What is Solana (SOL)?
Solana, named after a southern Californian coastal city, is an open infrastructure made to support the building of scalable apps. Solana was founded in 2017 by Solana Labs Team. This team was headed by Anatoly Yakovenk, a computer engineer. Intriguingly, Solana mimics the characteristic of Ethereum and was intended to address the problems that were found in Ethereum. Moreover, with its advancements, Solana promises to process transactions faster at a lower cost.
In addition, the Solana network is spread over thousands of independent nodes — which means that your transactions are always safe, according to the company.
The architecture of Solana is robust and designed to be resistant to censorship. Moreover, it is fast, secure, and designed to facilitate global adoption. Moreover, Solana can be used to mint, sell, and trade NFTs, develop decentralized finance (DeFi), and build the blockchain and Web3 games.
How did Solana come into existence?
Anatoly Yakovenk was not a big proponent of crypto in the beginning. He was more of a critic who highlighted the inefficiency in handling the transactions.
Nonetheless, one evening in 2014, Yakovenk was inspired by a brilliant idea while having a “caffeine-induced fever dream at 4 am.” Shortly after, Yakovenk wrote a paper introducing the idea of making Bitcoin’s SHA256 hash function exponentially faster. It was here that he introduced the proof of history, which timestamps transactions.
Later on, Yakovenko teamed up with an old acquaintance and colleague from Qualcomm, Greg Fitzgerald, to build a single blockchain network.
The duo launched a testnet for Solana in 2018. Subsequently, they teamed up with another colleague, Stephen Akridge, who improved the project’s transaction throughput.
With more and more development added to the system, the trio was able to build and launch the Solana mainnet and the SOL token, Solana’s native token, in 2020.
How does Solana work?
Solana deploys proof-of-history (PoH) to keep time on the blockchain. Unlike the proof-of-work and proof-of-stake, proof-of-history is not a consensus mechanism. However, PoH does play an important part in the PoS mechanism that Solana follows.
The integration of PoH with other innovations has revved Solana’s transaction process. In fact, Solana boasts a maximum throughput rate of 50,000 transactions per second. Solana is both fast and low in cost, with a block time of less than one second and a transaction fee of 0.00025.
Solana vs Ethereum
Heralded as the “Ethereum Killer,” Solana was built to address the drawbacks of Ethereum. However, when Solana has credits for some areas, Ethereum has the upper hand on various other parameters.
|Market Cap||Solana ranks #9 with a market cap of $10 billion. Although Ethereum has long lived, Solana has rocketed into the top 10 largest cryptocurrencies in its short existence||Based on the market cap, Ethereum has the upper hand as it has existed ever since 2015. According to CoinMarketCap, Ethereum ranks #2, with a live market cap of $185 billion.|
|Technology||Solana doesn’t have the same scalability issues as Ethereum since Solana users aren’t competing for block space to process transactions. Their average fee per transaction is typically a small fraction of a penny.||Ethereum used a proof-of-work mechanism, which was criticized for slow speeds and the amount of energy used by miners to validate transactions. But Ethereum moved to a proof-of-stake system to address these issues. Prior to the Merge, around 13,000 Ether were issued per day. However, after the Merge, that figure falls to around 1,600 Ether per day. |
The average price per transaction was a little less than $1, but historically it has been as high as $70. After the Merge in 2022, Ethereum projects were predicted to be able to process over 100,000 transactions per second, which should allow for enough capacity to keep fees relatively low.
What Makes Solana Unique?
There are eight main features that set Solana apart from the rest of the blockchain.
Proof of History
The proof of history mechanism Solana follows provides the highest throughput rate of any layer one blockchain. In addition, the system can more easily track the sequence of events and monitor transactions as a result of having a database of events and transactions that took place.
Tower BFT, Solana’s custom implementation of Practical Byzantine Fault Tolerance, is a vital mechanism that uses the PoH cryptographic clock. This allows the network to achieve an agreement without time delay.
Pipelining is the technique of assigning a sequence of input data to various hardware components. This method enables transaction data to be verified faster and duplicated throughout the network’s nodes.
Pipelining is a suitable procedure for processing a data sequence in a series of stages with separate hardware.
Turbine is Solana’s block propagation protocol that solves the blockchain scalability trilemma. The scalability trilemma is the belief that decentralized platforms can only accomplish two out of the following three goals—security, scalability, and decentralization—at a given time.
The block-propagation-optimized protocol broadcasts transaction shreds to all network nodes using User Datagram Protocol (UDP) —establishing low-latency and loss-tolerating connections between apps on the internet.
Cloudbreak is a data structure for simultaneous reading and writing across the network. This will come in handy when the memory required to store account information rapidly becomes a hurdle in terms of both access speed and size. In such a scenario, Cloudbreak provides the required scalability on the Solana platform.
Gulf Stream is a mempool-less transaction forwarding protocol. A “mempool” is a contraction of memory and pool, and it is a cryptocurrency node mechanism for storing data on unconfirmed transactions.
For instance, once a transaction gets to any validator, they forward it to an upcoming leader.
This allows the validators to process transactions ahead of schedule, which results in faster leader changeover and less memory strain; where unconfirmed transactions may occupy the validator node. Solana is capable of supporting 50,000 TPS, thanks to this protocol.
Solana is the only chain that uses parallel blockchain transactions in one shard among other blockchains that are single-threaded. The hyper-parallelized transaction processing engine in the system scales across SSDs and GPUs for high performance.
A blockchain network running at 1GBPS will produce 4 petabytes of data per year for the ledger. Storing such enormous data would soon become the primary centralization vector, which will demolish the objective of blockchain deployment.
The Solana network uses Archivers to store data. The network’s data offloads from the validators to Archivers, a network of nodes. These nodes may be as lightweight as laptops or PCs that the network periodically checks to verify that they’re storing the correct data.
Pros and Cons of investing in Solana (SOL)
Ethereum is quite expensive compared to Solana from an investment standpoint. Notably, Ethereum’s higher price could be a major obstacle that could deter entry for some small investors.
However, these two blockchains are very similar because Solana was designed to compete with Ethereum. So if you’re an investor who believes in both projects, but you don’t have a lump sum to invest, Solana presents a cheaper alternative.
Nonetheless, Solana is not foolproof; it does have its drawbacks. In September 2021, the Solana Foundation stated that its network experienced some instability. Even Anatoly Yakovenko, CEO of Solana Labs, said similar network stability issues had occurred the week previous to the week that Solana faced these issues.
The Ethereum network has over 200,000 validators, but the Solana network only has about 1,000 validators to date. The more the number of validators there are in the chain, the more secure the network is. Although the Solano network is quite new and is less than two years old, investors would gain more confidence when the number of validators increases as the days go by is what the experts in the industry predict.
The hype about Solana NFT
With much hype around NFT, Solana saw potential in venturing out into the NFT space. Solana’s Solanart, an NFT marketplace. The biggest advantage of Solanart is that it offers faster transactions at lower costs to its customers. Notably, as of press time, Solana ranks second when blockchains by NFT Sales Volume are considered.
When Solana is considered overall, it is true that it is quite new in the market and takes time to gain more traction and trust in crypto traders. However, Solana as of press time has 1.2M followers on Twitter and 71.5K followers on Telegram.
Moreover, Solana processes transactions faster at a lower cost, allowing smaller investors to do transactions at a very low cost. Many blockchains aim to solve scaling issues with the help of level 2 or sharding. Solana has in-built scaling at level 1 that can’t be achieved while processing transactions on different levels or shards.
DeFI shows that compatibility is vital for transactions between different blockchains. Moreover, the operations’ cost, volume, and complexity will grow with the passing of time; which will require higher bandwidth and processing in under one second.
Level 2 solutions or sharding will not provide it. But Solana can process massive volumes of transactions on level 1 following institutional requirements to completion. The blockchain is compatible with another tier 1 networks.