What is Solana?
Solana, a highly functional open-source project, implements a high-speed layer-1 cryptographic blockchain.
Anatoly Yakovenko (an ex-executive at Qualcomm), created Solana in 2017. The goal of Solana is to increase throughput and keep costs low while surpassing the capabilities of popular blockchains. Solana uses a hybrid consensus model, which combines an original proof-of history (PoH), algorithm with the lightning fast synchronization engine. This is a version proof-of stake (PoS). This allows the Solana network to process more than 710,000 transactions per second (TPS), without scaling.
The third generation blockchain architecture of Solana is intended to enable smart contracts and decentralized app creation. The project supports a variety of decentralized financial (DeFi), platforms, as well as nonfungible token (NFT), marketplaces.
The 2017 initial coin offer (ICO boom) saw the launch of Solana blockchain. In 2018, the project’s internal testnet went live. Then, there were multiple testnet phases that led to the official launch of the main network in 2020.
What makes Solana so special?
Solana’s ambitious design seeks to solve The Blockchain Trilema, an idea proposed by Ethereum creator Vitalik Buterin in its unique manner. This trilemma identifies three main challenges developers face when creating blockchains: security, decentralization and scalability.
Many believe that blockchains are designed in a way that developers must sacrifice one aspect to get the other two. They can only offer two benefits at a time.
Solana’s blockchain platform proposes a hybrid consensus mechanism that maximizes speed while preserving decentralization. Solana is a pioneering project in the blockchain industry thanks to its unique combination of PoS/PoH.
Blockchains generally have higher scalability. This is due to the amount of transactions they can process per second. The more they scale, the greater their scalability. However, decentralized blockchains have slower speeds due to time discrepancies. This means that transactions are verified by more nodes and timestamps are taken longer.
Solana’s design addresses this problem by choosing one leader node based on the PoS mechanism, which sequences messages among nodes. The Solana network has many benefits. It reduces workload and results in higher throughput, even when there is no centralized or exact time source.
Solana also creates a chain by hashing one transaction’s output and using it to determine the input for the next transaction. This history of transactions is Solana’s main consensus mechanism. It’s called PoH. This concept allows for greater scalability, which in turn increases usability.
What is Solana’s work process?
Proof-of-history is the core component of Solana protocol. It’s a series of computations that creates a digital record that verifies that an event occurred on the network at any given time. It can be described as a cryptographic clock, which provides a timestamp for every transaction on the network and a data structure that is a simple addition to it.
PoH is based on PoS using Tower Byzantine Fault Tolerance (BFT), an optimized version the practical Byzantine protocol for fault tolerance (pBFT). It is used by Solana to reach consensus. Tower BFT is an additional tool that validates transactions and keeps the network safe.
PoH can also be considered a high-frequency Verifiable Delayed Function (VDF), which is a triple function (setup evaluation verification) that produces unique and reliable output. VDF preserves order by proving that block producers waited long enough for the network’s progress to happen.
Solana employs a 256 bit secure hash algorithm (SHA256), which is a set of cryptographic functions that produce a 256 bit value. The network periodically samples the number, SHA-256 hashes and provides real-time data according the set of hashes on central processing units.
This sequence of hashes can be used by validators of Solana to record a piece of data that was created before the generation of a hash index. After this piece of data has been inserted, the timestamp is created for transactions. All nodes must have cryptographic clocks in order to track events and not wait for validators to verify transactions.
The Solana (SOL), token
SOL is Solana’s cryptocurrency. It is Solana’s native and utility token. This token allows for the transfer of value, as well as security via staking. SOL was launched March 2020. It aims to be one of the 10 most popular cryptocurrencies in the space through total market capitalization.
The SOL token operation scheme works in the same way as it does on Ethereum. They function in a similar way, but Solana token owners stake the token to validate transactions using the PoS consensus mechanism. The Solana token can be used to pay transaction fees and receive rewards. It also allows users to take part in governance.
Similar: Proof of stake vs proof-of work: Differences explained
If you ask the question “How many Solana Coins are there?” The answer is that there will be over 500 million Solana tokens in circulation. With the current total supply exceeding 511,000,000 tokens, Solana’s circulating stock is less than half. Around 60% of SOL tokens is controlled by Solana founders and The Solana Foundation. Only 38% are reserved for the community.
SOL tokens are available on all major exchanges if you want to purchase Solana. Binance, Coinbase and KuCoin are the top cryptocurrency exchanges to trade in Solana.
Solana vs. Ethereum
Solana has been recognized for its speed and efficiency and has been cited as a genuine competitor to crypto industry leaders like Ethereum.
So how is Solana different than Ethereum? Can it be considered a potential Ethereum killer.
Solana can challenge the dominant smart-contract platform in terms of processing speed. It is said to be capable of exceeding 50,000 TPS. Solana uses different consensus algorithms in order to prevent slow transaction confirmation. This makes Solana a fast blockchain that can compete with other industries.
This is a huge number, and the current low-scalable Ethereum proof of work model can only handle 15 tons per second. Solana can handle thousands of times more than Ethereum. Another advantage of Solana is its extreme cost-effectiveness. The project implements new tokenomics at lower fees.
Similar: Web 3.0: A Beginner’s Guide to the Decentralized Internet of the Future
It is also worth noting, that Solana’s Blockchain, while it implements one variation of PoS is more sustainable and eco-friendly than the other. This contrasts with Ethereum’s current PoW model, which requires tremendous computational power.
Everyone in the crypto community looks forward to the Ethereum upgrade from PoS. The new type of Ethereum is in the process of being developed. It will include an execution layer (previously Ethereum 1.0) as well as a consensus layer. It will allow for greater throughput, increase scalability, lower transaction costs, and reduce unsustainable power consumption.
Solana’s downsides
You can still decide if Solana is worth your investment or not. Solana, despite its obvious advantages, has its flaws like any other crypto project.
The Solana blockchain is capable of competing with top-end blockchain projects. However, it is still susceptible to centralization because there aren’t many validators. Although anyone can become a Solana validater, it is difficult as it takes a lot of computing power.
The protocol is still labeled as a beta version, but this does not eliminate the possibility of errors and bugs.
Despite these problems, Solana remains one of the largest ecosystems in crypto and appears to be on the right path for growth.
