Proof of History: Solana’s Synchronization Algorithm

Node synchronization is crucial in any blockchain, as it ensures the timely exchange of network state information among nodes to maintain consensus. The swifter this exchange, the faster transactions get processed.

Blockchain's speed still trails behind traditional financial systems. Bitcoin can handle 6 TPS (transactions per second), Ethereum 15 TPS, and Cosmos 1,400 TPS, whereas Mastercard processes 5,000 TPS and Visa 24,000 TPS.

The Proof of History algorithm, developed and used primarily by Solana, addresses node synchronization and bolsters transaction speed. This mechanism, combined with rigorous computational demands on nodes, has catapulted Solana's blockchain to an unprecedented speed among networks, reaching 65,000 TPS, as claimed by its developers. 

Blockchain TPS comparison chart. Source: supraoracles.com

This article will elaborate on the PoH workings, its use cases, and the technology's limitations. 

What is Proof of History?

Proof of History (PoH) is a blockchain synchronization technology developed by Solana Labs in 2018.

PoH significantly boosts the security and effectiveness of blockchains, especially those capable of high transaction throughput. For instance, Solana's capability to handle more than 60,000 transactions per second is largely due to the implementation of the Proof of History algorithm.

To understand how PoH works, it's essential to define the term “timestamp” and examine the process of time synchronization in a decentralized network.

Time Synchronization in Blockchain

For any system to function properly, all its components must be synchronized. Imagine being an air traffic controller requiring instant data on each aircraft's movement and managing their flight speed and altitude. If any pilot's clock lags or rushes, it could lead to aviation issues.

In conventional systems, this is addressed using centralized clocks. Every smartphone or device checks the time against a central source when connected to the Internet. But how does blockchain handle this?

Blockchain employs a principle called timestamping. These timestamps identify the moment a particular block was mined and are crucial for maintaining consensus.

Time synchronization in most blockchains relies on prompt adjustment using the median of these timestamps. This median is calculated by collecting local time from all nodes and finding their median.

However, this median-based synchronization can be slow, as each node must send its local time, and then the system computes and redistributes the median. To solve this, Proof of History can be implemented, embedding these timestamps into the blockchain itself through Verifiable Delay Functions (VDFs).

How Proof of History Works

Blockchain networks employing Proof of History (PoH) generate a timestamp to validate that a transaction occurred at a specific time. PoH offers a cryptographic means to prove the sequence of transactions and identify events using VDFs.

VDFs are functions requiring a reasonable amount of sequential computation for assessment, akin to mining in Proof-of-Work systems. Once a solution is determined, any node can quickly verify its accuracy.

This solution allows the provider to demonstrate that a certain amount of time was spent performing the function, in such a manner that a validator can rapidly check the result.

The timestamp created by the VDF is then incorporated into each blockchain block, ensuring a verifiable and immutable record of the transaction timeline. After a block is appended to the blockchain, it is deemed completed and irreversible.

The objective of VDFs is to introduce a minimal time delay, allowing other nodes immediate access to information. VDFs are instrumental in pinpointing when a transaction was carried out.

Limitations of Proof of History

Despite the benefits of Proof of History, such as transaction speed and ensuring network immutability, the technology faces certain limitations. The most significant of these include:

• Reliance on a Reliable Time Source: The dependability of timestamps in PoH relies on the reliability of the time sources used for their generation.
• High Computational Power Requirements for Nodes: PoH necessitates the creation and validation of vast amounts of data. This sets a high entry barrier for deploying nodes, potentially making the blockchain less decentralized.

Currently, Proof of History is actively used in the Solana blockchain. It's not an independent consensus algorithm but operates in tandem with others, like Proof-of-Stake in the case of Solana.

The potential application of Proof of History technology beyond the DeFi sector is yet to be determined. In theory, PoH could find utility in diverse areas such as supply chain management, the food industry, or healthcare — essentially any field where precise time tracking is crucial.