When it comes to decentralized applications (dApps), most agree that Ethereum is the platform of choice for most developers. dApps are widely heralded as one of the most critical use cases of blockchain technology and have seen burgeoning growth over the past few years, with user interest skyrocketing as more are launched. However, there is a slight problem. Most of these applications run on the Ethereum blockchain, which has often struggled with the burgeoning demand fueled by dApps, leading to soaring gas costs and unprecedented network congestion, pushing developers to look for alternatives.
One platform that has emerged as a viable alternative is Solana, which is looking to address issues faced by Ethereum by offering faster transaction speeds and lower transaction costs. This article will delve deeper into Solana, looking at its history, how it works, and what it offers.
Key Points
- Solana is a highly functional blockchain protocol that hosts highly scalable decentralized applications.
- The protocol uses a Proof-of-Stake consensus mechanism but improves on it using a mechanism called Proof-of-History.
- Proof-of-History uses hashed timestamps to verify when a transaction takes place.
- Solana claims to have a throughput of over 50,000 transactions per second (TPS) and offers block times as low as 400 ms.
What Is Solana?
Solana is a highly scalable and functional protocol that powers a permissionless, high-speed layer-1 blockchain. The open-source project is run by the Solana Foundation, while the blockchain was built by Solana Labs, based in San Francisco. The protocol was founded in 2017 by Anatoly Yakovenko, a former Qualcomm executive, and Greg Fitzgerald. The Layer-1 blockchain looks to significantly scale throughput far beyond what is achieved by other blockchains, such as Ethereum while keeping costs considerably lower.
Solana achieves this by implementing a hybrid consensus mechanism combining a unique Proof-of-History algorithm with a lightning-fast synchronization engine. This, according to Solana, allows it to achieve a theoretical upper bound of 710,000 transactions per second. The protocol’s third-generation blockchain architecture facilitates smart contracts, dApp creation, a vast array of decentralized finance (DeFi) platforms, along with NFT marketplaces. As a result of its lightning-fast throughput and low transaction costs, Solana has earned the moniker of “Ethereum Killer,” emerging as a strong rival for the Ethereum ecosystem.
Solana’s native cryptocurrency is SOL. Its value surged by 12,000% in 2021, achieving a peak market capitalization of over $66 billion and becoming the fifth-largest cryptocurrency at the time. However, the recent bloodbath in the crypto markets has seen the value of SOL plummet. By October 2022, SOL’s market capitalization had dropped to around $11.7 billion. Currently, Solana’s market capitalization sits at just over $5.1 billion.
How Does Solana Work?
At the heart of Solana is its Proof-of-Stake consensus mechanism, reinforced by a separate mechanism called “Tower Consensus.” The Tower Consensus is derived from a system that allows distributed networks to achieve consensus despite attacks from malicious or compromised nodes, called Practical Byzantine Fault Tolerance (PBFT). Implementing the Practical Byzantine Fault Tolerance allows Solana to implement a global source of time across the blockchain.
This is done through a novel protocol christened Proof-of-History (PoH). Proof-of-History provides Solana with a clear record of previous events on the blockchain, helping maintain a common record of key events for future reference. Tower Consensus is able to leverage the synchronized clock, greatly reducing the processing power required to process transactions. It can do this because the timestamps that depict previous transactions no longer require to be computed, allowing Solana to achieve a level of throughput that enables it to blow the competition out of the water.
Additionally, Solana also comes with a plethora of other innovations that help it tower above its competition. One example is its transaction parallelization technology, Sealevel. Sealevel enables parallel smart contracts runtime, optimizing resources and ensuring that Solana is capable of scaling horizontally across SSDs and GPUs, helping the platform meet surging demand. Solana also uses Gulf Stream, which allows the protocol to forward transactions to validators even before the previous batch of transactions is finalized and closed. This helps the protocol maximize confirmation speed and considerably increase the number of transactions it can handle.
Other key innovations that help realize the Solana network are
- Turbine – Turbine is Solana’s block propagation protocol inspired by BitTorrent.
- Pipelining – Pipelining is a Transaction Processing Unit (TPU) for validation optimization.
- Cloudbreak – Cloudbreak is Solana’s Horizontally Scaled Accounts Database.
- Archivers – Archivers are Solana’s distributed ledger store for blockchain data storage.
What’s Special About Solana?
When it comes to blockchains and decentralized applications, speed is what matters. This fact is thrust into the spotlight each time the Ethereum network faces bottlenecks due to increased network congestion, leading to spiraling gas fees. However, Solana does not face any of these issues, thanks to its architecture.
According to Solana, its blockchain can theoretically process over 50,000 transactions per second. That is a staggering number and makes it one of the, if not the fastest, blockchain in operation. Let’s put these numbers into perspective, shall we? Solana’s current speeds make it nearly 1000 times faster than Bitcoin (5-10 transactions per second.). What about Ethereum? When Ethereum was still using the Proof-of-Work consensus, it could process 15 transactions per second, making Solana over 3000 faster than its primary rival.
Additionally, Solana offers an average block time that ranges anywhere between 400-800 milliseconds and an average transaction fee of only 0.000005 SOL. These numbers, combined with the protocol’s incredible scalability, mean the protocol can sustain a thriving dApp ecosystem without buckling under the pressure of increased network usage. Furthermore, Solana is achieving this level of scalability without resorting to layer-2 solutions or Sharding, making it one of a select few blockchains capable of processing over 1000 TPS.
Solana also makes it extremely simple for users to become validators. Practically any user can become a validator and secure the network if they have the required hardware to participate. You can check the validator requirements here.
Projects Building On Solana
Solana has a thriving, well-developed, and fast-growing dApp ecosystem. Some of the most prominent projects on the protocol are Orca, Mango, Raydium, Solend, Magic Eden, Solsea, Audius, and more. Solana also has a pretty impressive NFT marketplace and includes projects like “y00ts.”
You can explore the projects building in the Solana ecosystem here.
The Solana Token
As mentioned earlier, Solana’s native token is the SOL, which drives the ecosystem and all transactions on it. As the gas token on the platform, all transactions and smart contract operations require SOL. Validators can stake SOL, helping secure the network and earn rewards. SOL will also eventually be utilized for the on-chain governance of the platform.
In Closing
Despite the bearish market downturn, Solana remains a popular choice among users and developers. If you wish to know more about Solana or any other cryptocurrency, head over to CoinSmart, Canada’s most trusted cryptocurrency exchange. Plus, CoinSmart’s staking feature will allow you to stake your SOL and earn passive income.
Disclaimer: The content of this email is strictly for information purposes only. All of the opinions expressed in this email are not connected to CoinSmart and are not intended to provide you with investment advice. It is important that you do your personal research and/or consult an investment advisor to determine what is right for you.
