- High Speed
- Low Fees
- High levels of scalability
- Solana ensures composability between projects.
- Still in Beta
- Centralization still relatively high
- Little Transparency
- No clear roadmap yet
There is no stopping the growth and evolution of the cryptocurrency sector, the lack of regulation and skepticism of government in various nations notwithstanding. Almost every month, new crypto coins are being unveiled while existing ones are getting more popular. Like everything else in digital technology, this sector is also changing rapidly. In the last few years, several new crypto coins have been launched with unique features that have made headlines. Solana is among the new players and it comes with the promise of enhanced performance. It is rated as a fourth-generation Blockchain network.
The basics of Solano
Solana may be a new entrant in the fast-emerging crypto sector but it has managed to attract the attention of the industry veterans without delay. Its Blockchain has support for smart contracts and decentralized applications. The difference with other blockchains is that it makes use of a single blockchain (layer 1) solution. As of now, Solana runs on the PoS consensus mechanism. Through this technology, Solana can process up to 65,000 transactions a second. Solana is known as the first-ever web-scale Blockchain network and its creators say it is also the fastest one. In the future, it can grow up to 700,000 TPS.
It was in 2017 that Solana’s founder Anatoly Yakovenko unveiled the PoH consensus mechanism and a whitepaper. Yakovenko was joined by his former Qualcomm colleagues, namely Stephen Akridge and Greg Fitzgerald. The main-net of Solana came up in March 2019. Compared to other contenders, its growth has been remarkable. It was launched officially in the first quarter of 2020. In less than 2 years since its inception, Solano has managed to garner a user base comprising of 650000 members.
Proof of History- the USP of Solano
When Solana was in the early stage of conception- PoH seemed a revolutionary idea. It was made to address a tedious issue of distributed ledger systems-the agreement on time for reaching a consensus. Yakovenko thought the new technique would automate the Blockchain transaction ordering process and so crypto networks can be scaled higher. His whitepaper stated that the idea of timestamping transactions was feasible as it would enable the scalability of a cryptocurrency minus a reduction in security. His experiences in making and deploying database solutions at Intel and Google were behind this.
In the beginning, PoH was not built for use as a consensus mechanism. It was actually meant to be a PoS consensus component for Solana. Owing to this PoH technology Solana makes historical records that corroborate the occurrence of an event at a specific timing. These records can be deployed in future operations. Contrary to other blockchain solutions where using validators are required, Solana validators maintain their own clock. The system serves the function of a cryptographic clock.
Solana makes use of a PoS-based consensus mechanism, called the Tower BFT. It is like an enhanced version of the PBFT mechanism used in many other Blockchain systems. It leverages the PoH technique as a timer to bring down Communication Overhead and latency. While PoH is not exactly an outright consensus model, industry veterans hail it as the right move to blockchain network structure in terms of speed and capacity. So, Solana ultimately relies on a hybrid consensus model. In finer analysis, it offers the efficacy of a centralized system without eliminating the decentralization factor!
The future of Solana
The existing Tower BFT or the PoS-based consensus mechanism of Solana will not remain forever. It is meant to migrate to the delegated-Proof-of-Stake mechanism. As the network moves to the dPoS, the token holders will get the scope to take part in the block production method.
Unique features of Solana
Solana has become the preferred Blockchain network for thousands of crypto enthusiasts owing to it unique features.
- Solana enables any user to become a network validator. These network validators can help in enhancing overall network security. There is no minimum staking limit here.
- The Sealevel feature lest the Blockchain identify all non-overlapping transactions and then they can be processed simultaneously. Sealevel lends Solana an edge over typical smart contract-based networks. It enables parallel running smart contract execution. So, plenty of smart contracts can run in parallel sans any negative impact on network performance.
- Its Gulf Stream feature helps identify upcoming leaders and they can commence accumulating transactions prior to producing blocks.
- Solana deploys a transaction processing unit called Pipelining. It helps enhance block validation times.
- Solana has an account database named Cloudbreak. It enables the system to write and read data simultaneously.
- It is a programmable Blockchain which lends it an edge over first-generation Blockchain systems.
Tracking the growth of Solana
Post its launch in early 2020, Solana’s price reached 1$USD per SOL. It was launched in Binance soon after. For some time, the price hovered around the $1 range. It was launched on FTX, Serum and its price soared to $5. It was in February 2021, its price soared to a record high of $21. In August, its price touched an all-time high of $80. The market cap stands at approx. $3,681,261,287. As per the declaration made by the Solana Foundation, the number of total SOL tokens will be 489 million. It is now supported by leading crypto exchanges including Coinbase.
The inherent advantages of Solana
Solana is a new entrant in the Blockchain sector and it has been designed to overcome the hurdles faced by its more popular predecessors. It does offer some advantages that are hard to overlook.
- It is censorship resistant and the hybrid model is decentralized.
- Its transaction charges are lower than other cryptocurrencies and their networks.
- The delegated staking Blockchain offers more opportunities to the users including scope for passive income.
- Its DPoS network is way faster than Blockchains using older PoS networks. Solana’s average blocktime is only 2.34 seconds. This is way faster than that of Bitcoin which takes several minutes to execute a block.
How to store SOL?
The Solana team recommends users buying SOL uses the Trust Wallet. This free mobile wallet is a good option but the best option is to use a hardware wallet. You may try the Ledger Nano X or S. You can stake coins using the wallet directly.
How to use the SOL tokens?
There are 2 ways you can use the SOL tokens.
- Staking- The Solana Network users use this token for staking, directly or through an active validator.
- Transaction Fees- Like many other crypto tokens, SOL users can use the tokens for transaction fee payment.
Some integration bagged by Solana
The much-touted hybrid consensus model proposed by the Solana team has made crypto investors and experts enticed. This has helped Solana attract institutional traders. The Solana Foundation tries to gather decentralized finance. It tied up with notable entities such as Terra, Tether, Chainlink, Circle, Audius. The PoH consensus mechanism and innovative features like Sealevel, and Gulf Stream have enabled Solana to emerge as a high-performing Blockchain, globally.
So, should you buy Solana?
While investing in SOL can be a worthy move for crypto sector enthusiasts, those thinking of investing for a rapid price jump soon may think twice. It is better suited for those who want to be in this sector for a long time. Since Solana is a new entrant, analyzing past performance is not possible. However, given the fact it has more than 400 projects in its kitty, you can count on it.