Solana is a decentralised first-level blockchain built to enable scalable, user-friendly apps as well as smart contracts. The creator’s strategy includes thousands of smart contracts which can run simultaneously and in parallel without bogging down the network’s performance.
Solana is a Delegated-Proof-of-Stake (DPoS) network. DPoS networks differ from PoS ones in a couple of ways. Both mechanisms utilise Validators to process transactions. Validators are chosen based on their overall holdings in the network. The more coins you purchase, the higher the chances you will get chosen as a validator. This strategy ensures that only those vested in the network hold this position.
Co-founder and CEO Anatoly Yakovenko had been designing systems for the semiconductor giant Qualcomm and Dropbox before starting Solana. He was later joined by two former Qualcomm colleagues, Greg Fitzgerald and Stephen Akridge.
Yakovenko wrote the first PoH white paper back in 2017. He and Fitzgerald developed a blockchain called Rust a little later. In 2018, Anatoly recruited Greg, Stephen, and three others to co-found a company that was named Loom.
Loom, an Ethereum-based project, was created around the same time as Ethereum, and many were confused about whether they were the same project. The Loom team changed the name to Solana, a nod to a small beach town north of San Diego called Solana Beach, where Anatoly, Greg, and Stephen lived and surfed for three years when they were working for Qualcomm.
Solana Labs had raised around $20 million (~£14.4 million) from investors over the following year. The test version of the SOL coin was called Tour de SOL.
Solana can process 50,000 transactions per second (TPS) or more. The number could increase to as much as 700,000 TPS as the network grows. To put that in context, Ethereum currently has 15 to 45 TPS.
Solana Labs has developed a network that is never delayed. Its protocol doesn’t depend on local computer clocks or local timeouts between state transitions beyond the Verifiable Delay Function (VDF). The VDF actually ensures each transaction is evenly timed until the network moves forward.
Receiving nodes can begin state transition as soon as the message is received because they have cryptographic proof that the producer followed the delay preset by the protocol. Moreover, the messages can arrive out of order and the cost of network delays is gradually accommodated over time. Once Proof of History (PoH) is reconstructed, the entire data structure guarantees that the respective delays between all the block producers are correct.
The result of this functionality is that the network is never delayed and can continue producing at ultra-high speeds despite variations caused by block producers.
The native Solana token is used for paying transaction fees on the Solana network. The token can be passed to nodes in the Solana cluster in exchange for running an on-chain program or validating its output.
The system can perform micropayments of fractional SOLs that are called lamports. A lamport has a value of 0.0000000000582 SOL.
Solana has attracted many prominent investors. SOL’s average transaction fee is just $0.00025 (compared to Ethereum’s $12).
Solana’s ecosystem is truly impressive. Countless decentralised finance (DeFi) projects, crypto wallets, dapps, and stablecoins have chosen Solana as their blockchain platform.
The Galactic NFT-marketplace, the Wormhole bridge, and the Degenerate Ape Academy NFT-project are among other Solana-based crypto projects.
SOL has just recently gone past the $100 resistance level and is now changing hands at around $115. Solana saw its price more than triple over the past 17 days as it set a new all-time high at $130.16.
If the investors continue to profit, Solana’s price will test the demand zone stretching from $91.51 to $96.27. If buyers make a comeback around this barrier, we are more likely to see the reverse situation.
However, SOL might briefly dip below $91.51 before restarting the upswing. In total, this retracement would represent an 18% downswing.
Solana has several competitors on the market, for example, Algorand, Cardano, Polkadot, and Ethereum. The prospects for growth are high for the company, but that might be due to the young age of the crypto industry.
Solana’s creators are expecting it to grow to one billion users. It’s an ambitious plan, to say the least, so we will have to see where the chips fall.
Solana is pointing to a growing interest in altcoins, DeFi, and Ethereum alternatives. The platform’s success is a testament to the fact that the crypto industry is slowly but surely maturing – SOL grew by 72 times this year alone, while Bitcoin (BTC) only saw a 68% growth. This testifies to more and more people becoming aware of more than just one cryptocurrency.
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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
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