What is Solana (SOL)?
Solana is an open-source project that was established in 2017. It uses the Proof of History (PoH) to encode the trustless flow of time. The coin has seen its value soar by nearly 12,000 percent so far in 20212.A proof-of-stability (PoS) and Proof of History (PoH) based blockchain. The currency design has a theoretical top limit of 710,000 transactions per second (tps).
Solana is a blockchain platform that is meant to run decentralized, scalable applications. It is currently in beta testing. Established in 2017, Solana is an open-source project that is now being managed by the Solana Foundation in Geneva, while the blockchain was developed by Solana Labs, which is situated in San Francisco. 1 When compared to other blockchains such as Ethereum, Solana is substantially quicker in terms of the amount of transactions it can execute and has significantly reduced transaction fees to boot.
The cryptocurrency that runs on the Solana blockchain, which is also known as Solana (SOLUSD) and trades under the ticker symbol SOL, has seen its value soar by nearly 12,000 percent so far in 20212, and it currently has a market capitalization of more than $66 billion, making it the fifth-largest cryptocurrency by market capitalization.
Solana is based on Proof of History (PoH)
In November 2017, Anatoly Yakovenko, a co-founder of Solana, issued a whitepaper detailing the Proof of History (PoH) idea in further detail. PoH is a proof that may be used to verify the sequence of events and the passage of time between them. It can also be used to encode the trustless flow of time into a ledger.
It is noted in the whitepaper that blockchains available at the time of writing did not depend on time, with each node in the network relying on its own local clock without knowledge of the clocks used by other participants in the network.
Because there was no reliable source of time (i.e., a standardized clock), when a message timestamp was used to decide whether to accept or reject a message, there was no assurance that every other participant in the network would make the same decision. Once this obstacle is overcome, every node in the network may depend on the recorded passage of time in the ledger, which is essential for blockchain operation on the trustless foundation that is essential for blockchain operation.
What Technology does Solana use?
This architecture’s purpose is to show that there exists a collection of software algorithms that, when used in conjunction to construct a blockchain, can completely remove software as a performance barrier, allowing transaction throughput to increase proportionately with network capacity.
Solana’s design fits all three desired characteristics of a blockchain: it is scalable, safe, and decentralized, and it is built on the Ethereum blockchain. Solana’s design specifies a theoretical top limit of 710,000 transactions per second (tps) on a normal Gigabit network and 28.4 million transactions per second (tps) on a 40-Gigabit network for transactions per second (tps) on a Gigabit network.
In Solana’s blockchain, the Proof of History (PoH) and Proof of Stake (PoS) models are used simultaneously. While validators (those who verify transactions uploaded to the blockchain ledger) use PoS, they may verify transactions depending on how many coins or tokens they have; when using PoH, transactions can be timestamped and confirmed in a matter of seconds.
Ethereum Vs Solana
Due to the fast increasing ecosystem of Solana as well as its adaptability, it has unavoidably garnered parallels to Ethereum, the premier blockchain platform for decentralized apps (dApps).
Having smart contract capabilities is something that both Solana and Ethereum offer, which is important for operating cutting-edge applications like as decentralized finance (DeFi) and nonfungible tokens (NFTs). However, there are some significant distinctions between the two approaches.
The Ethereum blockchain, in contrast to the Solana blockchain, is a Proof of Work (PoW) blockchain, meaning that miners must compete to solve complicated puzzles in order to confirm transactions. As a result, this technology is more energy consuming and hence harmful to the environment.
Much of the excitement about Solana in 2021 stemmed from the fact that it had a noticeable edge over Ethereum in terms of transaction processing speed as well as transaction cost. In terms of transaction processing speed (tps), Solana can handle up to 50,000 transactions per second (tps), with an average cost per transaction of $0.00025. The cryptocurrency Ethereum, on the other hand, can only conduct fewer than 15 transactions per second, and transaction costs have reached an all-time high of $70 in 2021.
Ethereum, on the other hand, has the benefit of being the first to market, and as a result of its large ecosystem, it is only second to Bitcoin in terms of market value.
The Eth2 update and the transition to a proof-of-stake (PoS) paradigm for Ethereum are both scheduled for 2022; the upgrade is supposed to make the blockchain more scalable, secure, and long-lasting, while also drastically speeding up transaction processing speed.
Solana’s position as a younger blockchain firm was also scrutinized after the company’s network was down for more than 17 hours on September 17, 2021, due to a spike in transaction volume—which peaked at 400,000 transactions per second—and bot activity that caused excessive memory usage. While the value of the Sol token originally dropped as a result of the news, it has since recovered those losses, hitting a high of more over $250 in November 2021.