SOL has proven to be one of the market’s fastest-growing cryptocurrencies. Furthermore, it is one of the coins tagged ‘Ethereum’s killer.’ According to reports, Solana and its native token SOL have been going well this past year, as SOL rose over 10,000% in value. This article will explain what Solana is—the unique edge it has over Ethereum.
What Is Solana?
In 2017, Anatoly Yakovenko—a former engineer at Qualcomm—founded Solana intending to be faster and cheaper while staying true to decentralization. Solana, in a nutshell, is a public, open-source blockchain. It was designed to support a wide range of scalable decentralized apps (dApps), and SOL is its native token. Like most of the world’s most popular blockchains, Solana allows smart contracts.
Solana has a block time of 400 milliseconds which means it is very fast, especially when compared to Ethereum’s block time of 10 seconds or Bitcoin’s 10 minutes. So, what is Solana’s transaction speed? Solana can handle around 50,000 TPS, unlike Bitcoin’s 7 TPS and Ethereum’s 15 TPS.
The network is fast and cheap. It is comparable to the Polygon network with a near-zero transaction cost.
How Does Solana Work?
Solana’s breakthrough technologies enable scalability, allowing Solana’s 50,000 TPS to be achieved.
It combines a Proof-of-Stake (PoS) consensus with Proof-of-History (PoH) timestamp system. PoH is a way of integrating time into the blockchain data. Timestamps are used to place specific dates and times on the blocks to allow for a fast sequencing of validators, so they know the order to submit blocks without communicating back and forth.
VDF. With PoH, each block on the network can be timestamped. It uses a Verifiable Delay Function (VDF), which means that nodes can create the next block without coordinating with the entire network because they trust the timestamps and order received.
SHA-256. SHA-256 stands for Secure Hash Algorithm-256. This PoH system involves Solana hashing all transactions with the SHA-256 algorithm. It is the same technology used in bitcoins; it keeps data secure and encrypted.
Other key technologies include:
- Sea level. A term that describes how validators can run smart code simultaneously.
- TBFT. It stands for Tower Byzantine Fault Tolerance Consensus Method. It is an optimized variant of the Practical Byzantine Fault Tolerance (PBFT) protocol that ensures the network’s security and usability.
Solana uses the Rust programming language to run the smart contract code.
The native token of Solana Network is the SOL. Solana is both inflationary and deflationary. Deflationary because 50% of transaction fees were burnt for a long time. It is inflationary because they recently approved inflation of around 10% currently. So they get cut by a small amount every few days until the final staking reward gets to 1.5% in 10 years.
In terms of total supply, Solana started with 500 million tokens. Also, there are 4 private funding rounds before their initial ICO on early distributions. Those four funding rounds got 36% of the supply at a very low price. 13% went to the project’s founders, and 10% to the Solana foundation. The remaining 39% went to fund the community reserve held through the foundation.
Solana Use Cases
DeFi, non-fungible tokens (NFTs), and blockchain technology have grown popular. Unfortunately, Ethereum’s network, famous for creating dApps, has become overloaded and too expensive to use. Solana’s chain provides what Ethereum’s base layer currently lacks: rapid, low-cost transactions.
- Solana can be used as a network where users can build dApps.
- The coin can be sent to pay for transactions due to its low cost. The low price is possible because of the volume of transactions the network can process per second.
- Investors can stake their coins if they plan to hold them long-term to allow new coins on the blockchain to be validated. Staking lets you earn rewards over time. However, the fees you need to pay to stake Solana are expensive, around 1 SOL per day, over 10,000 USD per year. In addition, you need a supercomputer which is also expensive.
Doubts Surrounding the Ecosystem
While Solana has become popular among crypto enthusiasts, some uncertainties surround the network’s function. They include:
The Supply of SOL
As you know, SOL is the native token of Solana, and one of its drawbacks is that there is no defined maximum supply. However, there was significant controversy over SOL supply in 2021, when Solana allegedly lent market makers over ten million SOL tokens without disclosing this to the community.
Yakovenko stated that the tokens were given to a market maker to create aftermarket liquidity in response to the concerns. However, even though the objective behind the lending appeared to be legitimate, many community members were concerned about the lack of transparency and the foundation’s propensity to release an excess of tokens into the market, a move that may have serious consequences for SOL investors.
Is Solana centralized, you might ask? As previously stated, Solana may have certain centralized elements. For example, it incorporates a centralized staking system and a disproportional node distribution. If the decentralization part of the blockchain is your main concern, you should find out more about the network.
How to Buy Solana (SOL)
Guarda now supports SOL, and all you have to do is download the app on your desktop or access it via a web browser. In addition, Guarda is a non-custodial crypto wallet exchange platform. With Guarda, you won’t worry about third-party control over your private keys and funds. At the same time, you exchange, stake, and even store cryptocurrency on the platform.
Buying SOL with Guarda can be done in a few easy steps:
- Create an account on the Guarda if you are a new user and write down your password. Existing users can just log in by inputting their passwords.
- Once in the ecosystem, add the SOL wallet to your list, download, and save the backup for future use.
- Click on the ‘BUY’ button and input the amount you want to buy the SOL coins. SOL can be purchased using various world currencies.
- Choose your preferred payment option. On Guarda, you can pay with Visa/Mastercard or SEPA.
- Double-check and verify your purchase. After the verification, click ‘BUY,’ and your coins will appear in your wallet after confirmation.
Solana is one of the top cryptocurrencies with a market cap of $13.9 billion and a circulating supply of 339,963,174 SOL. But due to the various uncertainties ranging from supply to suspected centralization and even past outages (the recent one happened on the 1st of June due to a bug), there are a lot of doubts. This makes it difficult to conclude whether the network prioritizes decentralization as it claims.
So, it is up to you to decide whether you want to put your resources into the project. And if you are to make any decision, make sure it is after thorough research.