We are experiencing the new era of blockchain technology, which is a more powerful, efficient and scalable way to enable a decentralized world. The Ethereum network has been the big leader and has most of the Dapps, DeFi protocols and smart contracts from
crypto world built on it.
However, the growing demand for platforms with better technological performance has become an increasingly evident issue, emphasized by users who are beginning to see no sense in the high network congestion and high network usage rates.
Although Ethereum 2.0 is about to be released in full, that doesn't change the fact that many new competing blockchain platforms have emerged and excelled in terms of scalability and transaction speed.
Today we are going to learn more about one of them -which has been shining for some time now- and try to understand why its token is so highly valued. We are talking about the Solana network.
Solana (SOL) is a programmable blockchain for the creation of decentralized applications (DApps) that work in the DeFi, NFT, Web 3 sector, among others.
The project focuses on being a smart contracts platform that is fast, secure and with expanded scalability, in an infrastructure that promises to support between 50,000 and 65,000 TPS (transactions per second) and 400 milliseconds of time to create blocks, in an environment that, theoretically, it maintains decentralization and security.
Solana's ultimate goal is then to solve the blockchain trilemma, which assumes that a decentralized network can only satisfy two of three main properties - decentralization, security and scalability. For this, Solana has a series of innovations along with the combination of two types of consensus mechanisms, the Proof of Stake and the Proof of History, which we will see later.
Solana's origins go back to the end of 2017, when founder Anatoly Yakovenko (a former processor company Qualcomm and also a software engineer at Dropbox) published a draft white paper detailing a new timing technique for distributed systems, called Proof. of History (PoH).
A few years later, Anatoly teamed up with Qualcomm colleague Greg Fitzgerald and they founded Solana Labs, which between April 2018 and July 2019 raised more than $20 million in private token sales.
In 2020, the Mainnet beta was launched and today Solana Labs remains the main contributor to the network, while the Solana Foundation, a non-profit organization based in Zug, Switzerland, is dedicated to funding and developing the construction initiatives of communities around the world.
The Solana network is known as a third-generation blockchain and, as mentioned at the beginning, aims to solve the blockchain trilemma - creating a fast and scalable platform, trying not to compromise its security or decentralization. The protocol features eight core technologies that allow transactions to scale in proportion to bandwidth, making it the fastest blockchain in the world.
This set of computational technologies allows the network to accept thousands of nodes and offer a decentralized platform for DApps with global scale potential, without congestion and high fees, unlike Ethereum today.
This would make Solana about 10,000 times faster than Bitcoin and 3,800 times faster than Ethereum.
Another unique aspect about network performance is that it is achieved without using off-chain or second-tier solutions (layer 2), while Ethereum relies on Polygon plasma chains and scaling solutions.
The images compare Solana's performance with Visa, Ethereum 2.0, Binance Smart Chain, Polkadot, PayPal, Cardano and others. In terms of transactions per second and fees per transaction, Solana demonstrates advantages.
The network already hosts several initiatives and has some partnerships with players such as USDC, Chainlink, Kin, BSN, Exodus and Serum, DEX created by FTX and Alameda Research, which grew 1,500% just 12 hours after its launch.
Another project and highlight is Audius, which was recently chosen by TikTok as a streaming partner. Altogether, there are more than 400 projects created in the Solana network ecosystem and the influx of developers who choose to build their applications on it has increased.
The History Proof is the main component of the Solana protocol as it is responsible for most of the transaction processing.
Despite its name, PoH is not a consensus mechanism, but a cryptographic clock that allows nodes to agree on the timing order of events in the chain, without having to communicate with each other - as each node has its own clock.
This technique builds a history of information that will be used to verify an event that occurred in a certain period of time, which helps to create more efficiency and greater throughput within the network, storing historical records of transactions and allowing the system to follow the order of events more easily and maintain the order of events.
The Proof of Bet Consensus (PoS) is used as a tool for monitoring the PoH processes and validates each sequence of blocks produced by it.
It is the native token of the Solana ecosystem, which can be transferred between network nodes and, as with most smart contract platforms, serves as payment on the
application execution process and transaction verification.
Other ways to use the SOL are:
Making micropayments known as lamport.
Participation in the staking process and consequently receiving rewards, with the minimum necessary being 0.01 units of SOL.
Acting in the governance process and voting on future updates and proposals submitted by the community.
Currently, the circulating supply of the SOL token is 291,257,836 million and the total supply is 503,272,543 million The percentage of SOL in staking is 76%.
Of the total tokens distributed, 16.23% were directed to a seed sale (Seed Sale), 12.92% were dedicated to a foundation sale (Founding Sale), 12.52% were distributed among team members (Team ) and 10.46% of the tokens were given to the Solana Foundation (Foundation).
The remaining tokens have been released for public and private sales or are yet to be released on the market.Of the total tokens distributed, 16.23% were directed to a seed sale (Seed Sale), 12.92% were dedicated to a foundation sale (Founding Sale), 12.52% were distributed among team members (Team ) and 10.46% of the tokens were given to the Solana Foundation (Foundation).
The remaining tokens have been released for public and private sales or are yet to be released on the market.
CURRENTLY, THE NETWORK HAS 1288 BLOCK VALIDATORS.
In addition to Proof of History, Solana also has 7 other key technological innovations:
Tower BFT - PoH-optimized version of PBFT (Practical Byzantine Fault Toleration)
A PBFT-like consensus algorithm that uses PoH as its cryptographic clock and allows consensus to be reached without having to incur massive message overhead and transaction latency. This is one of the reasons for the high performance of the network.
Turbine - a block propagation protocol
This protocol makes it easier to transmit data to blockchain nodes and allows Solana to resolve bandwidth issues and also increase its overall ability to settle transactions faster.
Gulf Stream - Mempool-less transaction forwarding protocol
This protocol allows validators to execute transactions early, reducing commit time, maximizing transaction commit speed and the network's capacity for simultaneous and parallel transactions.
Sealevel - Parallel smart contracts run-time
This processing engine allows Solana to achieve more efficient execution time and also allow transactions to run concurrently in the same chains of state blocks.
Pipeline > a Transaction Processing Unit for validation optimization
Process where an input data stream is assigned to different hardware responsible for it, allowing transaction information to be validated and replicated quickly across all
network nodes.
Cloudbreak > Horizontally-Scaled Accounts Database
An ideal data structure for simultaneous reads and writes over the network.
Archivers > Distributed ledger storage
Used for storing data, which is transferred from validators to a network of nodes known as Archivers, where it will be subject to verification to ensure that it is being stored correctly.
In recent months, Solana's token has drawn attention by becoming
the fifth most valuable in the world.
Since August, the SOL token has valued more than 360%, going from $31.00 to hit its historic top at $259.24, taking it to a market capitalization of $48 billion.
The growth of NFTs, including Visa's investment in digital art and intense celebrity interest in NFTs, may have helped spark Solana's rapid growth. Additionally, Solana has launched global hackathons to seek to encourage technology innovators to create and develop blockchain-based games, art and collectibles, as well as decentralized lending platforms on the Solana blockchain.
The impact Solana has created has also caught the attention of many investors, including Multicoin Capital, Foundation Capital, SLOW Capital, CMCC Global, Abstract Ventures and more. In June, Solana Labs completed a $314.15 million private token sale led by Andreessen Horowitz and Polychain Capital.
More than 100 project integrations covering DeFi, Blockchain Gaming and Web3.
More than 350 active validators distributed worldwide.
8.3 billion chain transactions.
More than 54 million blocks created.
4.9 million exclusive SOL portfolios.
More than 600,000 global advocates and community members.
The hackathon organized by the Solana Foundation in the fourth quarter was attended by more than 1,000 developers.
The growing popularization of NFTs, DeFi protocols and other smart contract applications gives blockchain technologies programmables such as Ethereum and Solana, a potentially bright future on the market.
If Solana proves that it can actually be able to deliver such performance without compromising security, decentralization and other important aspects, it could become an increasingly strong competitor and a prominent player in the increasingly competitive sector of contract platforms smart.
