Solana is a public, open-source blockchain platform designed to support decentralised, scalable applications and non-fungible tokens (NFTs) with its smart contract.
Founded in 2017 by the Solana Foundation consisting of Anatoly Yakovenko alongside current Solana board member and Chief Operations, Officer Raj Gokal. San Francisco-based Solana Labs built the Solana Blockchain.
Solana is a new blockchain paradigm that is much faster in the number of transactions it can process with a significantly lower transaction fee than its rival Blockchains like Ethereum.
The native cryptocurrencies of the Solana Blockchain (SOL) soared high in 2021 that it reaching 12,000% and over $66 billion of market capitalization. As of the time of writing this, Solana ranked sixth in the cryptocurrency list, according to Coinmarketcap.
What Makes Solana Unique?
The decentralisation of Blockchain since Bitcoin’s inception has solved many financial problems. The ability to make financial transactions over the internet without intermediaries or mediators such as Visa or PayPal is what many have yielded for in Blockchain.
Solana intends to make crypto transactions faster and more scalable through the Proof-of-History mechanism. Currently, it can process as many as 50,000 transactions per second, with an average cost per transaction of $0.00025. In contrast, Ethereum can only handle less than 15 TPS, while transaction fees reached $70 in 2021.
Proof of History
As you may know, Bitcoin and Ethereum use the proof-of-work (PoW) consensus mechanism, which is slower and more expensive compared to other consensus mechanisms.
New cryptocurrencies are moving from a PoW mechanism to the proof-of-stake (PoS) alternative which has a lesser transaction fee. The network participants in the proof-of-stake mechanism stake their crypto to get a chance to validate transactions and earn a fraction of newly minted crypto and fees.
However, just like PoW, PoS mechanisms require a specific number of validators to validate a transaction before processing which also slows down the transaction processing. Solana uses both the PoS and a new and faster mechanism called proof-of-history (PoH). PoH enables transactions to be time-stamped and verified quickly.
How it Works
Solana’s whitepaper explained that Proof-of-history works by creating an electronic ledger integrated with a verifiable clock. With this, the participants’ nodes know the recorded time of a transaction without the need to use the other node’s time.
Proof of history creates a historical record that verifies when an event occurred at a specific time, meaning each node has its internal clock to verify events. The mechanism uses the verifiable delay function (VDF), which hash incoming events and notes when events occur.
Solana blockchain is divided into slots or periods when a validator takes a transaction and produces a block. Each block is assigned leaders through the PoS mechanism to save time, with each validator responsible for continuing the count of time.
How Proof-of-History Works
- Validator A is assigned to slot one and spends five seconds finding the next block.
- Next, Validator B gets slot two and takes five seconds to find the following block, amounting to the passage of 10 seconds.
- Validator C takes slot three and takes five seconds to find a block. By the end, a total of 15 seconds have passed.
This means each validator has to wait for the previous validator to finish its tally before it can start. When other nodes examine the sequence of hashes, they can immediately tell the order in which events occurred without having to validate time with other nodes. Solana side-steps the communication process in the proof-of-work and proof-of-stake mechanism and thereby fastens the transaction processing.
Solana Token (SOL)
The SOL token has the following utilities
- Payment for fees on associated smart contracts or other transactions
- Development of decentralised applications (dApps)
Solana is a scalable blockchain that uses the Proof-of-Stake and Proof-of-History mechanism to create a programmable ecosystem for developers to develop Solana-based applications at a cost-efficient rate. Currently, it has more than 350 decentralised applications in its ecosystem and is planning to bring more applications on the network through a program called Riptide Hackathon.
Why are so many applications launching on the network?
Solana solved the blockchain trilemma issue by offering a secured, decentralized, and scalable network for developers to launch their projects on. Security and scalability are therefore the major features that have driven the success of the network. For instance, the Solana blockchain can handle 50,000 transactions per second (tps); and with maximum number of validators, it can scale up to 710,000 tps. The low transaction fee of $0.00025 also entices different developers.
Examples of Dapp on the Solana Network:
To sum up, Solana combines PoS with PoH to achieve faster, low fees transactions. It solves some major problems associated with existing blockchains but it is not without its limitations.