What is Solana (SOL)?
Solana (SOL) is a cryptocurrency of the project of the same name, which can rightfully be considered a direct competitor to Ethereum. This is a comprehensive platform for decentralized finance, which provides uniquely high-speed and low-cost processing of transactions.
The presented crypto project appeared due to the need of users to look for an optimal alternative to Ethereum, which was characterized by network congestion and excessively high gas fees. The essence of the project is to create a blockchain network without sidechains and parachains.
How did Solana appear?
The project was founded in 2017 in one of the US megacities, and about a year later it was put into operation, but only in test mode. The Solana blockchain is considered a third-generation blockchain. This project is also called or considered a public operating system.
Two years later, the Solana Foundation was founded to help develop the Solana project. One of the main tasks was attracting external investors and teams. In the same year, the Solana project began to attract the attention of other companies that created their own blockchains. The first with which Solana created a cross-chain bridge was the Ethereum blockchain.
What are the advantages of Solana?
Taking into account the events that are happening with the project, the price of cryptocurrency continues to grow due to the features of the network. Features and benefits that keep Solana at the top include:
- The maximum theoretical throughput is 50,000 transactions per second, when processing a block takes only 400 msec. Such indicators are not final, as they can increase thanks to network improvements and the use of updated equipment.
- Solana operates on a hybrid protocol, combining PoH (Proof of History) and PoS (Proof of Stake) consensus algorithms.
- Transaction confirmation is not based on mining but on a staking system. The energy efficiency of the project is confirmed by both the creators and independent experts. The transaction requires less energy than 2 Google searches and 24 times less than charging your phone.
In addition, Solana was primarily designed to execute smart contracts, which makes it inherently competitive with Ethereum.
How does Solana work?
Solana was designed from the outset to be a high-performance, secure, and scalable network. It is based on the Proof of Stake (PoS) consensus mechanism combined with Proof of History (PoH). PoS allows you to spend less computing resources . Plus, it provides security and almost completely eliminates the chance of an Attack 51%. Blockchain also uses PoS mechanism to increase throughput and scalability.
PoS is far from new and by itself does not allow you to accelerate the network to such speeds. It's all about the blockchain synchronization algorithm. Solana has what can be loosely called a “decentralized clock”: all network nodes are set to the same time, and they perform work according to a schedule. Each event has a reliable “timestamp”, and they can be arranged in a verifiable sequence. As a result, the network can work to verify many blocks simultaneously without having to verify each one specifically.
Another way to speed things up is the Sealevel smart contract execution environment. In addition, Solana has a multi-level block propagation mechanism called Turbine.
What is the Solana (SOL) used for?
The best technology won't matter if there are no applications based on it. Solana is one of the best, modern, and fastest ecosystems with thousands of projects, including developments in the field of DeFi, NFTs, Web3, and games. Blockchain enables dApp developers to create cost-effective applications. There are over 350 projects on the network, so it would be hard to highlight each project in this article.
What is the future of Solana?
There is an opinion in the financial sector that Solana could well challenge key payment systems such as Visa/Mastercard. This is facilitated by an increase in fees for processing client cards. It can be achieved through the comprehensive payment platform SolanaPay, which can be considered unique in the field of payment processing.
The future of SOL will directly depend on whether the Solana blockchain is adopted as the main one for NFTs, DeFi, and a wide range of decentralized applications. Currently, there are plenty of projects based on the Solana system. In addition, the general trends in the development of the crypto market play an important role.
Solana is a promising project that attracts the attention of both partner companies and investors. Solana is suitable for resource-intensive systems and applications focused on a large number of users and transactions: crypto exchanges, marketplaces, and file storages.
SOL is the internal cryptocurrency of the project. It is used to pay transaction fees on the Solana blockchain and operations with smart contracts. In the future, it is also planned to use SOL to vote on changes to the project. SOL is a popular coin for staking.