Since the launch of the leading blockchain as an open-source blockchain with smart contract functionality for the creation of decentralized applications, we have witnessed the use of the Ethereum blockchain to launch DeFi projects and deploy DApps on the blockchain.
However, as time went on and more people began to troop into the Cryptocurrency space over the years, questions have been raised about the Ethereum blockchain’s scalability issues coupled with the insane transaction fees investors have to pay per transaction.
A lot of projects, in a bid to address the problems, have launched blockchain platforms that will be scalable, secure as well as be suitable for the creation of decentralized applications to facilitate payment through blockchain technology.
One of the blockchain protocols that have done a great job in this quest is Solana.
This Post Contains
- What Is Solana Blockchain?
- Who Are The Founders Of Solana?
- How Solana’s Hybrid Consensus Algorithm Works.
- What Makes Solana Unique?
- Solana Tokenomics.
- Is Solana A Good Investment?
Solana came with the aim of creating a blockchain platform that can be used on a global scale. The blockchain addressed the challenges that come with transaction speed and transaction fees when using blockchains such as Ethereum. Therefore, since its launch in 2020 Solana has provided a platform on which people can carry out their Cryptocurrency, NFTs and Dapps activities at a fast transaction speed while paying minute transaction fees in the process.
What Is Solana Blockchain?
Solana is an open-source high-performance permissionless blockchain that combines the Proof-of-Stake and Proof-of-History consensus algorithms to provide a scalable blockchain for the use of decentralized finance on a global scale.
Solana’s hybrid consensus algorithm enables the development of decentralized applications (DApps) and smart contracts to proffer DeFi solutions for the use and creation of Cryptocurrencies, Automated Market Makers, Decentralized exchanges and NFT marketplaces.
Solana also offers one of the fastest blockchains, the platform can execute 65000 transactions per second.
Who Are The Founders Of Solana?
In 2017 Anatoly Yakovenko along with Greg Fitzgerald, his Qualcomm colleague, started working on a project called Solana Labs. Along with other colleagues, they launched the Solana protocol in 2020.
How Solana’s Hybrid Consensus Algorithm Works
Solana combines the Proof of History mechanism with the platform’s Proof-of-Stake mechanism for the operation of its blockchain.
Here’s how it works.
Unlike the popular Proof-of-Work consensus mechanism, which uses computational power to validate transactions, Proof-of-Stake requires owners of the cryptocurrency can stake their coins to validate transactions.
With Proof-of-Stake, cryptocurrency owners create their own validator nodes by staking their coins to a validator, (a computer running the blockchains software with its own copy of the blockchain).
These validators verify new blocks of transactions and add them to the blockchain.
However, Instead of relying on computational power to determine the miner who will validate these transactions like in Proof-of-work, validators are chosen based on how large their stake is, how long they have staked for and a number of other criteria in Proof-of-Stake.
The Proof-of-Stake algorithm is more energy efficient than the Proof-of-Work consensus algorithm.
Related: Advantages Of Decentralized Finance Over Traditional Finance
Proof of History is a sequence of computation that can provide a way to cryptographically verify passage of time between two events and prove that transactions are in the correct sequence. In a bid to save time and prevent delay, validators are assigned slots ahead of time. Each slot has a predetermined time in which validator A can verify a transaction and produce a block, the next validator (who has been assigned ahead of time) then takes over from Validator A and uses the information provided by validator A as the starting point for his own block.
In short, Solana takes the output of a transaction as the input of the next transaction, this prevents delay and saves time and makes transactions faster.
What Makes Solana Unique?
Solana’s hybrid consensus algorithm is both user-friendly and developer-friendly; the blockchain offers short processing time of transactions. The blockchain is more scalable than most blockchains. In addition, institutions can deploy their DeFi projects and Dapps on the Solana blockchain at near zero cost for smart contract execution and transactional activities for users averaging just $0.00015 per transaction. This has attracted both small-scale investors and Cryptocurrency projects looking to reach as many people as possible.
Due to its lightning-fast processing time, scalability and minute transaction fees, Solana has been supported by many investors to rival the Ethereum blockchain and take its place as the leading blockchain platform.
Solana coin (SOL) can be staked by holders in exchange for rewards. SOL can also be used to pay for smart contract executions and transaction fees.
All Time High: $260.06
All Time Low: $0.5052
Market Cap: $26,980,415,711
Total Supply: 511,616,946
Circulating Supply: 319,930,052.72
Is Solana A Good Investment?
SOL is currently down from its All time high and would probably revisit the price sometimes in the future. In addition, the Solana blockchain keeps growing and improving and it remains to be seen how far SOL coin can go, therefore SOL is definitely a coin you should consider adding to your portfolio.
Solana blockchain on the other hand currently has over ten million users and keeps growing every day with the platform being touted as an ETH killer (A blockchain that will topple the Ethereum blockchain and take its place as the leading blockchain).
Despite all this, Solana has been subject to criticism due to its Security and decentralization challenges.
Nevertheless, there’s no blockchain that is perfect yet, many have struggled to proffer solutions to the challenges of decentralization, security and scalability, each blockchain has its own shortcomings and Solana isn’t an exception but that doesn’t mean you should avoid Solana.
Users are trooping in leaps and bounds to the platform and projects are being launched on a daily basis.
2 responses to “What Is Solana?”
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