A surprising number of Solana projects are closed-source — but now the tide may be turning

In August 2020, Uniswap, the world’s largest decentralized exchange, suffered what in crypto parlance became known as a “vampire attack.” The Ethereum-based protocol was effectively cloned to create a near-identical but more user-friendly service named SushiSwap, which then sapped both liquidity and users from its progenitor. 

The current version of SushiSwap supports hundreds of millions of dollars in crypto trading every day. But its genesis was possible entirely because Uniswap — like most Ethereum-based protocols — is an open-source project. The code that underpins it can be freely perused and indeed copied by anyone, at any time. 

The same cannot be said for a good proportion of projects built on Solana, the much-hyped upstart blockchain network promising faster and cheaper transactions than Ethereum. 

A recent analysis of the top decentralized applications (dapps) built on Solana, conducted by The Block Research, found that six of the largest 10 Solana dapps by total value locked (TVL) are closed-source, and that 46% ($4.98 billion of $10.7 billion) of the TVL in that group sits with closed-source projects. 

It is a state of play that Solana’s founders are acutely aware of — and are now pushing to change. 

On November 14, responding to one Twitter user’s gripes, Solana co-founder Raj Gokal announced a competition to incentivize projects to go open-source. The winner was offered $100,000 and dinner with Gokal. 

Later the same day, Ian Macalinao, founder of automated market maker (AMM) Saber, announced that the project had open-sourced its core ‘swap program’. 

Why does it matter whether projects on Solana are open or closed? Because, as Macalinao put it in his announcement, exposing the rules that govern decentralized systems is a fundamental tenet in crypto. It is exactly because the Bitcoin protocol is open-source, he argued, that observers can be certain there will only ever be 21 million bitcoins. 

Macalinao isn't the only Solana project founder with this view. “A decentralized project that isn't open source makes no sense whatsoever,” says Jonathan Schemoul, founder of the infrastructure project Aleph.im, which has built open-source indexing tools for several Solana-based projects including Serum, Orca and Raydium. 

Securing an opening

Solana only launched officially in March 2020. As the ecosystem around it develops, co-founder Anatoly Yakovenko hopes to see more projects follow Saber’s lead. “As any space matures, you start seeing people that are trying to make a business and internally they make a decision that I think is short-sighted,” he says. 

In Yakovenko’s view, the most promising and innovative teams building on Solana all subscribe to the open-source ethos. Even if they are commercially-oriented, he says, they “recognize that growth is way more important than any kind of current advantage.” Solana itself has been open-source from the start, according to Yakovenko. 

“There’s a lot of benefit to having reusable code that has been audited, bullet-proofed and tested and being able as a dapp to look at it and see the patterns of design that other engineers took, and understand how something works,” he adds. “Over the next ten years, it will make a significant difference.”

In the Twitter thread explaining why Saber was becoming more decentralized, Macalinao pinpointed potential security issues — as opposed to a fear of copycats — as the main reason Saber hadn’t opened its code to the world sooner. Meanwhile, a number of big-name Solana players still need to be convinced to take the plunge. 

Raydium, one of Solana’s largest AMMs with more than $2 billion in TVL, remains closed. The project’s head of partnerships, who goes by the handle InfraRay, confirmed via Telegram that it is closed-source, adding that the dapp is focused on security “while the ecosystem is young and projects are completing multiple rounds of audits.” They did not respond to further questions. 

Not everyone agrees, however, that being open-source means being less secure. “Having more eyes on the code makes the code more robust,” said a spokesperson for Drift Protocol, a platform for trading cross-margined perpetual futures built on Solana. Drift went open-source in early November.

“Most projects cite code readiness or security as a barrier to going open-source, but we think that being open-source is a benefit for security,” the spokesperson continued. The decision paved the way for Drift to launch a public bug bounty that attracted many white hat hackers and skilled developers, they added.

At any rate, momentum seems to have been established. In their recent shifts to the open-source model, Drift and Saber follow in the footsteps of other popular Solana dapps like Mango Markets and Serum. 

Open-source is “becoming the standard, as on other chains,” according to Aleph.im’s Schemoul. And the more projects that open up, the harder it will be for other projects to remain closed.