Solana is a popular, public blockchain that supports smart contracts such as NFTs and many other decentralized applications. SOL is the token used with Solana blockchain that uses staking and means of transferring value to provide network security at high levels. In the following, we try to introduce the Solana blockchain and provide all you need to know about it.
What is Solana?
Solana is an open-source project with high functionality that makes use of a new and high-speed layer-1 blockchain. It was first launched in 2017 by Anatoly Yakovenko who is a former executive at Qualcomm. According to the creator, Solana is developed to provide throughput high over the popular blockchains with low costs.
Solana creates a blockchain platform that supports many decentralized applications such as its native cryptocurrency SOL as well as other well-known cryptocurrencies Tether, Terra, Chainlink, etc. It also supports decentralized finance (DeFi) projects, including decentralized trading. Solana is also one of the first platforms to support decentralized Internet (or Web 3) applications. If it is not enough yet, notice that it supports NFT markets, music streaming and gaming, too.
Solana blockchain makes use of proof-to-history (PoH) protocol; therefore, it relies on validators rather than miners to process transactions and mint new cryptocurrencies. This feature makes Solana much faster in terms of the number of transactions processed on the platform with significantly lower transaction fees compared to other existing blockchains. Solana blockchain also uses a hybrid protocol of proof-of-stake (PoS) which is an algorithm that allows the blockchain to maintain accurate information across all of its participants.
What makes Solana unique?
Solana seems to be designed to solve the already known problem of blockchain trilemma, which was first proposed by Vitalik Buterin, the creator of Ethereum. The trilemma describes three major challenges that developers face when building blockchains: decentralization, security and scalability. Many experts argue that it is almost impossible to hold all the three aspects along and one will be sacrificed in favor of the other two. They believe only two of these features can be provided in a blockchain at any given time.
However, Solana blockchain platform comes up with a hybrid consensus mechanism that settles on decentralization to maximize speed. The unique combination of PoS and PoH makes this blockchain innovative in the domain. Solana also improves scalability greatly on the number of transactions supported per second while a normal blockchain slows the process due to time discrepancies and a large number of nodes to verify transactions. Solana solves the problem by providing one leader node based on PoS mechanism that sequences messages between nodes. Therefore, Solana reduces workload and increases throughput even without a centralized and exact time resource.
Even more interesting, Solana creates a chain of transactions in which the output of one transaction is used as the input for the next. It forms a history of transactions which is actually the main mechanism of Solana, PoH. This feature lets greater scalability of protocols that significantly improve the usability of the blockchain accordingly.
How does Solana work?
Solana is a programmable blockchain with the ability to store codes or smart contracts. There are several innovative features provided with Solana blockchain, for example, Gulf system and Sealevel, both of which help identify all non-overlapping transactions and process them simultaneously. These two main features further allow to identify the number of upcoming leaders and accumulate transactions before any blocks, which, in turn, leads to faster process execution. PoS system adds a low barrier to entry and timestamped transactions into Solana that provides maximum efficiency.
The fast synchronization between nodes on Solana Blockchain is based on PoH system. This solves the problem of synchronizing the interactions between nodes, from Leader Schedule and Turbine and Gulfstream data transfer protocols. Such fast synchronization of nodes makes Solana fast enough to rival complex centralized systems.
Besides, Solana includes archivers that store distributed data and optimize transaction recording using Cloudbreak. It allows a perfect process of transactions in the Solana utility tokens. Solana blockchain also is different in that it does not come with restrictions of requiring a minimum number of coins to create a node.
The Solana token (SOL)
The native cryptocurrency in Solana is SOL. SOL is also the utility token in Solana that provides transferring value to the platform and blockchain security by staking. It was first launched in March 2020 and is one of the top 10 cryptocurrencies in the market.
SOL used a similar operation scheme to Ethereum blockchain. However, they are different in that SOL stakes the token to validate the transaction using PoS consensus mechanism. In addition, the Solana token is a means to receive rewards as well as pay transaction fees and, also, enables users to participate in governance features.
There are over 500 million SOL tokens in circulation now. Almost %60 SOL tokens are under the control of Solana’s founders and Solana’s foundation and the rest are reserved for the Solana community.
Pros and cons of buying Solana
Like any newcomer to the market, there has been lots of discussion on whether to invest in Solana. Let’s check some aspects of this discussion.
Pros
First of all, the most attractive feature of Solana is the high transaction speed and low fees. As already discussed, Solana can support tens of thousands of transactions per second compared to less than 20 transactions by its main rival Ethereum. Also, Solana makes use of cutting-edge technology with the process of verification that helps with lower fees compared to other blockchains. At the time being, Solana’s average fee is less than 1 percent of each transaction. Second, Solana has got lots of attention in the market since it supports smart contracts and NFTs. Solanart NFT market runs on the Solana network and allows NFT buyers to enjoy a faster and more secure transaction as well as lower fees compared to Ethereum users. Finally, Solana has proved to be more environmentally friendly. In contrast to Ethereum and Bitcoin, the computing power in Solana, using PoS and PoH verification process, is less energy-intensive, and causes less negative environmental impacts.
Cons
Solana community is rather young and, therefore, small. So, investors may question the network stability of Solana. Since there are only about 400 projects on Solana network now, the number of projects cannot be compared to those of Ethereum with almost 3000 cases. However, the projects on Solana include decentralized finance, or DeFi, applications, NFT projects and gaming apps.
How to invest in Solana?
If you find yourself interested in Solana, you may buy SOL directly through a cryptocurrency exchange market. You need to choose a proper cryptocurrency exchange like Binance, Kraken and Coinbase. Check the price rate and fees before purchase. Introduce your digital wallet to store your SOL securely. SOL also can be stored on a hardware wallet, which is more secure.
How to trade on Solana network?
It is pretty simple to start trading on Solana. All you need is to choose a digital wallet or exchange that supports SOL staking, such as SolFlre, Binance, or Exodus wallet to stake on Solana. On your wallet, click the Staking section and create an account. Then, you need to transfer Solana coins into the staking account. Remember to leave some coins in the wallet to pay transaction fees. You also need to choose a validator to delegate your SOL while considering the operator fees. Since Solana review uses a proof of stake mechanism, validators secure the network through staking and not mining. Therefore, you are required to appoint the existing SOL to validators and eliminate the need for high-end GPUs accordingly.
Final word
Today, Solana is one of the most advanced blockchains in operation. The developers behind this project tried their best in creating a network that could overcome problems of functionality, payment and speed as well as security. Therefore, most experts expect to see more developers make the switch over to Solana as their original blockchains to provide higher quality services to their users.
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