Solana is an open source project with the main purpose of improving the scalability by increasing network speed with lower cost.
What is Solana?
- Solana is an open source project on permissionless blockchain. It is highly functional and provides decentralized finance (DeFi) solutions.
- A significant focus for the Solana Foundation – which backs and develops the Solana blockchain – is to make decentralized finance accessible to the masses.
- The Solana network can process up to 65,000 transactions per second (tps) at the measly cost of USD0.00025 per transaction, as compared to Ethereum’s measly 13 tps and exorbitant GAS costs.
- SOL – Solana’s native token – is burned to pay for fees on the network in a similar manner to GAS on the Ethereum blockchain.
- SOL tokens can also be staked to earn rewards as an incentive for securing the blockchain.
|Token Type/Protocol||Solana protocol|
|Total Token Supply||506,348,085 SOL|
|Current Circulating Supply||See Coinmarketcap|
|Market Capitalisation||See Coinmarketcap|
|Token Creation Date||March 2020|
|Can it be mined?||No|
Who is behind Solana?
Solana was created by Anatoly Yakovenko, former senior staff engineering manager at Qualcomm. Later on, he entered a new position as a software engineer at Dropbox where he and his colleague, Greg Fitzgerald started working on a project which would later be named Solana.
What is the purpose of Solana?
Solana aims to improve scalability by introducing proof-of-history (PoH) which in layman’s terms, increases the throughput and speed of the network (which in turn reduces the cost of transactions upon the network).
By doing so, decentralized app (DApp) creation can be incentivised for both users and developers, as the cost of using the network becomes less prohibitive as compared to slower, less scalable, and more expensive networks like Ethereum.
- Solana can decrease validation times for both transaction and smart contract execution due to Solana’s hybrid protocol (both Proof-of-Stake, and Proof-of-History). With lightning-fast processing times, Solana has attracted a lot of institutional interest.
- Both small-time users and enterprise customers can benefit from the Solana protocol as it is designed to have low transaction costs while still guaranteeing scalability and fast processing.
- Composability (the ability for individual components within a system to interoperate with one another) is ensured, allowing different ecosystem projects to interact with one another seamlessly.
- Users are able to connect to a Solana cluster to secure the network (i.e. staking) in exchange for rewards.
- Solana has a relatively high concentration of whale wallets with a SOL balance greater than 10,000, although the vast majority of these wallets are for validator nodes or the Solana Foundation Reserve.
- Solana is a layer-1 – a main blockchain that transactions are processed on – which means that it is competing against the likes of other blue-chips like Ethereum, Cardano, and Polkadot. In the same way that Google cannibalized all other search engines in the early 2000’s, the adoption (and by extension, price) of SOL will therefore be contingent upon its ability to capture market share as the dominant layer-1.
News and Updates
- Solana is ranked number 7 in the CoinMarketCap ranking as of September 2021 as a result of its meteoric rise from less than $1.61 on January 1st to a peak of just under $200.
- FTX US has announced its support for a Solana NFTs on 11th October 2021 allowing users to mint, trade, auction, and authenticate NFTs based on the Solana blockchain through the platform.
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