What is Solana ($SOL)?
Another one of Ethereum’s sons comes for the throne.
If you’re reading this, you have some level of involvement in the crypto space. And if you have some recent involvement in the crypto space, there’s about a 95% chance that you’ve heard of the Solana crypto project.
For newer people in the space, the title “Ethereum killer” alone is enough to pique their interest – but what exactly is this coin that’s rocketed to the top of the CoinMarketCap charts this past year? What’s so special about it and how is it planning on dethroning Ethereum?
Well.. let’s get right into it.
Table of Contents
- So what exactly IS Solana’s crypto offering?
- What makes Solana so special?
- The Solana Token ($SOL)
- Our conclusion on the Solana ecosystem
So what exactly IS the Solana crypto offering?
Put simply, Solana is a web-scale, open source blockchain that aims to be a high-speed, decentralized crypto platform for dApps and marketplaces. Its native crypto, SOL, is used to pay transaction fees, stake on the network, and give holders the right to vote in future upgrades.
The Solana whitepaper was published in 2017 by Anatoly Yakavenko, a former Qualcomm and Dropbox employee, that specialized in distributed systems and compression algorithms (rumor has it that the project was named after one of his favorite beaches). Along with Eric Williams and Solana’s CTO, Greg Fitzgerald, they set out to deal with the traditional throughput problems that existed in blockchain networks like Bitcoin and Ethereum. Above all else, they wanted to create a scalable system that was still truly decentralized at its core.
The Solana crypto ecosystem touts the insanely low block time (time it takes for a new block to be added to the blockchain) of ~400 milliseconds. To put into perspective how ridiculously fast that is, in comparison, Bitcoin’s block time is 10min, and Ethereum’s block time is 10sec.
They also make the claim that the Solana crypto ecosystem can handle upwards of ~710K TPS (transactions per second) given the appropriate conditions; to be fair, though, they haven’t yet gotten beyond 50K TPS.. which is still a feat in itself. In comparison, MasterCard claims to be able to handle 5K TPS, and Visa claims that they can handle 24K TPS.
An important note to add, as well, is the fact that the network manages to keep its transaction fees pretty low (a common pain point on the Ethereum network). The average transaction fee on the network comes in at a fraction of a penny (~$0.0002 per transaction).
What makes Solana so special?
So what exactly is it that makes the Solana cryptocurrency such a hot commodity?
This project has garnered a lot of attention from a wide variety of investors – from major players in the crypto-sphere (FTX, Chainlink, Serum) to mainstream celebrities (looking at you Tom Brady), Solana is the talk of the town.
Let’s take a look at what sets this project apart:
Proof of History (PoH)
While the Solana network does use the Proof of Stake (PoS) consensus model (similar to ETH 2.0), it does it a bit differently. They introduced a new concept called “Proof of History” (which is essentially a spinoff of PoS consensus, but with the addition of “time” being integrated into the blockchain data).
The idea behind this was to solve for the “time issue” that other blockchains face.
For typical blockchains, the nodes would have to communicate with one another constantly to come to a consensus on the timing of certain transactions prior to validation–adding each block to the blockchain. With Solana, everyone would add a “timestamp” to their own blocks with a cryptographic proof. These timestamps are used to place specific dates and times on each of the blocks as they are sent for blockchain validation, allowing for the fast sequencing of the blockchain validators.
This Proof of History consensus mechanism allows Solana to easily confirm the order of their transactions without having to constantly communicate back and forth.
Tower BFT (Byzantine Fault Tolerance)
Solana’s implementation of a PoH-optimized pBFT (practical Byzantine fault tolerance). It takes advantage of the cryptographic clock used in PoH, allowing consensus to be reached among nodes without the need for excessive messaging between them.
Solana’s validator nodes can run smart contract code in parallel, instead of in series, so much more can be done simultaneously.
These smart contracts run differently from the ones on the Ethereum platform – while Ethereum uses a virtual machine to run the Solidity programming language, Solana uses the Rust programming language. While Rust (being a low-level programming language) is more difficult for programmers to use, it is significantly more powerful than some of the other languages, and allows for a wider range of possibilities.
This also means that scammers/lazy programmers wouldn’t be able to directly copy and paste the programming for projects from other platforms onto the Solana platform.
This protocol breaks data down into smaller increments and makes it easier to transfer information amongst the nodes, increasing the network’s overall transaction processing speed. This mechanism relies heavily on individual nodes sharing received data with others in its vicinity only, so that each only takes on minimal responsibility for transferring information accurately.
This is what enables Solana to reach its massive TPS!
It allows network validators to execute transactions ahead of time, so that their confirmations take less time and the memory requirements on validators from unconfirmed transaction pools are decreased.
Streams of input data are assigned to different hardwares so that transaction information can be quickly validated and replicated across all the nodes in the network.
A data structure that organizes the database of accounts, making concurrent reads and writes between the network’s 32 threads possible.
Data on Solana offloads from validators to a network of nodes known as Archivers. These nodes can be basic laptops or PCs and they are subject to a check, every so often, to ensure that the data stored on them is correct.
The Solana Token ($SOL)
$SOL is the native currency of Solana’s ecosystem, with a max supply cap of 489 million SOL. It is used primarily as Solana’s “gas token”–as payment for all on-chain transactions and smart contracts. It can even be used for micropayments (called “lamports”) within the ecosystem.
Aside from gas and payments, SOL token holders can also earn rewards by staking their SOL to support the Solana network. To achieve this, 0.01 SOL is put up by the user to become a node that helps validate transactions on the blockchain, in exchange for rewards (more SOL tokens). The process is pretty simple:
- Create a staking account with a wallet that supports staking and add SOL tokens
- Select one of the Solana crypto validators
- Delegate your stake to your selected validator
Some of the best exchanges for finding SOL right now are Binance, FTX, OKEx and Coinbase.
Our conclusion on the Solana crypto ecosystem
Although Solana is still relatively new, the SOL token has rocketed to the top 10 of crypto by market cap. And even though the project is fully functional for users, the mainnet is officially still in beta and constantly being worked on and improved.
With over 200 projects developing on the Solana crypto blockchain, we are getting more and more excited about this nascent ecosystem. Sam Bankman-Fried, the founder and CEO of the extremely popular FTX Exchange and Alameda Research trading firm, is credited to be the richest person in crypto thanks to his efforts on Solana (reportedly worth over $22.5B).
Seeing as Solana offers some of the lowest latency and gas costs in its lane (better tighten up Ethereum – Solana mean business), the platform has shown that it has the potential to be one of the strongest competitors yet to legacy blockchain solutions like Bitcoin and Ethereum.
Low cost.. high speeds.. widespread adoption.. Solana is a crypto project on many people’s watchlists and it’s pretty easy to see why.
Any questions? Contact the KRBE Digital Assets team.
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