Solana is one of the cryptocurrencies and Blockchain projects that are emerging and whose future may be bright. In this article, we analyze the Solana cryptocurrency, its main characteristics, strengths and limitations, and prospects and potential. Also, discover how to invest in Solana and our focus on Solana staking.
Solana: how does it work?
To understand how Solana Network works, we must first look at the parts that make up this protocol. Among these parts, we can highlight the following.
The Solana Proof of History (PoH) Consensus Protocol
Proof of History (PoH): The Solana consensus protocol Proof of History (PoH) is the cornerstone of Solana since this protocol is the one that offers the possibility of processing transactions at high speed and in complete safety. Proof of History is a Proof of Stake (PoS) type consensus protocol whose operation depends on the use of time and a type of function known as Verifiable Delay Function.
Solana's Verifiable Delay Function validation process
For a PoH validator to work on the network, it has to do some staking which gives it voting power within the network; the validation process uses the Verifiable Delay Function as an additional means of security to the simple lottery commonly seen in most PoS algorithms.
In this sense, Solana's Verifiable Delay Function PoH works in two ways:
- it allows you to order network transactions chronologically so that they are tracked in precisely that order
- It creates an intrinsically time-bound cryptographic system in which transactions are made, taken, and verified by the network. This is possible because Verifiable Delay Functions use the temporary transmit (Tx) parameters to perform a unique cryptographic function to ensure their validity.
The advantages of Solana
The main problem with the current Blockchain is that it supports very few transactions per second (tps).
For example, Bitcoin supports between 5 and 8 transactions per second and Ethereum between 12 and 20. As soon as these numbers are exceeded, the network has no choice but to become congested. What does that mean? That transaction fees increase so that these transactions are validated before the rest. According to its developers, Solana can exceed the figure of 50,000 transactions per second, making it the fastest network in existence.
Gulf Stream allows Solana to push failed or unconfirmed transactions away from the edge of the network
Additionally, Solana includes the Gulf Stream, which eliminates the mempool used in some cryptocurrencies such as Bitcoin and Ethereum, so Solana distributes transactions between validators, even before they finish validating the previous batch of transactions. . This allows you to reach maximum speed and as many transactions as possible simultaneously.
Turbine makes it quick and easy to propagate information between nodes
On the other hand, Solana also has the Turbine protocol, which propagates the blocks to facilitate the delivery of information to the nodes since the Solana protocol only takes about 0.5 seconds per block. The turbine divides block information into small sections sent by the network and tells nodes the content for building the block.
If, by coincidence, a node does not have the necessary information to create a block, it can request it from the rest of the network in parallel, thus reducing bandwidth.
Solana can support 100,000 transactions per second (TPS) and 700,000 when the network matures.
Cons of Solana
Solana: a beta version
Technically, Solana is still in beta. This is not uncommon for blockchain projects, which are almost all experimental in some respects.
Very high validator requirements
Solana pays the price for its speed: the requirements for validators (validators are computers that help run the Solana network) are very high. While, in theory, anyone can run a validator node on Solana, the high cost of building, running, and maintaining such a machine will alienate many users. In theory, this makes the network less decentralized, as more power is concentrated in the hands of fewer users.
This could cause other problems. For example, validator nodes that are not powerful enough to handle network activity can cause slowdowns or instability, which occasionally occurs in Solana.
Solana: an early-stage network
Finally, Solana has simply not been as tested as Ethereum, active since 2015. There may still be bugs or undiscovered issues affecting network performance or security.
Solana's potential
Solana has a cryptocurrency (a token) named SOL. The world of cryptocurrencies is subject to rapid change, but SOL is one of the most traded tokens on Coinbase and Binance. Ranked ninth on Coinmarketcap, Sol reached a historical price of $259.59 on November 6, 2021, and subsequently lost over 70% of its value. Since then, Sol has been trading reliably above the big $50 support.
Solana's vast ecosystem
Solana has an ecosystem of more than 1,464 innovation-based projects; the network extends from the world of decentralized finance (Defi) to the universe of NFTs. Its ecosystem is wide and varied and includes AMMs (Automated Market Makers), decentralized exchanges, NFT buying and selling platforms, games, and Defi platforms. In total, applications passing through Solana move billions of dollars.
How to invest in Solana
How to buy Solana
To buy SOL, the best and easiest thing to do is through your personal wallet. This way, you retain ownership of the private keys.
How to trade SOLANA
To trade Solana, the SOL ticker, it is best to do so through cryptocurrency exchanges that are safe, reliable, and have enough users to ensure liquidity, i.e., allow you to enter and get out of your cryptocurrency.
How to stake Solana
https://solanabeach.io/ is the link to the site allowing you to stake sol tokens. All you have to do is buy Sols on an exchange (Binance, coinbase ..), transfer your Sols to Solanabeach to stake them, and be eligible for rewards.
What forecast for Solana?
The Solana blockchain has many features that make it a key technology within the crypto ecosystem. Especially since it can guarantee good scalability and process a large number of transactions per second.
On the other hand, Solana has been backed by FTX CEO Sam Bankman-Fried and additional benchmark funds.
If the Proof of Stake mechanism combined with the Proof of History mechanism proves to be secure, many others may choose to use it by leaving out other blockchains.
This network seeks to directly compete with Ethereum, offering a more flexible platform and faster settlement of transactions. In an environment where Ethereum presents some speed and cost issues in transactions, alternatives such as Solana can catch the attention of investors and, more importantly, users.