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What is Solana (SOL)

What is Solana (SOL)

Solana is a programmable blockchain that aims to perform high-speed transactions without losing its main feature: decentralization.

Solana, the new trending blockchain for the crypto industry, is no shortage of innovations, and many expect it to shake up the industry. Indeed, its platform incorporates innovative features allowing it to manage up to 50,000 transactions per second.

What is Solana (SOL)

How is this feat possible and above all, how does Solana work? In this article, we will present this project and how it could revolutionize the future of blockchain.

Contents :

  • Solana (SOL), history and development
  • First of all, what is Solana?
  • What is proof of history (PoH)?
  • The BFT tower system: practical Byzantine fault tolerance optimized for PoH
  • Turbine: the protocol for the preparation of the blocks
  • Sealevel: simultaneous smart contracts
  • Gulf Stream: Solana's mempool management solution
  • Pipelining: a transaction processing unit to achieve the efficiency of a single node
  • Cloudbreak: Solana’s horizontal state architecture
  • The “archivers”: the distributed register of Solana
  • How does Solana work?
  • What are the applications managed by Solana?
  • Who are Solana's competitors?
  • Solana and its more than 250 partners
  • What are the predictions for the price of the crypto SOL?
  • The distribution of the Solana token
  • How to buy SOL crypto?
  • Solana, a potential market disruptor?

Solana (SOL), The history and development.

Announced at the end of 2017, Solana (SOL) is a new cryptocurrency that has undergone three years of development before an official launch in 2020. Its token is native to the blockchain of the same name, which is a direct competitor to Ethereum. The SOL is a creation of the company Solana Labs made up of American engineers from large digital companies (Google, Apple, Microsoft, Intel). At its head is Anatoly Yakovenko, former engineer of Qualcomm and Dropbox, and expert in mobile technology.

The (open source) Solana project is presented as a solution for democratizing financial systems, and its mission is to become the default option for all decentralized applications. Focusing on the speed and scalability of services to facilitate cryptocurrency transactions and their generalization to the general public, the Solana project allows for a large number of operations per second, and provides for commissions of only 0.000001 dollar per transaction. Security on Solana is also enhanced by the addition of Proof of History (PoH) consensus and Proof of Stake (PoS) consensus, two major innovations.

What is Solana (SOL), and how did this project come about?

Anatoly Yakovenko, former Qualcomm and Dropbox collaborator, founded and announced the Solana platform in 2017 when the project's white paper was published. Mr. Yakovenko is a software engineer experienced in compression algorithms and distributed systems. Together with Eric Williams and Solana's CTO, Greg Fitzgerald, the team aims to make this project a distributed, trustless protocol to address common issues present on Bitcoin and Ethereum blockchains.

Solana's white paper is the first written reference to the concept of proof of history, described as a new system for keeping track of time for distributed systems on the blockchain.

The team released the Solana platform testnet in February 2018. The company behind this platform, Solana Labs, was originally called Loom. The name later changed to avoid confusion with Loom Network, a multi-chain interoperability solution.

Solana raised over $ 5 million through two seed rounds ahead of its Series A funding. In 2019, Solana Labs completed a $ 20 million Series A funding round led by Multicoin Capital. After her launch auction on CoinList, Solana raised an additional $ 1.76 million.

The mainnet beta launched in March 2020, and offered basic transaction functionality and smart contracts.

The current Solana team has gained experience working for the world's largest companies (Apple, Qualcomm, Intel, Google, Microsoft, Twitter, Dropbox and others). So far, Solana has received the attention of many investors, including Multicoin Capital, Foundation Capital, SLOW Capital, CMCC Global, and Abstract Ventures, among others.

At this time, Solana Labs is the main contributor to the network. The Solana Foundation, a non-profit foundation, is actively involved in the funding and development of community initiatives.

First of all, what is Solana?

Decentralized transactions are possible thanks to blockchain technology. That said, the technology we use to transfer cryptocurrency has one major problem: It is slow. To put it in perspective, let's take the Ethereum network, which can process around 15 transactions per second, while the Visa network processes tens of thousands of them every second.

And this is exactly the problem Solana wants to solve. But then, what does Solana really consist of?

Solana is a programmable blockchain that aims to perform high-speed transactions without losing its main feature: decentralization. The network uses a new mechanism called “proof of history”.

SOL, the native blockchain token, is used for transaction fees and can also be staked. Solana is a direct competitor of the Ethereum network.

What exactly is a programmable blockchain?

Unlike Bitcoin, which mainly consists of a huge immutable large ledger, Solana uses smart contracts. These smart contracts are pieces of code that trigger actions when certain conditions are met.

Ethereum also uses this smart contract feature to deploy decentralized applications (dApps). However, the sheer volume of these self-executing contracts has congested the network.

Consider Ethereum's relatively low transfer speed and the large number of smart contracts; the network is slow, the transfer costs are very high, and the carbon footprint is significant, as it still operates on the principle of proof of work consensus.

Until Ethereum 2.0 is fully deployed (which is slated for 2022), the network is expected to leave a share of the dApp market to next-gen blockchains. So far, Solana is the fastest programmable blockchain.

Solana operates on an adapted proof-of-stake consensus model, and on which cutting-edge basic innovations have been deployed.

The speed of execution of Solana is due to 8 functions:

  • Proof of History (PoH)
  • Tower BFT
  • Gulf Stream
  • Turbine
  • Sealevel
  • Pipelining
  • Cloudbreak
  • The “archivers” (or Archivers)

What is proof of history (PoH)?

The Solana blockchain uses the Proof of History (PoH) algorithm, which is actually not a consensus mechanism, but a cryptographic clock. PoH's algorithm helps make the entire network more efficient and faster, because nodes do not have to communicate to validate a block. Instead, they all have to agree on the timing of the events recorded on the channel.

With historical records of transactions and events on the blockchain, the system can easily keep track of the order of events.

PoH works through nodes because each has its own clock, which is the main reason for network efficiency.

For its part, Bitcoin uses the proof of work consensus. For this, miners must validate transactions and produce new bitcoins with each new block. Miners must also cooperate to achieve consensus, for example when it comes to establishing when a transaction has taken place.

The creator of Solana noted in his white paper the essential feature of proof of work, which Bitcoin uses: the ability to function as a decentralized clock.

In traditional centralized systems, it is not necessary to have a clock because all nodes in the system can be confident that the timestamps are correct.

As the creator of Solana explained, the PoH system is a historical record that proves that an event took place at a specific point in time. Imagine, for example, that you take a photo from today's printed newspaper and upload it. By using PoH, Solana's blockchain is able to handle more transactions, which contributes to better scalability and efficiency of the platform.

The BFT tower system: practical Byzantine fault tolerance optimized for PoH
Solana implemented a practical Byzantine fault tolerance, pBFT for short, which is optimized for PoH. PBFT is an algorithm that uses PoH as a cryptographic clock to help achieve consensus without having to send a flood of communication between nodes. This algorithm can significantly improve the speed of transactions.

Turbine: the protocol for the preparation of the blocks
Another key component of this high-speed blockchain is the Turbine protocol, which groups the data to be transferred between nodes into small batches of data. Transmitting data in these reduced sets solves bandwidth issues and increases network processing speed.

Sealevel: simultaneous smart contracts
Solana’s execution time is also optimized by the Sealevel engine, which enables parallel processing of transactions. This is a fundamental development in the blockchain industry, as Solana is the first blockchain to be able to perform parallel processing for the same instruction, but having different inputs.

Gulf Stream: Solana's mempool management solution
Gulf Stream is Solana's solution to reducing the number of unconfirmed transactions, with the system pushing the capture and transfer of transactions to the end of the network. This allows validators to reduce confirmation times, run transactions ahead of time, and reduce the memory load from the pool of unconfirmed transactions. Gulf Stream enables Solana to achieve 50,000 transactions per second.

Pipelining: a transaction processing unit to achieve the efficiency of a single node

The pipelining process is an optimized way of handling the input data stream, which must be handled in sequential steps. Solana's technical director compared the process of pipelining to doing laundry: The clothes go through the process of washing, drying and folding, and each of these steps must be done in that order, but by different units.

This model is commonly used in the design of central processing units, and it allows transactions to be quickly validated and replicated to all nodes in the network.

Cloudbreak: Solana’s horizontal state architecture
Solana uses memory-mapped files and sequential operations to promote network scalability. Cloudbreak is the data structure that provides sequential writes and simultaneous reads between the 32 threads supported by modern SSDs.

The “archivers”: the distributed register of Solana
Archivers are used to store data, which they download from consensus validators. PoH technology enables the implementation of Proof of Replication (PoRep) for batch verification on millions of replicator nodes around the world.

Archivers tell the network how many bytes they have available for storage. Based on the total available storage of archivers and the number of replicator identities, the network divides the registry into different portions based on replication rate and fault tolerance. Archivers are rewarded with around 3% inflation for their storage work.

How does Solana work?

Solana is the world's first scalable web blockchain. Thanks to its unique architecture, the blockchain without platform authorization can generate a throughput of 50,000 transactions (TPS) per second.

Solana is designed to be the fastest blockchain on the market. Its eight main features (PoH, Tower BFT, Gulf Stream, Turbine, Sealevel, pipelining, Cloudbreak and archivers) allow it to achieve unmatched transaction speeds.

In summary :
  • Solana uses a proof of stake consensus mechanism, assisted by the Tower BFT consensus.
  • Tower BFT enables the network to achieve consensus by enforcing a universal time source, called proof of history. This creates a permanent baseline for all nodes in the network. It is important not to confuse Proof of History (PoH), a clock without network permission, with a consensus mechanism.
  • The proof of history is a decentralized clock that helps secure the blockchain and is one of the eight foundational innovations of the Solana network. Tower BFT uses the permissionless clock to speed up transactions.
  • Likewise, the transaction parallelization system, Sealevel, allows smart contracts to run simultaneously, using available GPUs and SSDs.
  • Gulf Stream functionality is the memory pool system, often referred to as a mempool. This allows transactions to be passed to validators before previous transactions are finalized, thereby maximizing transaction speed.
Finally, Solana's processes work as follows:
  1. Receipt of the translation entry in the registry (also called a ledger)
  2. The registry sequences and categorizes messages so that they can be processed by other nodes efficiently.
  3. The same register executes the transactions of the current state and stores them in RAM.
  4. The registry publishes the end state transactions and signature to the auditors (these are the replication nodes).
  5. Auditors perform the same transactions on the copy of the report and publish their report signature when they receive a confirmation.
  6. The published confirmations will serve as a vote for the consensus mechanism.

What are the applications managed by Solana?

Now that you have a better idea of ​​what Solana is, you might be wondering what applications can run on this network.

Solana is a programmable blockchain due to its ability to interact with smart contracts, much like Ethereum. Smart contracts support a range of decentralized applications (dApps), such as NFT marketplaces, DeFi games, and DEX (decentralized exchanges).

The most popular Solana applications are decentralized exchanges (DEX) and loan applications. The network can also support wrapped assets and stablecoins , such as USD Coin. You can view the entire Solana ecosystem here.

Who are Solana's competitors?

Most unauthorized blockchains see Solana as a potential competitor, as Solana is a viable alternative to older smart contract blockchains. Many compare Solana to Ethereum, which is the first blockchain-based server platform. The main advantage of Solana is that its platform can process up to 50,000 TPS, while Ethereum's processing rate is between 15 and 45 TPS.

If we compare the size and development history of different blockchains, Solana's competitors would be SKALE Labs, 1Token, ARK and Cindx. However, the constant evolution of the network and its design sets it apart from all existing blockchains.

Solana and more than 250 partners

Solana launched the beta of its mainnet in March 2020. Since then, its native cryptocurrency, SOL, has grown into one of the industry's top 10 cryptos by market capitalization. Although the network offers full functionality, developers are still working to improve the characteristics of the network.

Solana already has more than 250 projects and partners, including USDC, Chainlink, BSN and Serum. The Solana team believes that scalability of dApps is no longer an issue and now aims to add partners and capital to help it onboard one billion users.

Solana Labs plans to further accelerate the construction of its platform and plans to launch an investment and trading office for the network. 

What are the predictions for the price of the crypto SOL?

The overall development of the network as well as the projects that have joined Solana have contributed to the positive sentiment in the market. Solana's native token (SOL) is used for transaction fees and staking.

The protocol burns all fees paid into SOL, making it a deflationary mechanism and helping to entice users to staking their SOL tokens directly from their compatible crypto wallets. This helps to make the blockchain more secure.

In September 2021, Solana's native token (SOL) ranked 7th among cryptocurrencies in the market by market capitalization, with a total of 296,831,588.35 tokens in circulation.

In view of its many successful partnerships, the price of SOL has increased by 66,000%. Its all-time high is $ 214.96 and was reached on September 9, 2021. Investors can also increase their income by placing their SOL in staking.

The distribution of the Solana token

As of September 2021, the outstanding supply of the SOL crypto was $ 296.69 million.

The SOL offer is distributed as follows:

  • The tokens from the seed sale represent 16.23% of the total supply.
  • Tokens from founders' sales represent 12.92% of the total supply.
  • Tokens from the sale of validators represent 5.18% of the total supply.
  • Tokens from strategic sales represent 1.88% of the total supply.
  • Tokens from the sale of CoinList Auction represent 1.64% of the total supply.
  • Team tokens represent 12.79% of the total supply.
  • The Foundation's tokens represent 10.46% of the total supply.
  • Community tokens represent 38.89% of the total supply.
The Swiss Foundation, whose board of directors is independent, holds the community tokens. These are used for marketing and grants. Foundation tokens are on deposit at Coinbase and in cold storage wallets. Team funds are in a USD bank account.

The funds received from token sales are distributed as follows:

  • 3.00% - partnerships
  • 3.00% - marketing
  • 35.00% - team
  • 35.00% - development
  • 12.00% - professional and legal services
  • 3.00% - taxes
  • 6.00% - office rent
  • 3.00% - other

How to buy SOL crypto?

Given the speed of both its business development and growth, Solana is attracting the interest of buyers around the world. Every day, more and more cryptocurrency exchanges are quoting the SOL to trade against fiats or other cryptos. Investors can thus buy SOL tokens on Binance, Bitfinex, FTX or Coinbase, among others. SOL can also be staked.

Solana, a potential market disruptor?

Solana has the potential to disrupt the dApp ecosystem with its next-generation functionality. The platform is an improved blockchain capable of solving many of the problems encountered by other well-known blockchains. Ethereum 2.0 is not yet mature, so there is a possibility that Solana will establish itself in the market.