Solana is a platform that aims to provide a framework for decentralized applications (dapps) while emphasizing scalability.
Solana is one of several competing blockchain projects, such as Ethereum and Cardano, that strive to create an ecosystem of crypto products and services.
Built for speed
To distinguish itself, Solana introduces a combination of design and architecture choices that aim to provide faster transaction settlement times and an infrastructure that prioritizes flexibility, allowing developers to write and launch customizable applications in different programming languages.
To achieve these features, the native cryptocurrency of the Solana network, SOL, is used to execute custom programs, send transactions, and incentivize stakeholders who support the Solana network.
Who started Solana?
Anatoly Yakovenko proposed Solana in 2017 as a decentralized network of nodes capable of beating the performance of a single node.
As a core contributor, Solana Labs guides the Solana blockchain, which is also supported by the Solana Foundation, a Swiss-based non-profit devoted to expanding the community and financing development.
As part of Solana Labs, Yakovenko and his team began receiving funding in 2018. The team raised more than $20 million privately in a Series A that lasted several months into 2019. Solana raised an additional $1.76 million in a public token sale conducted by cryptocurrency auction platform CoinList following the launch of its mainnet in March 2020.
Solana in action
Many features common to other cryptocurrency networks, such as smart contracting, transaction settlement, and token issuance, are available on the Solana network. To clearly distinguish itself from the competition, Solana hopes to offer faster settlement times and a larger transaction capacity.
Architecture of the Solana Network
Solana’s network design aims for scalability, and it employs eight core components to accomplish this:
- Proof-of-History– The global clock was used to create a common schedule for all participants.
- Gulf Stream – Specifies when and how transactions are to be exchanged.
- Sealevel – A processing engine that determines transaction order and execution.
- Turbine – Specifies how nodes (also known as validators) send and receive blocks after validating transactions.
- Cloudbreak – A memory mechanism that is used to keep track of the balances of participants.
- Pipeline – Each component of a transaction is verified.
- Archivers – A network of nodes where data is offloaded from validators and permanently stored.
While technologically complex and intricate, each component is designed to maximize the number of transactions Solana can carry out without sharding its chain or using a layer two network.
To secure its blockchain, Solana developed a consensus mechanism known as Tower BFT, which incorporates what is known as delegated proof-of-stake (DPoS).
To secure the network, validate transactions, and distribute newly minted SOL, DPoS employs a voting and reputation system, which means that anyone who owns SOL tokens (also known as SOL coins) can contribute to the network’s operation.
Participants (“nodes”) can lock or “stake” each SOL token in order to participate in governance and increase their chances of being chosen to produce blocks.
Participants can also choose to delegate their SOL to other validators, allocating votes to them in exchange for a share of the block rewards.
What makes SOL valuable?
The SOL cryptocurrency is critical to the upkeep and operation of the Solana ecosystem.
Solana rewards validators and delegators with a portion of newly minted SOL as well as transaction fees based on the amount of SOL staked, the set inflation rate, and the complexity and volume of network transactions.
Users who own SOL tokens can also gain access to the suite of projects built on the Solana network.
Solana, like Ethereum, allows developers to run custom smart contracts and create decentralized applications (dapps) to provide digitized products and services. Serum, a decentralized exchange service with an order book, and Raydium, an automated market maker (AMM) that provides liquidity to its ecosystem, are two examples.
Solana: Use cases
Solana’s attempt to create a scalable platform for decentralized applications without implementing sharding or second-layer technologies may appeal to users.
Furthermore, developers may find the platform appealing for products and services that are likely to generate a high volume of activity.
If investors believe that the market will eventually favor more scalable blockchains, they may seek to purchase SOL and add it to their portfolio.
Solana appears to be winning the race to topple Ethereum as dApps and projects pour in and retail and institutional investment keeps pushing the price to new heights. Cardano is currently trading at $2.12 while Solana is off slightly at $197.44.
Why the major discrepancy? It has to do with supply.
Cardano has a massive supply of 45 billion ADA (Cardano’s native token) while Solana is much more scarce with only 301 million SOL in circulation. Of course, Ethereum rests in the number two spot overall with a single ETH valued at $4,215.92 and a rapidly dwindling supply of less than 117 million ETH.
What are your thoughts on the race to beat Ethereum? Leave us a comment!
I write about blockchain, crypto, NFTs and other disruptive technologies and innovations.