Scale or Die 2025: Scaling Smart Wallets: How To Build Onchain Infrastructure At Fintech Scale

In a groundbreaking announcement at Scale or Die 2025, Squads has unveiled Grid, a revolutionary open finance API set to transform the landscape of blockchain infrastructure. This innovative solution aims to bridge the gap between traditional fintech and blockchain technology, potentially catalyzing mass adoption of decentralized finance on the Solana ecosystem.

Summary

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Carlos Norega, leader of the developer products team at Squads, presented a compelling vision for scaling blockchain infrastructure to match the user bases of major fintech players. With companies like Revolut adding 15 million new users annually, reaching a total of 52 million globally, the need for robust, scalable blockchain solutions has never been more pressing.

Norega outlined the challenges facing current wallet infrastructures, including security vulnerabilities, programmability limitations, and cost inefficiencies. He then introduced Squads' solution: smart accounts, a form of smart contract wallet infrastructure on Solana. These accounts promise to deliver the necessary programmability and security for large-scale operations.

However, the real game-changer came with the announcement of Grid, an open finance API for building on stablecoins. This new offering aims to recreate the entire financial system on-chain, providing developers with the tools to build modern fintech applications at an unprecedented scale. By bridging the gap between traditional finance and blockchain technology, Grid opens up new possibilities for innovation and growth in the Solana ecosystem.

Key Points:

The Scale Challenge in Blockchain

Carlos Norega highlighted the immense scale at which modern fintech companies operate, using Revolut's 52 million global users as a benchmark. This level of scale presents unique challenges for blockchain infrastructure, requiring solutions that go beyond simple wallet functionality. To truly compete with traditional finance, blockchain systems need to be able to handle millions of users efficiently, securely, and cost-effectively.

The challenge isn't just about handling transactions; it's about recreating entire financial workflows on-chain. This includes connecting to different payment rails, implementing complex money management systems, and ensuring that all of this can be done at a scale that matches or exceeds current fintech capabilities. Norega emphasized that achieving this level of functionality and scale is crucial for blockchain technology to become a viable alternative to traditional financial systems.

The Trilemma of Wallet Infrastructure

Norega outlined three critical aspects that any successful wallet infrastructure must address: security, programmability, and cost-efficiency. He argued that very few current solutions manage to solve all three aspects simultaneously, creating a trilemma for developers and users alike.

Security is paramount in any financial system, not just in terms of protecting funds from external threats, but also in preventing users from accidentally losing access to their assets. Programmability is essential for implementing flexible policies and controlling the movement of funds in complex financial systems. Cost-efficiency becomes increasingly important at scale, where even small per-user costs can add up to significant amounts when dealing with millions of users. Squads' approach with smart accounts aims to address all three of these aspects, providing a foundation for truly scalable blockchain-based financial systems.

Smart Accounts and State Compression

Squads' solution to the infrastructure challenge comes in the form of smart accounts, which are essentially smart contract wallets on Solana. These accounts offer native programmability and enhanced security, especially when set up with multi-signature configurations. However, Norega acknowledged that even smart accounts face challenges, particularly in terms of cost scaling.

To address this, Squads has implemented state compression techniques. This innovation dramatically reduces the cost of deploying accounts, from what would have been $20 million for 52 million accounts down to just $300. Squads' unique approach to compression allows for dynamic compression and decompression of accounts, optimizing capital efficiency while maintaining full functionality when accounts are active. This breakthrough in cost-efficiency makes it feasible to scale to millions of users without prohibitive infrastructure costs.

Solving the Indexing Challenge

Norega highlighted that solving account infrastructure is only part of the solution. Another critical aspect is improving the efficiency of data indexing and retrieval. Current RPC (Remote Procedure Call) systems on Solana face latency issues, with response times often exceeding 150 milliseconds, far above the sub-100 millisecond standard set by leading financial data APIs.

The complexity of indexing blockchain data goes beyond simple latency issues. Norega explained how the design of some Solana programs can make it challenging to track certain types of transactions effectively. For instance, tracking token transfers to a user's wallet often requires monitoring multiple accounts, not just the main wallet address. These intricacies in program design and data structure necessitate more sophisticated indexing solutions to enable features like real-time notifications and efficient data retrieval at scale.

Introducing Grid: The Open Finance API

The culmination of Squads' efforts to address these challenges is Grid, an open finance API for building on stablecoins. Grid aims to recreate the entire financial system on-chain, providing developers with the tools and standards familiar from traditional fintech development. This approach not only solves technical challenges but also addresses a crucial talent gap in the blockchain industry.

Grid incorporates all the necessary components for modern finance, including payments, debit mandates, and payload authorization. By adhering to open finance standards, Grid makes it possible for a wider pool of developers, including those from traditional fintech backgrounds, to contribute to blockchain projects. This could significantly accelerate the development and adoption of blockchain-based financial applications.

To demonstrate the power and simplicity of Grid, Squads is releasing an open-source reference implementation of a neobank. This implementation showcases how, with just 12 API endpoints, developers can create a fully functional banking application with features like account creation, stablecoin transfers, and KYC integration. This practical example serves to illustrate the potential of Grid to revolutionize fintech development on blockchain platforms.

Facts + Figures

• Revolut added 15 million new users last year, totaling 52 million users globally
• The current average cost of deploying a three-signer multi-sig smart account on Solana is about $0.35
• Without state compression, deploying 52 million accounts would cost almost $20 million
• With state compression, deploying 52 million accounts now costs only about $300
• Leading financial data APIs guarantee response times under 100 milliseconds
• Current Solana RPC query response times range from 150 to 400 milliseconds
• Squads' Grid API requires only 12 endpoints to create a functional neobank application
• Squads protocol has over $10 billion in value secured
• Most major teams in the Solana ecosystem use Squads protocol for treasury security or program configuration and upgrades

Top quotes

1. "When we're thinking at this scale, we really need to think a little bit differently."
2. "Security is at the backbone of any financial system."
3. "MPC improves resilience and the DevEx, but ultimately, it moves the trust guarantees off-chain."
4. "We can see that it's something that we need to implement for us to solve the basic needs of account infrastructure to go for scale."
5. "Part of that problem is that RPCs do too many things."
6. "We have to solve a way to basically have access to a greater pool of engineering, an engineering workforce."
7. "This is an open finance API to building on stablecoins."
8. "If you're trying to build your fintech 10x faster, you should do it with Grid."

Questions Answered

What is Grid and why is it significant?

Grid is an open finance API for building on stablecoins, introduced by Squads. It's significant because it aims to recreate the entire financial system on-chain, providing developers with familiar tools and standards from traditional fintech. This bridges the gap between blockchain and conventional finance, potentially accelerating the development and adoption of blockchain-based financial applications at a scale comparable to major fintech companies.

How does Squads address the cost issue of deploying millions of accounts?

Squads addresses the cost issue through state compression techniques. This dramatically reduces the cost of deploying accounts from what would have been $20 million for 52 million accounts to just $300. Their unique approach allows for dynamic compression and decompression of accounts, optimizing capital efficiency while maintaining full functionality when accounts are active.

What are the main challenges in scaling blockchain infrastructure to fintech levels?

The main challenges include security, programmability, and cost-efficiency. Additionally, there are issues with data indexing and retrieval, with current RPC systems facing latency problems. The complexity of tracking certain types of transactions due to program design also poses challenges. Lastly, there's a talent gap, with a need for more developers who can build blockchain solutions at fintech scale.

How does Grid make it easier for developers to build blockchain-based fintech applications?

Grid provides an open finance API that adheres to familiar standards from traditional fintech development. It includes all necessary components for modern finance, such as payments, debit mandates, and payload authorization. By using these standards, Grid allows a wider pool of developers, including those from traditional fintech backgrounds, to contribute to blockchain projects, potentially accelerating development and adoption.

What is a smart account and how does it differ from traditional cryptocurrency wallets?

A smart account is a form of smart contract wallet infrastructure on Solana. Unlike traditional cryptocurrency wallets (like EOA wallets with seed phrases), smart accounts offer native programmability and enhanced security, especially when set up with multi-signature configurations. They aim to provide better security, more flexible policies, and improved control over fund movement compared to traditional wallets.

How does Squads' compression implementation differ from others?

Squads' compression implementation is unique because it allows for dynamic compression and decompression of accounts. This means that accounts can be compressed when inactive to save on rent costs, but can be fully decompressed when they need to be active for transactions. This approach optimizes capital efficiency while maintaining full functionality, unlike other implementations that may sacrifice transaction space or functionality for compression.

What is the significance of the open-source neobank reference implementation Squads is releasing?

The open-source neobank reference implementation demonstrates the power and simplicity of Grid. It shows how, with just 12 API endpoints, developers can create a fully functional banking application with features like account creation, stablecoin transfers, and KYC integration. This practical example illustrates the potential of Grid to simplify and accelerate the development of blockchain-based financial applications.

How does Grid address the talent gap in blockchain development?

Grid addresses the talent gap by providing an API that adheres to open finance standards familiar to developers from traditional fintech backgrounds. This approach makes it easier for a wider pool of engineers to contribute to blockchain projects without needing to learn all the intricacies of blockchain development from scratch. It potentially opens up blockchain development to a much larger workforce, helping to solve the talent shortage in the industry.