What is Solana (SOL)? Is this the next Ethereum?
If you follow the latest happenings in the cryptocurrency and blockchain space, you have probably heard of the Solana network. You may have also heard that it is an Ethereum killer. The network was created to replace Ethereum and has become one of the fastest-growing blockchain networks within its first year. It offers innovative technology with remarkable performance that attracted much attention from 2021 onward, making it quite popular among investors over time.
What is Solana?
Solana is an open-source blockchain network that facilitates the development of DApps with a high throughput of 65,000 transactions per second (TPS). The Solana network is a third-generation blockchain that promises to build a fast and scalable network while maintaining security and decentralization.
Solana’s blockchain network is one of the few layer-one solutions that can handle thousands of transactions per second without the need for layer-2 or off-chain solutions. Solana, like Ethereum, is a programmable blockchain platform that can host decentralized applications or DApps. On the other hand, Solana challenges Ethereum, the most popular platform for developing DApps, by delivering a fast and efficient network with minimal transaction fees.
A brief history of Solana
Solana is an open-source project managed by the Switzerland-based Solana Foundation. Anatoly Yakovenko founded it in 2017. He published the Solana Whitepaper in 2017, intending to develop a distributed system using an algorithm that can improve Proof-of-Work and Proof-of-Stake blockchains. He and his colleagues created a prototype testnet in 2018. Solana was officially launched in March 2020 through an ICO, raising more than $25.6 million, and raised over $314 million in 2021 for future development.
One of the primary reasons for Solana’s popularity is because several well-known organizations support it. These supporters include FTX, Alameda Research, Andreessen Horowitz, and Polychain.
The SOL token
SOL is the native currency as well as a utility token on the Solana blockchain. Solana Labs launched the SOL token in March 2020 during the release of the beta testnet. On the Solana blockchain, the SOL token is used for staking and paying transaction fees. SOL has a current supply of almost 26 million, with a maximum supply of 489 million. Holders can use it to pay for micropayments known as “lamports.”
SOL did remarkably well in2021, rising to the seventh-largest cryptocurrency by market capitalization as of September 2021.
How does Solana work?
In terms of technology, Solana is a bit unique. Currently, most blockchain networks use the Proof-of-Work (PoW) or Proof-of-Stake (PoS) consensus mechanism. On the other hand, Solana introduced a new cryptographic mechanism known as Proof-of-History (PoH). This mechanism improves scalability while retaining network security.
The nodes in PoH can create a transaction snapshot, proving that the transaction has occurred. This is accomplished by using a cryptographic clock. These clocks allow the nodes to agree on the time order of transactions occurring on the blockchain without talking.
Solana uses a combination of PoS and PoH to validate and add new blocks to the blockchain. Through PoS, individuals stake SOL tokens to become validators for the blockchain. Through PoH, validators can easily verify transactions without communicating with the other nodes on the network.
Compared to popular networks such as Bitcoin and Ethereum, this approach enables Solana to execute transactions faster and at a lesser cost.
Solana has overcome several problems encountered by previous blockchain networks and developed a new structure and efficient system for verifying and adding transactions to the blockchain network. However, it’s worth noting that the network is still in development — but will undoubtedly compete with Ethereum one day!
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