Solana is a platform which achieves high transaction speed at a low cost. The native token is SOL.
Who created Solana?
Solana was co-founded by Anatoly Yakovenko, who worked at Qualcomm for a decade. The blockchain is named after the San Diego beach.
Solana was launched in March 2020 by the Solana Foundation It is headquartered in Geneva, Switzerland.
How Solana is different from other blockchains?
- It is very fast. The block time of Solana is 400 milliseconds. Ethereum has a block time of 10 seconds and Bitcoin has a block time of 10 minutes.
- Solana can theoretically handle up to around 710,000 transactions per second. (Almost 30x of Visa). The current TPS which Solana has achieved is 50,000
- Transacting on Solana is cheap. Transaction fees are less than $0.01.
Solana blockchain claims to solve the blockchain trilemma.
- Decentralized: Not dependent on a central intermediary
- Scalable: Handle a growing number of transactions
- Secure: Defend itself from attacks, bugs
Blockchains are forced to make trade-offs that prevent them from achieving all 3. But Solana claims to achieve all 3.
There are few critics as well on this claim. Their challenge is that Solana is not truly decentralized. While anyone can be a validator or block producer, the cost of running a validator requires a much more robust system. The expensive hardware is a constraint for many.
In Ethereum you must stake around 32 Ethereum. On Solana, you need to hold a very small amount of SOL. But need to use 1 – 2 SOL every day just for voting. With the increase in the price of Solana, the cost of being a validator has also increased.
The consensus mechanism of Solana is such that the more you stake the more is the probability that you are selected to produce the block and earn the transaction fee.
What makes them so fast and so cheap?
It is due to the innovations on the consensus mechanism.
Anatoly described a new system called Proof of history in his white paper. The mechanism works in conjunction with proof of stake. It integrates time variables into the blockchain data.
How does it work?
In a decentralized network before submitting a block, the participant nodes have to talk to each other to agree on a time for which message or transaction came first. They cannot simply look at an external clock to trust the timestamp. This process is slow because of the back-and-forth communications.
Whereas in Solana, the nodes place their timestamps on the blocks. send to other nodes for verification. This allows very fast sequencing of validators. The need to wait for confirmations is eliminated.
Video Explainer of Proof Of History:
The native token of the Solana network is $SOL. The token is used for the transaction fees & Staking.
Total Circulation: 489 Million
- 36% of the tokens went to four private funding rounds (before ICO) and the ICO
- 13% of the tokens went to the founders of the project
- 10% went to the Solana foundation
- 39% went to fund community initiatives
Solana has a deflationary issuance schedule. Staking rewards are at around 8%. But they are decreasing by 15% until it reaches 1.5% after around 11 years. After that, it will remain constant.
Transaction fees are dynamic based on the load in the network. 50% if the fees are burned. This lowers the overall SOL supply.
Solana App Ecosystem
Solana uses the rust programming language. It is a low-level language which is more powerful, but requires more work.
For Solana developers it is a challenge that they can’t simply copy and paste their dapps and projects from the Ethereum network. Everything must be coded from scratch, unlike many other blockchains that can just copy & paste.
But this doesn’t slow down the pace with which the Solana ecosystem is growing. Both in working products and activity compared to other larger blockchains, Solana is fast growing.
Many of the DeFi, NFT, gaming apps built on Solana are gaining popularity. Currently, there are over 500 projects and the number is growing every day.
The path ahead
Solana is powerful for developers to built the apps and fast for the users. This enables the creation of scalable and user friendly apps.