Taking a break from gambling at the best crypto casino and want to find out more about Solana?
Solana is a permissionless, open-source blockchain network that provides decentralized finance (DeFi) solutions for users. In an effort to improve the speed of its operations, it uses specific and unique methods of ordering transactions.
Solana’s native cryptocurrency is the SOL. In simple terms, it’s a currency that investors can use to interact with smart contracts and pay their transaction fees.
Solana’s protocol encourages developers to create decentralized apps (Dapps). It has ambitions to improve scalability. It will do this by introducing a proof-of-history consensus coupled with an underlying proof-of-stake consensus on the blockchain network.
At the time of writing, the currency’s market cap was hovering around $9 billion with a unit price of approximately $32.80 and a circulating supply of over 272 million SOL.
History Of Solana
Solana’s platform was developed in 2017 by Anatoly Yakovenko from Solana labs. Before the development of Solana, Yakovenko worked at Qualcomm.
At this time, he already had extensive experience in compression algorithms, which he had gained while working as a software engineer for Dropbox. In collaboration with Solana’s CTO, Greg Fitzgerald, and another developer, Eric Williams, they developed a new process of addressing traditional throughput issues evident in the Ethereum and Bitcoin blockchains.
The Solana blockchain adopts a new technique of verifying transactions that improves the scalability and speed issues that affect Ethereum and Bitcoin.
It uses a proof-of-history model that gives the blockchain the ability to handle thousands of transactions each second.
Solana has ambitions to develop a trustless and distributed platform that would facilitate greater scalability. The team behind it is supported by experience and expertise from top global organizations, including the likes of Apple, Qualcomm, Intel, Google, Microsoft, Twitter, Dropbox, amongst others.
How Does Solana Work?
Solana is a third-generation proof-of-stake blockchain. It has implemented a unique method of developing a trustless system that can determine the time of each transaction, commonly referred to as proof-of-history. In this sense, it cannot be understated how important it is for cryptocurrencies to keep track of the order of transactions in the network.
As an example, Bitcoin tracks the order of their transactions by bundling transactions in a system of blocks that has a single timestamp. Each node must validate these systems of blocks together with other nodes in the blockchain. This can be a particularly time-consuming process as there is a long waiting time for these nodes to confirm a block across the blockchain network.
Solana operates differently by employing a proof-of-history model. All of its transactions and events are hashed through the use of the SHA256 hash functionality. This enables developers to take an input and create a unique output that is almost impossible to predict.
Once this is done, Solana takes the output of that transaction to use it as an input for the next hash. Through this process, the order of transactions is built into the hashed output.
The hashing process is intended to develop a long and unbroken chain of hashed transactions. This innovative feature creates a clear and verifiable order of transactions that a validator will add to a block with any conventional time stamp required.
When it comes to hashing, a specific amount of time is necessary. Essentially, this means that validators can verify the amount of time that has elapsed effortlessly.
Dynamics Of Proof-Of-History Model
As mentioned above, the proof-of-history model employed by Solana is vastly different from the process used by Bitcoin.
Blocks on the Bitcoin blockchain are typically large groups of transactions that are not ordered. Every Bitcoin miner adds the date and time to the block that they have mined in alignment with their local time at their location.
This time could be different when compared to other nodes or even be false. These nodes on the Bitcoin network must then try and figure out if the time stamp on the block is actually a valid one.
When ordering the transactions in a chain of hashes, validators process and distribute less information in each block. Through the use of a hashed variation of the latest transactions, the time for confirming a new block is vastly reduced.
You should note that the proof-of-history model does not serve as a consensus mechanism. However, some might describe it as a manner of improving the time spent to confirm the order of these transactions.
In combination with a proof-of-stake model, choosing the next validator for a block becomes much more manageable. Nodes require less time to validate the order of transactions, which means that the blockchain network selects a new validator much quicker.
Key Features Of Solana
Solana’s developers have worked hard to create eight core technical features that help the blockchain network match a centralized system’s capabilities. While the proof-of-history is the most notable feature, it is vital to highlight the others:
- Tower BFT, which is a PoH-optimized variation of Practical Byzantine Fault Tolerance
- Turbine, which is a block propagation protocol
- Gulf Stream, which is a Mempool-less transaction forwarding protocol
- SeaLevel, which is a parallel smart contracts’ run time
- Pipelining, which is a transaction processing unit that optimizes validation
- CloudBreak, which is a horizontally-scaled accounts database
- Archivers, which is a distributed ledger storage
These features enable the protocol to provide a high-performance blockchain network; one that offers 400ms block times and can process thousands of transactions each second.
To give you a better perspective of how efficient Solana’s network really is, let’s consider the ‘crypto giants’ in comparison. The block time of Bitcoin is approximately 10 minutes, while the block time of Ethereum is about 15 seconds – truly incredible!
Holders of SOL can stake their tokens as part of the blockchain network’s PoS consensus mechanism. If users have compatible crypto wallets available, they can stake their tokens with validators that process the network’s transactions.
With that being said, a successful validator can share a portion of rewards with users who have staked their tokens. This system of rewards acts as an incentive for validators and delegators and hopes to encourage these key role players to act in the network’s best interests.
At the time of writing, Solana has over 900 validators, which is considered reasonably sufficient for a genuine decentralized network.
Consensus Methods Used By Solana
Solana is one of the highest-performing permission-less blockchain networks across the globe. It has over 200 physically distinct nodes that support a throughput of over 50000 TPS when operating with GPUs.
It does, however, face challenges with its distribution systems, specifically in terms of the agreement in time. While cryptocurrencies such as Bitcoin use a proof-of-work algorithm that serves as a decentralized clock for the system, Solana uses a proof-of-history algorithm.
This means that Solana can create historical records that provide evidence that an event had occurred during a particular moment in time. This algorithm employed by the protocol is a high-frequency Verifiable Delay Function that needs a specific number of sequential steps to analyze.
All the networks’ events or transactions that are analyzed will then be issued with a unique hash and a count that can be verified effectively and publicly. This count enables users to determine exactly when each event or transaction occurred, essentially working like a cryptographic timestamp.
Inherent in each node is a cryptographic clock. This clock also monitors the time of the network and the ordering of events. Through this innovation, the network has the ability for high throughput and greater efficiency through the blockchain.
What Is A Solana Cluster?
The Solana Cluster is a key element in Solana’s software. It is a cluster or set of computers that collaborate.
From the outside, this cluster can be viewed as a singular system. Every cluster is a group of independently-owned computers that typically work together, although they can work against each other as well.
The purpose of these computers is to verify the output of untrusted and user-submitted programs. Moreover, it can be used whenever a user needs to preserve an immutable record of events or the programmatic interpretation of the events.
In specific use cases of the technology, it can monitor which computers provided meaningful contributions in keeping the cluster operational. Moreover, it has the ability to monitor the possession of real-world assets.
The encouraging aspect of this is, provided that the user has a copy of the ledger, the program outputs can always be reproduced. Furthermore, they will remain independent of the organization that issued it.
Solana’s scalability innovation is possible through its verification system. The system uses a variation of proof-of-stake, and needs miners to hold amounts of SOL for them to validate transactions and add new blocks to the Solana blockchain.
Although the proof-of-stake model is more efficient than the proof-of-work model, it can be time-consuming to validate transactions. From there, the sequence in which validations take place can affect the efficiency, which then causes congestion and a slow network.
Solana effectively addresses these sequencing drawbacks through the proof-of-history model. It provides a timestamp for each transaction on the blockchain before being validated by the proof-of-stake model.
Through this process, Solana’s network creates a historical record of events or transactions on the network. Subsequently, it confirms the order in which each transaction took place before it was added to the chain.
Essentially, all nodes on Solana’s network have the ability to create blocks that include timestamped transaction information with the need to coordinate with the whole network. This is particularly useful in saving valuable time as it can process more than 50,000 transactions each second.
Solana also claims to be the fastest blockchain globally, with a rate of 2.34 seconds for adding new blocks to the network.
About The SOL Token
As we mentioned earlier, SOL is the native cryptocurrency of Solana and operates as a utility token. Users will pay transaction fees with SOL when engaging with smart contracts or making transfers.
As part of its deflationary model, the network burns SOL. All holders of SOL can become network validators, and users can build smart contracts and create projects based on the blockchain.
SOL uses the SPL protocol and has two primary use cases:
- Paying for transaction fees incurred when using smart contracts or the network
- Staking tokens that form part of the proof-of-stake consensus mechanism
The SOL token can transfer to nodes within Solana’s cluster in exchange for operating on-chain programs or validating its output.
Moreover, SOL can be used to perform lamports, a type of micropayment. SOL’s token can be staked to earn additional rewards and is an excellent way for investors to profit if they plan to just hold their tokens.
If you would like to stake your tokens, the process is relatively easy.
- Transfer your tokens to a wallet that supports staking
- Create a staking account
- Select a validator from one of Solana’s validators
- Delegate your stake to the validator
Where To Store SOL?
Users can store their tokens on the sollet.io crypto wallet developed by the Serum Academy, or Trust Wallet if they are operating through their mobile devices.
If anyone intends to stake their SOL, they must use a wallet that is compatible with staking. These wallets include SolFlare wallet or Solana command-line tools. This wallet will enable users to create a stake account and delegate their SOL tokens to a validator.
Although Solana is a relatively new project, it certainly has a lot of promise with its improved speed and scalability. Plus, the price of its token has performed better than expected. As a result, it has attracted the intention of many investors who wish to diversify their portfolios.
While the adoption and usage of the network is still in its infancy, it should definitely be considered an investment with incredible potential. Good luck!