What is Solana?

Last edit: February 24, 2023
Author: Gunavarshini
Reading time: 4 minutes

Solana is a rapidly growing blockchain that is often referred to as the Ethereum Killer. Solana is a blockchain platform that has a unique hybrid consensus model which allows it to be lightning fast and efficient.

Its native cryptocurrency used for its transaction fees is SOL. It was launched in 2017 and is now ranked among one of the top cryptocurrencies in the world.

SOL rose to popularity when one the biggest NFT trends happened – the Degenerate Ape Academy which was launched on the Solana blockchain.

Quick Facts:

Solana has a blocktime of 400 milliseconds ! This is extremely fast when compared to Ethereum with a blocktime of 10 seconds and Bitcoin at 10 minutes.
Solana in theory is able to handle up to 50,000 transactions per second which would be faster than VISA which can only handle up to 23,666 transactions per second.
Solana has a unique hybrid protocol called “Proof-of-History (PoH)”.

Solana is incredibly fast

Solana was created to solve the Bitcoin trilemma proposed by Vitalik Buterin which talks about three things developers want in an ideal blockchain. These are decentralization, scalability and security. Most blockchains such as Bitcoin and Ethereum have to compromise on one aspect to ensure the other two 'are' met.

Solana was named after the founder’s favorite beach, Solana Beach, California.

However, Solana claims to have solved this problem using their unique protocol which involves a hybrid mechanism called Proof -of-History (PoH) combined with a bigger block size and a better block time at 0.4 seconds.

All these make Solana incredibly fast, efficient and cheap at $0.00025 per transaction. All these makes Solana have one of the cheapest transaction fees in comparison to Ethereum which charges between $3 to $10 per transaction.

This makes Solana ideal to be used to mint NFTs as compared to Ethereum which is more expensive.

It also has smart contract capabilities which would allow it to be used to build decentralized apps.

Solana and its unique Proof-of-History(PoH) consensus

The Proof-of-History mechanism is similar to the Proof-of-Stake mechanism but with the addition of time.

Timestamps are used to place specific dates and time on each block along with the cryptographic proof.

In a traditional blockchain, agreeing on the time aspect involves a lot of communication back and forth between validators aka the computers. This uses up about the same amount of time as validating the transaction.

Did you know Solana has 25 blocks validated by 25 people at once!

The Solana blockchain simplifies this so validators don’t have to obtain consensus on the time since it is already recorded on the block. This also makes the blockchain lighter and and faster.

Solana also combines their unique consensus model with the Tower Byzantine Fault Tolerance (Tower BFT) which allows validators to stake their tokens to vote which validates the PoH hash.

What is Solana used for?

Solana can be used for many reasons but it has gained particular attention within the Non-fungible Tokens (NFT) space as it is said to be more affordable than Ethereum. Solana is only a fraction of the price of Ethereum.

Here are some other uses of Solana currently that you should know:

Solana can be used to trade, mint, and sell NFTs
Development of Decentralized Finance (DeFi) platforms such as the Defi crypto exchanges, Defi lotteries, etc.
Build blockchain games which would be fast and efficient.
Solana supports stable coins and wrapped assets. ( 700 million worth of USD Coin was issued on Solana)
SOL tokens can be used for staking, pay transaction fees for smart contracts and transactions.
SOL tokens may be used for governance voting.

Solana vs. Ethereum

Solana is often cited as Ethereum’s competitor because it is quite similar to Ethereum but with a few differences.

1. Consensus mechanism

The first generation of Ethereum uses Proof-of-Work (PoH) to validate transactions which is quite similar to Bitcoin. Solana on the other hand uses the Proof-of-History consensus which makes it faster to validate transactions as compared to Ethereum.

2. Stateful vs Stateless

Ethereum is described as having a “stateful” nature which essentially means all transactions on the network are recorded in one state and if a new transaction occurs, the miners would have to update their copy of the network. This makes Ethereum slower and more expensive than Solana.

Solana is “stateless” as it does not require an update after each transaction and this reduces memory consumption. This also helps Solana be more scalable than Ethereum.

3. Programming language

Solana as we know has the capabilities of incorporating smart contracts just like Ethereum. Smart contracts’s security features rely on the programming language and virtual machines it uses.

Ethereum uses a custom-built Ethereum Virtual Machine (EVM). The contracts are written using the Solidity, Vyper, yul/Yul+ and Fe programming languages.

Solana uses the Rust, C and C++ programming languages which are more well known. Rust is a low level programming language and requires more work than Ethereum.

Developers can’t even copy and paste the codes and everything has to be done from scratch.

4. Outages

Solana had 2 outages that occurred in December 2020 and September 2021. This was due to a DDoS attack aka Distributed Denial of Service. This had caused Solana to halt for several hours.

Ethereum on the other hand had never experienced an outage. This could be because Ethereum is more decentralized than Solana.

5. Decentralization

Ethereum is said to be more decentralized than Solana. This is where most Solana critics come in as the goal of a blockchain is to be as decentralized as possible.

One of the many reasons why Solana is not seen as decentralized is due to the token’s initial allocation. It was said that 50% of the allocation was to Solana Labs, Venture Capital investors and developers.

The amount of tokens allocated to the public is quite tiny while more than 70% of the tokens are staked. This allows an imbalance of control over the tokens which would skew the network validation control to insiders instead of the public.

In comparison, only 15% of Ethereum’s tokens are allocated to insiders and 5% to foundations. This allows a significant amount of tokens for public ownership.

Who founded Solana?

Solana was founded by Anatoly Yakavenko. Anatoly came to the United States in 1990 as a young kid from Ukraine. He has mentioned that he had always been interested in programming growing up.

He was discouraged from continuing his interest in computer science after the Dot.com bubble burst but Anatoly decided to push through with his passion anyways.

Anatoly graduated from University of Illinois Urbana Champaign in 1999. He decided to work in Qualcomm as an engineer and left after 13 years of service in 2016.

With that, he started on a new side project in 2017 with a friend and that’s how he came up with the concept of “Proof-of-History”.

This led to a few more co-founders being brought in to the team and the development of the Solana blockchain in 2017.

Initially Solana was named Loom but because of a similar Ethereum-based project called Loom Network, the team decided on Solana which was just a random, off-the-bat name, but it stuck.

How can I buy Solana?

Solana is available on most exchanges for purchase. Here are some places you can buy Solana at:

Some exchanges may be more expensive than others however, it’s best to keep in mind that the additional fees may account for better security and ease.

Once you have purchased Solana through an exchange, make sure it is transferred to a reputable crypto wallet whether that may be a hot wallet which is connected to the internet like Phantom wallet or Solfare wallet or a cold wallet that is usually a thumb drive.

Iconic moments since Solana’s inception in 2017

November 2017 - Anatoly published the first whitepaper about Proof-of-History.

February 2018 - Greg Fitzgerald who previously worked with Anatoly in Qualcomm began the prototype, the first open source implementation of the whitepapers.

March 2018 - The team created the Solana GitHub organization.

July 2018 - A 50-node, permissioned, public testnet consistently supporting bursts of 250,000 transactions per second was published.

What To Expect With Solana In The Upcoming Months?

Solana has many projects that are still in the making which includes the NFT and Defi space.

According to the official Roadmap of Solana published, there is only one final update that is still pending.

This is the upgrade of the Solana network from Mainnet Beta to a full mainnet version. This will also introduce the inflation schedules of Solana. However, this update has been pending since 2020.

Anatoly had also mentioned that Solana is looking to have a billion users and this is why Solana was built to scale so that it can accommodate more transactions.

What affects Solana’s price movement?

There are a lot of reasons for Solana’s drastic increase in traction. One of the many reasons the price is rising is due to Solana’s move into the NFT space. This skyrocketed its price because it allowed NFT minting to be cheaper than Ethereum.

In addition, Solana has also released many projects that involve Defi which includes Serum which is a decentralized and noncustodial exchange. There is also Mango Market which is a market for Defi derivatives.

Solana is also developing cool wormhole projects (not an actual wormhole). These projects help bridge two networks together like Solana and Tether.

Solana is also seen as an alternative to Etherum as Etherum has become quite expensive lately. A lot of Solana supporters believe Solana could be the next Etherum very soon.

How can I stake Solana?

Staking Solana may be a great way to earn some passive income on the side while holding on to an amazing token of technology.

You can stake your Solana tokens to validators that process transactions. The way it works is if more Solana tokens are staked in a validator, the higher the chances of the validator performing transactions and earning rewards.

There is a risk however, and this happens when your validator is slashed. This is when a portion of the stake a validator holds is destroyed because the validator had shown malicious behavior. This is something just to be wary of.

Here are the steps to stake your SOL tokens

Move your SOL token into a wallet/exchange that supports staking.
Create a stake account
Select a validator
Stake your coins and wait for the rewards to come in!

Some tools you can use to stake Solana

Final thoughts on Solana

Solana is a high-performance blockchain platform designed to support decentralized applications and marketplaces at scale.

It uses a unique consensus algorithm called Proof of History (PoH), which helps achieve high transaction throughput and low latency, enabling the platform to process thousands of transactions per second.

One of the main advantages of Solana is that it offers low transaction fees, making it an attractive option for developers looking to build decentralized applications that require high-speed and low-cost transactions.

The platform has also gained popularity among NFT marketplaces, gaming projects, and DeFi protocols.

However, like any other blockchain platform, Solana has its own set of challenges and limitations.

One of the concerns with Solana is its reliance on a single consensus mechanism, which could potentially make it vulnerable to attacks.

Additionally, as the platform grows, there may be issues with decentralization and the risk of centralization, which could undermine the platform's security and trustworthiness.

Overall, Solana is an innovative blockchain platform that offers high-performance and low-cost transactions, making it an attractive option for developers and users looking to build and use decentralized applications.

However, like any other technology, it has its own set of challenges and limitations that should be considered before using it for any project.