Solana’s DeFi ecosystem has exploded over the past year, with the ease of trading meme coins attracting more participants to this layer-1 chain. The latest stats on Lama DeFi has a total value locked (TVL) of $4.7 billion, nearly 3x since the start of 2024.
Behind this success is the Solana Virtual Machine (SVM), the blockchain’s runtime software that performs similar functions to Ethereum’s Virtual Machine (EVM): executing smart contracts and processing transactions. However, unlike the EVM, Solana’s runtime environment is more efficient; it can handle up to 4,000 transactions per second (tps) while the EVM claims an average of 30 tps.
In the following sections of this article, we will explain how SVM works, what makes it superior, and the innovations built on top of it to extend its value proposition beyond Solana’s DeFi ecosystem to the broader Web3 space.
SVM explained
In the context of smart contract networks, a virtual machine is simply the software designed to execute programs and update the state of the blockchain. In the case of Solana, the SVM plays an important role in enabling the seamless execution of these functions.
How exactly?
Program execution
Solana smart contracts can be written in multiple languages, including C, C++, and Rust. However, for the programs to be validated efficiently, these languages must be compiled into BPF bytecode to make the execution process transparent to Solana’s decentralized network of validators. The SVM is responsible for this compilation.
Changing the state of the blockchain
Each Solana node (validators) runs its own environment isolated from the SVM; consensus on network updates can only be reached if the nodes agree. So when a smart contract is deployed and requires changes to the blockchain, the SVM communicates these updates to individual nodes, which then translate and approve the updates.
Horizontal scaling
The main reason why SVM is faster than EVM is due to a unique engine called “Sealevel”. This unique feature allows multiple smart contracts to be executed simultaneously, unlike Ethereum’s VM, where smart contracts can only be processed one at a time. In simple terms, the Sealevel component of SVM supports parallel transactions, which makes it easier to scale the network.
SVM beyond the Solana ecosystem
The SVM has proven to be a valuable execution environment by significantly reducing the operational costs of Solana’s DeFi applications while improving the speed at which transactions are completed. But what’s even more exciting is that the value of this VM is also being felt on other blockchain networks.
For example, Zeus Networka cross-chain communication layer, is currently building an interoperable DeFi ecosystem powered by SVM. Key to the operations of this permissionless layer is the Zeus Programmable Library, a network of pluggable and programmable nodes designed to allow Web3 developers to seamlessly deploy or integrate DApps or services from other smart contract environments to SVM.
This seamless interoperability is essential to the expansion of the Web3 ecosystem, which has long struggled as most blockchains operated in siloed environments. The Zeus Network has also gone further to provide additional security through fraud proof and programmable signatures. In doing so, this blockchain-agnostic platform built by SVM not only provides interoperability, but also a secure platform for building decentralized applications.
Although it is a nascent DeFi ecosystem, the first interoperability-focused DApp, APOLLO, has already launched its public testnet on the Zeus Network. What stands out about this DApp is its specific goal of bringing Bitcoin liquidity to Solana’s DeFi ecosystem. At the time of writing, there is nearly $1 trillion in unused BTC, most of which owners cannot move on Web3 due to limited options. APOLLO addresses this gap by enabling more Bitcoin-native assets to be used in Solana’s fast-growing DeFi portfolio, which includes GameFi DApps, NFTs, and more.
SVM Cumuls
Similar to Ethereum’s opportunistic and zero-knowledge (ZK) chains, SVM has also become a fundamental building block for rollups. One notable project currently leveraging SVM on this front is Finished – an opportunistic rollup that allows developers to deploy Solana-based smart contracts in minutes.
At the heart of this SVM rollup is a cloud platform that essentially allows any interested Web3 innovator to launch their projects with their favorite Solana frameworks, as well as the flexibility to customize projects with modular options.
Eclipse is another popular staking solution that has leveraged Solana’s Sealevel virtual machine, launching the Polygon SVM in 2023 as part of its DeFi interoperability product suite. According to a comment According to Neel Somani, CEO of Eclipse, the collaboration between the Polygon and Solana communities provides an opportunity to develop even more powerful scaling solutions.
The future of DeFi?
For some time now, Solana has been touted as the Ethereum killer, though many skeptics strongly disagree. While it’s still too early to conclusively say that the former will emerge victorious, the latest statistics point to a situation where we’re likely to see more DeFi activity on Solana in the next bull cycle.
The reason behind this argument is simple: SVM has proven its efficiency compared to EVM, the price of Solana’s native token has performed better than ETH over the past year, it is much easier and cheaper to use Solana, and finally, the meme coin craze, which has been a driving force in past cycles, is now thriving more on Solana than on Ethereum.
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