Solana is a new blockchain project officially launched in March 2020 that aims to be the next generation of a decentralized network based on privacy, scalability, decentralization, and sustainability. Solana ecosystem utilizes a unique ‘Proof of History’ approach to achieve these principles while maintaining true decentralization.
Solana’s core is built on the Ethereum blockchain, and the platform’s core functionality is built on the Ethereum Virtual Machine (EVM).
This means that Solana will be the first blockchain to use Proof of stake, a consensus mechanism that is considered one of the most secure consensus mechanisms in the market today.
Emergence of Bitcoin has helped evolve the blockchain technology much more than blockchain other use case. Project’s like Solana is adding new chapters in what can be achieved through power of distributed networks.
Origin of Solana
Solana is a brainchild of Anatoly Yakovenko, who has been involved in distributed systems and compression algorithms for the past two decades. And Greg Fitzgerald is another person with Anatoly, who collaborated to lay the foundation stone of Solana Labs in 2018.
In November 2017, Anatoly published a whitepaper that described Proof of History, a revolutionary method for keeping track of time between computers that don’t have trust in one another.
Based on his previous work in the field of distributed systems for microprocessor firm Qualcomm, Mesosphere, and Dropbox, he understood that a reliable clock could make the process of synchronizing networks very easy. If synchronization is straightforward, the network that results can be lightning fast, limited only by bandwidth. And the journey to revolutionize the blockchain began.
SOL: Native coin of Solana Blockchain
SOL acts as the main currency of the Solana blockchain. The token can be passed to the nodes of the Solana cluster to run on-chain applications or confirm its output.
The current circulation of SOL is 26 million. The supply limit of SOL can be reached at 489 million SOL. This coin can also be used in other scenarios, such as staking SOL to earn an ROI of up to 7%.
What is Proof of history?
In Proof of history, the blocks are validated by the nodes in the network. Each node in the network is assigned a block producer. This block producer will vote for the next block. In Proof of history, the blocks are validated by the nodes in the network. Each node in the network is assigned a block producer. This block producer will vote for the next block.
Proof of history is also used in some other blockchains. This is mainly used in the Monero blockchain.
Solana uses a combination of Proof of stake and a new mechanism called “proof of history.” Proof of history is developed to keep the time between computers on a distributed network without all the computers communicating about it and agreeing.
Proof of History (PoH) works as an efficient way to order transactions and address bandwidth issues. As a result, Solana can support more than 50 million transactions per second.
Solana also usages a Proof of stake mechanism to achieve the distributed consensus within its blockchain. However, this algorithm has been tweaked with different technical parameters to achieve scalability and improve the overall transaction speed.
What makes Solana unique?
Solana is a hybrid blockchain project that runs on public and private blockchains. The project’s primary focus is to provide the tools for developing decentralized applications (Dapps).
Solana will offer a public blockchain. It will allow anyone to build decentralized applications (Dapps) on top of it.
The private chain is a permissioned chain managed by the Solana team. This chain will be used to host the private chain of Solana’s decentralized application (Dapps). It will be used to run the Dapps hosted by the Solana platform.
Solana is also an excellent example of using the public and private chains together. It can run a private chain on top of the public chain.
Solana can be considered a private chain. It also supports the standard function of a private chain. We can do cross-chain atomic swaps with other chains, and there are other features that we can’t find in other chains.
On the technical side, Solana is based on the Hyperledger Fabric, which is a permission chain. We can also call it a permissioned ledger.
Hyperledger fabric is the underlying blockchain technology of Solana.
Solana’s Hyperledger Fabric is an open-source, cross-industry, distributed ledger framework for building permissioned distributed ledgers. The Linux Foundation developed it.
The project aims to create a scalable, high-performance, enterprise-grade blockchain. Hyperledger Fabric is designed to support a variety of use cases, including distributed applications, decentralized networks, distributed business processes, digital assets, and smart contracts.
How does Solana Blockchain work?
Solana uses the Tendermint consensus mechanism. Tendermint is a highly scalable and high-throughput consensus mechanism. It has been designed to handle millions of transactions per second.
The Tendermint consensus mechanism has been tested and proved to be very stable. Tendermint has been used in some very high throughput systems.
Tendermint is also the basis for the Cardano blockchain. Some other projects have also used this consensus mechanism, including Dfinity, Raft, Hyperledger Fabric, and Cardano.
What is Tendermint consensus?
Tendermint, Verifying that every machine has recorded the transactions in the same order.
This means that a transaction can be replayed by any node and always be seen in the same order, even if it was sent from different nodes.
Since transactions are guaranteed to be ordered on all nodes, the only way for them to become inconsistent is if some of the nodes become disconnected which highly improbable.
How to stake Solana?
Crypto staking is a way to invest in the POS blockchain to get reward for supporting the network. with Staking you can be eligible to earn a new Solana coin (SOL). When you stake your Solana coin, you give it to the network and acquire a new Solana coin. The staking process can be done by staking SOL on the Solana platform or by taking on a different platform.
The more stakes given to a validator, the more frequently this validator is picked to add new transactions to the ledger. The more transactions a validator writes, the greater rewards it and its delegators receive. Validators who set up their systems to handle more transactions will receive more rewards; as a result, they ensure that the network is operating as fast and efficiently as possible.
The entire network is protected through the collective validation vote around the world. It involves obtaining a Proof-of-Stake to ensure the whole network can be protected from threats, subversion, and malicious attacks. With staking SOL, you will make a contribution to protecting the network as stakeholders, and in return, you will receive the reward in SOL tokens. At present, the nominal yield per year (APY) on Solana stakes is around 7% percent, excluding the commission for validators.
Currently, nearly $38 billion of SOL is staked.
True Rival of Ethereum
Solana is a permissionless, non-linear network. This means that the blockchain will never lose its consensus. To increase Solana’s transaction processing speed, it employs a unique system of command-line programming that offloads data to Archivers.
It allows for high throughput on the network, which is a primary reason why the network is considered a permissionless blockchain. The Solana network has over 200 distinct nodes and over 50,000 TPS throughput. Unlike Ethereum, Solana uses GPUs for mining, allowing very high transaction processing speeds.
Ethereum has not yet migrated completely to the POS algorithm from Proof of Work. Also, the transition is not expected to bring a great result in terms of scaling the entire network except for a complete change in the consensus algorithm. In comparison to Ethereum blockchain, Solana has many cutting-edge features that make it an ideal blockchain for dApps and other smart contract projects.
SOLANA (SOL) Price prediction 2022
The future of cryptocurrency is bright, and the future of Solana blockchain is no different. The first web-scale blockchain, Solana, is built on the PBFT proof-of-history system, which minimizes the risk of malicious nodes. It is currently listed on most major cryptocurrency exchanges, including Binance, Coinbase, and Bitstamp. Investing in Solana is a good idea, and the price of the cryptocurrency is expected to rise over the next few years.
While cryptocurrency has been around since 2017, it’s still far from the mainstream. It has a long way to go, and many investors are skeptical. Despite its popularity, Solana is far from dead. Its developers have already begun developing a version of the blockchain with a community-driven design. It also features a decentralized exchange and marketplace to help people create their own decentralized apps.
As per Coingecko, SOL has already given a 19697.0% return since its all-time low. Considering the current influx of dApps and smart contracts, Solana has an optimistic future with continued enhancement in its blockchain. Solana is not far from being a real contender of Ethereum. Owning to the growth in its blockchain and its increasing staking, SOL price can break into a massive rally in 2022 and could break its ATH.
The Road Ahead
Solana is a blockchain that claims to have high transaction speeds and a combination of proof stake and Proof of history consensus mechanisms.
It is designed for large-scale applications. The Solana network can support at least two hundred thousand transactions per second. These apps are smart contracts, decentralized finance applications, and NFTs, or non-fungible tokens.
The Solana blockchain features and benefits will make this network a viable option for those who want to use blockchain technology for personal or business needs.
Except for some infrequent outages in the Solana network, the project is going as planned and overtaking major smart contract platforms. There are many upgrades laid ahead, and successful implementation will help Solana reach the top list of smart contract platforms.
Camila is working as a Senior Writer with Coinfea. She has completed her bachelor’s from a reputed college. She loves to write about trading technologies like crypto and blockchain.