Monday, January 17

What is Solana (SOL)?


Unlike most other blockchains today, Solana is very fast and cheap. The platform is a solution for smart contracts (smart contracts) highly scalable.

With the project, programmers are able to create games, financial systems and other various functionalities in a way quite flexible. By choosing Solana’s ecosystem, their projects benefit from a network that has low fees.

The cryptocurrency is having a fast and huge growth in recent months, a fact that has occurred after entering important sectors such as the decentralized finance (DeFi) and non-fungible tokens (NFT). Both sectors, which made strong progress in 2021, tend to continue in the same perspective for 2022 and the next few years.

What is Solana?

Founded by former Qualcomm, Intel and Dropbox engineers in late 2017, it was launched in March 2020.

Solana, also called “Ethereum Killer”, is a blockchain network, a platform for smart contracts, the digital contracts that run automatically.

Therefore, its platform allows creating applications as if it were an “apps store” for the smartphone, however, decentralized. In the world of cryptocurrencies we call these applications dApps, the decentralized applications.

Other important features of the project are:

  • Your token is the SUN.
  • It is the second blockchain that most received investments from Ventures Capital (Venture Capital) in 2021.
  • It has more than 350 decentralized applications (dApps) in its network.
  • It is the fourth most used network in trading non-fungible tokens (NFT), unique and non-transferable digital assets.
  • Uses “timestamps”, the History Test (Proof of History Where PoH), in its validation model, avoiding the existence of network information overload, as we will see in more detail later.
  • Its focus is on providing scalability without sacrificing decentralization or security.

Due to its architecture, Solana is one of the platforms that has the fastest transactions between existing blockchains. Its processing is around 65,000 transactions per second (TPS), extremely fast when compared to the others.

Token SOL:

The SOL token uses the SPL protocol. SPL is the Solana blockchain token pattern, similar to ERC20 on Ethereum.

SOL has two main use cases:

  1. payment of fees transaction when using the grid or smart contracts (smart contracts).

  2. Staking as part of the Proof of Stake (PoS) consensus mechanism.

Solana’s 8 exclusive innovations:

  1. Proof of History (PoW): cryptographic clock for the blockchain.
  2. Torre BFT: Solana’s version of the Practical Byzantine Fault Toleration (PBFT) system, a network consensus analysis method.
  3. Turbine: blockchain information transmission protocol.
  4. Gulf Stream: method of forwarding information without mempools, that is, without a holding area for cryptocurrencies for transactions not yet confirmed. In other words, it eliminates the “buffered buffer” from the network.
  5. Sealevel: they are the smart contracts parallel to the cryptocurrency network.
  6. Pipelining: area where transaction processing takes place.
  7. Cloudbreak: a database of accounts linked to the network.
  8. Archivers: way of storing blockchain history.

For anyone who is not a programmer and does not intend to be a validator, it is unnecessary to know the details of each innovation.

However, for those who better study Solana’s fundamentals and competitive differentials, it is important to know a little better about the Proof of History (PoW) mechanism, as it is it who really differentiates the network from its competitors.

What is Proof of History or Pova of History (PoH)?

To know what PoH is, it is essential to know the key points of how the network works in information processing:

  1. Solana’s events and transactions are all submitted to the hashing SHA 256.
  2. Hash functions allow you to scramble information in a very random way.
  3. The SHA 256 has a input (input) and produces a output (exit). They are unique and extremely difficult to predict.
  4. Solana’s innovation happens when the network takes the output of one transaction and uses it as input for the next hash, as shown in the figure below.
  5. Proof of History: A Clock for Blockchain | by Anatoly Yakovenko | Solana | Medium

    The process of hashing creates a long and unbroken chain of transactions, with verifiable and well-defined order of transactions.

  6. In this way, a network validator adds one more block to the blockchain without the need for a conventional “timestamp”.

It must be understood that Proof of History is not a consensus mechanism. Its consensus mechanism is the Proof of Stake. PoS):

  • Consensus is a process of agreement between blockchain nodes on new transactions.
  • For consensus, the order of events is important.
  • For example, you must not be able to spend funds before receiving them.

So PoW is actually a very efficient way to decrease the time spent on order confirmation of transactions.

Proof of History incorporates historical transaction records to prove that transactions actually happened before they were added to the blockchain.

Solana x Ethereum:

As mentioned earlier, Solana has come to rival Ethereum, the second best known cryptocurrency and the most used blockchain today when it comes to smart contracts.

  • Solana is infinitely cheaper than Ethereum: today, the transaction with ETH is costing $80 USD; with Solana, this amount is around R$0.02.
  • As for faster transactions and lower fees, Solana has the ability to process 65,000 transactions per second (TPS), more than 4,300 times faster than Ethereum.

Check below some more differences between Solana and Ethereum, its biggest competitor.

Solana

Ethereum

Transactions per second

65.000

15

Time for

process transactions

0.4 seconds

13 seconds

Average fee per transaction

US$ 0,0015

US$ 40

Number of validators

700

11.000

Appreciation between January

until December 25th

+ 246.700%

+ 464%

By comparison it’s clear that, despite the ongoing Ethereum 2.0 update to increase the capacity of the Ethereum blockchain, Solana is currently better in this regard. However, when we think about decentralization, Solana is far superior.

Main decentralized applications (dApps) on the network:

Since its launch, cryptocurrency has seen significant growth from decentralized applications (dApps) on the network.

Currently, as stated above, it has 350 dApps, according to your website. Among the highlights, we find:

Star Atlas game
Star Atlas Game / Reproduction
  • Free game in format Play-toEarn or play to win, where the player is rewarded with cryptocurrencies when playing.
  • It promises to deliver the highest graphic and production quality among all games until then (AAA quality).
  • It is the main rival of the illuvium game (ILV), which has the same technical qualities, despite its distinct gameplay and blockchain.
  • Although it has not yet been released, it has a super engaged and confident community in the project. your twitter, for example, has more than 279 thousand followers.
Solana's DEX Chart
Solana’s DEX Chart / Reproduction
  • It is the most popular decentralized exchange (DEX) on the Solana network.
  • Its great advantage is to offer an order book (order book) the same as a traditional brokerage, allowing for a better user experience.
  • The data of Dune Analytics show that Serum is gaining more and more users and holders of SRM tokens that target the long term, the holders.
DEX growth chart
DEX/Reproduction growth chart

Solana’s partnership with Brave navigator

In case you didn’t know, the Brave web browser, competitor of Google Chrome, is a browser who is surfing the Web 3.0. Among its features is the payment of remuneration for users who watch propagated within it and the model focused on protecting user data.

In 2021 Solana announced a partnership with the browser. This tends, in the long run, to benefit both tokens: BAT and SOL.

In the figure below, we have the browser adoption web Brave over time:

Brave web browser adoption
Adoption of the Brave web browser

As Solana CEO Anatoly Yakovenko said: “Embedding with browsers is key to helping dApps create the best web experiences, it’s an important step in embedding Solana’s next billion users.”

Solana: a major player in the NFT market

According to the data aggregator CryptoSlam, Solana is also showing wide rise in NFT sales volume.

Currently, it already occupies the fourth position in the ranking, just short of becoming the third.

Blockchains por NFTs
Blockchains by NFTs / Reproduction

This information is extremely relevant when we think that the potential of NFTs is just beginning to be explored. In addition, there are large companies investing in the segment, such as Adidas and Microsoft.

We recommend reading this other article, with the full explanation of what NFTs are and how their use goes far beyond games and digital arts.

Conclusion

The efficiency of the Solana network, added to its technology and the projects being created on it, has aroused interest in the entire market.

The project’s architecture, powered by a new way of verifying transactions and coupled with an efficient PoS mechanism, makes it a strong competitor to Ethereum and other platforms. smart contracts.

A forecast by Solana is that it will continue to gain more and more space in the ecosystem, even more if the Ethereum 2.0 update continues to suffer delays, as it has been.





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