What is Solana (SOL) crypto
Solana is a third-generation first-level blockchain based on the PoS (Proof-of-Stake) consensus algorithm. It also uses the PoS-based PoH (Proof-of-History) algorithm to calculate transfer time. Thus, Solana makes significantly faster processing of transaction data by tracking the order of transactions differently than Bitcoin and Ethereum and achieving great protocol scalability.
What is Solana cryptocurrency?
The Solana project took its foundation in 2017, and 2018 was the launch date when the developers released the first version of the test network. The Solana Labs project was created by Dr. Eric Williams, BREW OS developer Greg Fitzgerald, and former Qualcomm and Dropbox developer Anatoly Yakovenko, who designed the new PoH algorithm personally. Subsequently, the blockchain became famous for the incredible speed of transaction processing due to the wide scalability of the protocol. The protocol itself, as well as the native SOL asset, was presented to the public in 2020. On March 23, 2020, the Dutch auction of Solana tokens took place; the participants could return up to 90% of the transferred funds.
The Solana Foundation is a non-profit organization headquartered in Zug, Switzerland, dedicated to the decentralization, growth, and security of the Solana network, founded in June 2020. The organization’s tasks include conducting research, including the involvement of third-party teams and educational activities.
In 2020, the FTX crypto-derivative exchange released the Serum decentralized exchange on the Solana blockchain. In October of this year, the developers discussed creating a cross-chain bridge with Ethereum, which allows for transferring cryptocurrencies between two blockchains. Solana released the first stablecoin in connection with the event — Solana USDC. This collaborative year also saw Solana integrate Waves’ Gravity protocol, a blockchain-agnostic oracle system that supports cross-chain communication and sidechains within a single, unified framework.
The Solana blockchain is still working in test mode and is far from revealing its full potential; however, this doesn’t prevent the development of several DeFi projects that already exist on the network.
The latest news about Solana
Digital publications are full of news headlines with the company name, which thundered in 2021 and continues to conduct its activities and develop the blockchain network, despite the loud fall of the SOL coin. Here is exciting token news from September 2022 about Solana:
Helium. In August 2022, the Helium project, which is developing a DeFi wireless blockchain network, put forward an initiative to join the Solana network due to its focus on the speed of processing transactional data without losing security. During the community vote, the idea was supported by 6177 participants who blocked over 12 million HNT tokens, a native cryptocurrency, in its favor. But also, 1270 voters were against the proposal. The Helium team sees the move to Solana as beneficial for the project due to efficient transactions and platform interoperability. This swap promises development for the company.
Statistics.NFT projects continue to multiply. The number of NFTs issued on the Solana blockchain has skyrocketed. According to the Block analysis, on September 7, 2022, there were already 312 000 of them in the network. Accordingly, the trading volumes of collection assets have also increased. The platform has also surpassed all blockchains in terms of trading volume, including the ever-leading Ethereum.
The price of the Solana crypto depends on a combination of social and financial conditions in the digital asset market. The current SOL price is the result of a downtrend. The collapse of the entire cryptocurrency market in the first half of 2022 played a significant role.
Can you mine Solana?
If you are wondering how to mine Solana, here is the answer. The SOL coin can’t be mined with video cards or other specialized equipment. Solana works on the PoS algorithm — such mining doesn’t require the trader time and money to find the necessary equipment and is also a “cleaner” way to get cryptocurrency. The main stages in PoS mining are:
- opening the wallet by downloading it from the official website;
- buying the required number of coins on the exchange;
- waiting for a block;
- using a client program for mining;
How SOL works
Solana is a well-known competitor to Ethereum, which is the second largest blockchain by market capitalization. Solana offers a way to create DeFi programs that get rid of intermediaries with the help of blockchains.
The critical problem of Ethereum is the high cost of running applications. When Ethereum builds Layer 2 technologies, Solana solves scalability issues with an improved underlying infrastructure that offers faster and cheaper transactions, including the PoH (Proof-of-History) protocol, a method of proving that an event happened at a particular time. Proof-of-History aims to speed up the process of ordering transactions in the blockchain, which is an integral part of the system’s security.
However, Proof-of-History is not exactly a consensus mechanism like its PoS foundation. This is a technology to reduce the waiting for confirmation of transactions. Together, PoH and PoS simplify the choice system within the chain.
Back in 2019, Anatoly Yakovenko, the founder of Solana, shared his platform’s features in detail on social networks. The most striking of them is PoH (Proof-of-History); however, among the distinguishing features of the platform, there are other equally interesting features:
- Pipelining — transaction processing block for verification optimization;
- Tower BFT — PoH-optimized version of PBFT (Practical Byzantine Fault Tolerance);
- Cloudbreak — account database, scalable horizontally;
- Turbine — block distribution protocol;
- Sealevel — parallel execution of smart contracts;
- Archivers — distributed storage of registries;
- Gulf Stream — a transaction forwarding protocol without a mempool.
This unique Solana functionality allows the blockchain to process thousands of transactional data per second and create a block in as little as 400 ms.
And yet, despite all the advantages, the blockchain has its pitfalls. The main Solana disadvantage is periodic crashes. At the beginning of 2022, users noticed violations in the system operation several times — most often, this is associated with the chain test mode.
Also, due to these disruptions in the blockchain system, some of the wallets of Solana customers were hacked.
How can you use Solana (SOL coin)
Solana cryptocurrency can be used for transactions, investments, or currency exchange.
The SOL utility token does excellent with the basic functions of any other utility cryptocurrency. For example, pay a fee for using a smart contract address and transaction Solana gas fees within the blockchain.
The Solana ecosystem (SOL) has its token standard, like ERC20 — SPL. Native coin holders can become network validators. The platform neutralizes inflation with a burning mechanism by buying back and burning a certain amount of SOL assets.
The Solana blockchain is open to commercial ideas and allows developers to be creative in designing applications and smart contracts, even though it is still in test mode. Metaverse enables users to create a token, a marketplace — anything for a novice crypto businessman.
The SOL token is also helpful for governance — community members can take part in voting about network projects. Also, the token can be mined using staking.
In total, Solana is a young and promising blockchain that can fight back against global crypto giants. Its potential has yet to be fully revealed, but for now, the platform is attracting more and more creative organizations with its speed and system consistency.
So far, Solana DeFi is working in test mode, and the native Solana coin is capable of incredible growth. We look forward to the release of version 1.0 to admire even more innovations from the Solana developers.
The project began its existence in 2017, and the SOL cryptocurrency was launched in 2020.
Yes, Solana is a decentralized platform.
The SOL token performs the basic functions of a native currency, such as paying commissions within the platform. It is also used to manage projects within the network. The Solana cryptocurrency can be used as a reward and mined through staking.
You can't say for sure which is better. Solana and Ethereum are direct competitors with their pros and cons.
It is used for internal blockchain processes and trading on exchanges.
The Solana blockchain is based on the PoS (Proof-of-Stake) consensus algorithm, integrating its own algorithm — PoH (Proof-of-History) into it. Also, the crypto currency of the platform is based on the combustion mechanism.
In particular, the unique PoH (Proof-of-History) algorithm allows for processing thousands of transactions per second. Blockchain also has other features that are different from other networks.