few validators are consistently selected as leaders, it might lead to a scenario where a small, well-resourced group could exert disproportionate control over block production. This could potentially limit the variety of participants actively involved in creating blocks for the network.

Block leaders serve as the exclusive transaction issuers and may potentially utilize Maximum Extractable Value (MEV) transactions to generate additional earnings. Nevertheless, the rapid pace of the chain diminishes MEV opportunities compared to slower networks. This aspect presents a risk inherent in the Proof-of-Stake (PoS) mechanism.