How does a $70 fee generate $50 billion in Solana?

Author: Thejaswini M A Source: www.thetokendispatch Translation: Shan Ouba, Golden Finance

Anatoly Yakovenko is somewhat annoyed.

It was the year 2017. News broke that the Bitcoin conference would stop accepting Bitcoin payments as transaction fees soared to $60-70 per transaction. The world’s top cryptocurrency event surprisingly could not actually use cryptocurrency.

So, he did what any frustrated engineer would do—went to Café Soleil in San Francisco, ordered two cups of coffee and a beer, and stayed up until 4 AM, pondering why Bitcoin was so slow. Between the second espresso and the last few sips of beer, Yakovenko had what he called his “Eureka moment”: a way to encode the passage of time as a data structure. At that moment, he didn’t realize that this thing already had a name (verifiable delay function), so he couldn’t Google it. He thought he had invented something completely new.

In a sense, he indeed did it. When Solana launched in 2020, it could handle 65,000 transactions per second. Nowadays, this blockchain built by Yakovenko in his garage reached a market value of over 50 billion dollars at its peak.

Cultivating System Thinkers

Yakovenko’s journey into the blockchain world began with an early immigration experience. Born in Ukraine in 1981, he moved to the United States with his family in the early 1990s, becoming part of the wave of Eastern European immigrants seeking opportunities during the tech boom in the U.S.

In his youth, he was attracted to the C language and became fascinated by the precision and powerful capabilities of low-level system programming. He later recalled the early days of coding during the internet bubble era, saying, “There was a magical feeling back then—writing a piece of code could solve an incredible problem for the world.”

While studying computer science at the University of Illinois at Urbana-Champaign (UIUC), Yakovenko founded his first company, Alescere, in the early 2000s, which was a VoIP (Voice over Internet Protocol) system aimed at small businesses. The company ultimately failed, but it allowed him to gain valuable experience in handling real-time network protocols.

In 2003, Yakovenko, who had just finished his startup, joined Qualcomm in San Diego. What started as a standard engineering job turned into a journey of technical challenges lasting 13 years.

He has participated in various projects from the QChat instant messaging server to the BREW mobile operating system, eventually rising to the position of Senior Engineering Manager. He also optimized the communication methods between different processors, becoming an expert in “safely extending operating system services and protection domains to auxiliary processors”—essentially researching how to enable different parts of a computer system to collaborate efficiently without slowing each other down.

His list of patents during that period was almost a blueprint for his later work in blockchain: “Exposing Host Operating System Services to Co-Processors” and “Extending Protection Domains to Co-Processors.” His core focus was on reducing overhead and enhancing coordination efficiency among distributed components.

“I started to think about how we at Qualcomm use wireless protocols to solve these scalability issues, which led me down the ‘rabbit hole’ of research.” he said.

The cellular base station technology he was studying at the time used a method called “Time Division Multiple Access,” which coordinates multiple signals through precise time management. In 2017, after working at Qualcomm for over a decade, Yakovenko moved to Dropbox to work on compression and distributed systems. However, what changed everything was his side business.

He and Qualcomm’s GPU head Stephen Akridge are working on deep learning hardware while mining cryptocurrency in the background to offset costs. The initial focus was on machine learning, not blockchain innovation.

But as Yakovenko watched the mining machines coordinate with thousands of other computers, one question always troubled him: why is the efficiency of proof of work so low? Bitcoin transaction fees soared to $60-70 per transaction, and this network, originally intended to realize peer-to-peer electronic cash, couldn’t even handle basic payments. The news from the Bitcoin conference only fueled his frustration. It was then that the moment at Café Soleil happened.

“Historical Proof” Breakthrough

Imagine this: ten thousand people trying to agree on “what happened and when it happened.” Everyone is shouting loudly, and the scene is chaotic.

This is basically how Bitcoin operates. But the problem is not just noise.

A new block is generated every 10 minutes for Bitcoin, which is a careful balance between security and speed. If block generation is faster, the risk is that the network may split into multiple competing versions; if it is slower, transaction confirmations will take a long time. This 10-minute rhythm means that Bitcoin can only process about 7 transactions per second.

In comparison, Visa can process about 24,000 transactions per second.

The real problem is that in a distributed system composed of thousands of computers worldwide, there is no central clock. Each computer’s clock has slight deviations, and network messages also take time to transmit. The order of events may appear different at different locations.

Thus, thousands of Bitcoin nodes spend most of their time debating some fundamental issues:

“Did this transaction happen before that one?”

“When was this block created?”

“Which version of the blockchain is the correct one?”

The more computers participate, the more debates there are.

Yakovenko came up with an idea—what if there was no need to argue about time at all? What if the blockchain came with a clock that no one could forge? Each transaction would automatically carry a timestamp that everyone could independently verify.

In this way, nodes do not need to continuously send messages to each other to synchronize time; they can immediately know the order of events just by looking at the same tamper-proof clock.

No more endless back-and-forth messages—just a precise timing crypto stopwatch.

He calls it historical proof. Replace debate with calculation. Instead of spending countless conversations to align time, just look at the clock. Simple.

Build Solana

With this breakthrough, in 2018, Yakovenko co-founded Solana Labs with another Qualcomm veteran, Greg Fitzgerald, and Raj Gokal. The name comes from their experiences surfing at Solana Beach in California.

The daily routine of the co-founders is: surfing in the morning, biking to work, coding all day, and returning to the beach in the evening.

They built Solana during the crypto winter of 2018-2019, a time when funding was scarce and enthusiasm had waned. But Yakovenko saw this as an advantage, allowing them to focus on engineering without hype and pressure.

He recalled: “It was like a meteorite impact that wiped out the dinosaurs. It really is a crypto winter, and you will see many teams collapse. We have always been relatively conservative, never raising a lot of funds, only having about two years’ worth of capital reserves, so we always tell ourselves - we must get this thing done as soon as possible and focus on the core products that we believe can bring about change.” What the team is doing is not just “historical proof.” They have also built a complete innovative system that supports high throughput:

• Sealevel: A parallel smart contract runtime that allows the blockchain to run multiple transactions simultaneously by pre-declaring the accounts that the transactions will touch.
• Turbine: A data propagation system inspired by BitTorrent, which utilizes erasure codes and a randomized proof-of-stake tree to distribute transaction data across the network.
• Gulf Stream: A forwarding system without a trading pool that sends transactions to future leader nodes before the block-producing node starts producing blocks.
• Cloudbreak: A horizontally scalable account storage system designed for high-concurrency access.

Every innovation targets different bottlenecks, combining to create an unprecedented effect—a blockchain that grows larger and faster. On March 16, 2020, the world was thrown into chaos—stock markets plummeted, countries went into lockdown, and numerous startups collapsed. On this day, Yakovenko chose to launch Solana. A few months later, it proved to be the best time to launch the world’s fastest blockchain. By the end of 2020, Solana had processed 8.3 billion transactions, generated 54 million blocks, and attracted over 100 project integrations in the DeFi, gaming, and Web3 sectors. The number of global validator nodes grew to over 300, which is quite impressive for a network that was less than a year old.

Developers are beginning to build applications that were previously impossible on slow blockchains — high-frequency trading systems, real-time games, social media platforms — for the first time in blockchain history.

Downtime Era

Success has brought new challenges. Solana’s high throughput makes it a target for malicious traffic attacks, exposing systemic weaknesses.

• September 14, 2021: Surge in transactions during Grape IDO led to network forks and a 17-hour downtime.
• May 1, 2022: The automated NFT “blind minting” robot caused a consensus collapse, resulting in 7-8 hours of downtime.
• May 31, 2022: Offline trading processing vulnerability causes a 4.5-hour outage.
• October 1, 2022: Configuration error caused a 6-hour downtime.

Critics argue that these incidents prove Solana sacrifices decentralization for speed. Its monolithic architecture means that once an issue arises, it can “collapse” dramatically. The team’s response is systematic improvements: better deduplication, improved random number handling, fixing fork selection vulnerabilities, and introducing the QUIC protocol to enhance network reliability.

November 2022, Solana faced its greatest test - the collapse of FTX.

Sam Bankman-Fried is one of the most prominent supporters of Solana. When his exchange collapsed, panic spread, and investors thought that everything associated with FTX would go down as well. The price of Solana tokens plummeted, and people sold off their holdings in a frenzy.

The Solana community did not wait for others to come to their rescue.

FTX controls a popular trading platform called Serum, which many Solana users rely on. After FTX collapsed, this platform was essentially abandoned, and no one knows what will happen next.

Within a few hours, Solana developers and community members took action to copy all the code of Serum and created their own version—OpenBook, completely independent of FTX. This operation is technically termed a “fork,” which means creating a new version with the same functionality but without the ownership issues.

Throughout the entire crisis, Solana itself never stopped operating. During the price crash and the spread of panic, the blockchain continued to process transactions—without downtime or technical failures. Unlike traditional companies, Solana is greater than any single individual or company. The technology and the community can survive independently.

Future Vision

At 44 years old, Yakovenko still maintains a unique combination of engineering pragmatism and crypto idealism—typical traits of a successful blockchain founder. He advocates for establishing “reasonable rules”, such as legislators should personally use the technology before implementing regulations.

Interestingly, despite hoping for favorable policies for cryptocurrency, he opposed the government crypto reserve plan proposed by Trump—arguing that it was too centralized. This principled stance raises doubts about his suitability for politics. He prefers to see innovation develop organically rather than be controlled by bureaucrats, even if those bureaucrats happen to support his blockchain.

His ultimate vision is to build Solana into the infrastructure of global finance, allowing the flow of information to be as fast as the spread of news.

Even in the so-called “blockchain war” where it competes directly with Ethereum, Yakovenko rejects tribal thinking. He insists that different blockchains can coexist and complement each other, rather than engage in a life-and-death struggle—this is a rare mature mindset in an industry where people often predict the “zeroing” of one another’s protocols over minor technical disagreements.

Yakovenko created one of the world’s most powerful distributed computers with a seemingly simple insight that trapped everyone at the time—transforming time itself into a data structure on the blockchain.

With an estimated net worth between 500 million and 800 million USD, he has reached a state of financial freedom where he can focus on building rather than accumulating wealth.

And true recognition is beginning to arrive in the most important form in the financial sector: other people’s money. Currently, four publicly traded companies hold over 591 million dollars worth of Solana tokens in their corporate treasury, with Upexi accumulating 1.9 million SOL tokens in just four months. SOL Strategies has adopted a more robust dollar-cost averaging approach. Classover Holdings announced plans for a potential 500 million dollar investment in Solana, while Trump’s proposed U.S. strategic crypto reserve also lists Solana alongside Bitcoin and Ethereum as strategic assets.

When publicly traded companies start holding your blockchain tokens like they hold government bonds, you have likely created something truly meaningful.

The adoption by institutions indicates that Yakovenko’s vision of transforming Solana into a global financial infrastructure may not be as far-fetched as it sounds. Asset management companies, from Franklin Templeton to Fidelity, are applying for Solana spot ETFs; companies are also starting to use SOL as treasury reserves, for the same reasons as holding BTC or ETH: it is both a store of value and a potential engine for the future financial system.

If that moment of frustration at Café Soleil really sparked a breakthrough that allows money to flow at the speed of light, then corporate financial executives have started to take notice.

This is the whole story about the founder of Solana.