Solana – Highly Scalable Blockchain
The following blog will introduce another cryptoasset from our dynamic portfolio – the Solana blockchain platform. Solana is a highly scalable programmable blockchain, on top of which it is possible to build a wide spectrum of decentralised applications. The main goal of this platform is to build a scalable network, which is much faster than any other existing blockchain.
One of the greatest challenges of blockchain technologies is undoubtedly scalability. With the growing numbers of users, many blockchains have to face limitations regarding the speed of transactions and validations. Solana’s main goal is to remove these limitations without giving up security, but slightly compromising on decentralisation.
The origins of the Solana blockchain platform date back to 2017, when Anatoly Yakovenko, the main face of the project, published the whitepaper describing the so-called Proof of History (PoH). Proof of History is a technique that can keep a timestamp between computers that do not trust each other through a decentralised virtual clock.
Anatoly Yakovenko is a respected software engineer with extensive experience in the world of technology. Before joining Solana, he worked for the world-famous Qualcomm, Dropbox, and Mesosphere. Additionally, Yakovenko was involved in the development of BREW and Firefox operating systems.
In 2018, Yakovenko teamed up with his former Qualcomm colleague Greg Fitzgerald, now Solana’s chief technology officer, to build a test network using the Proof of History.
After successful testing, the development team received over $20 million for development in its first private funding. Following the network’s official launch in March 2020, Solana received an additional $1.76 million through a public coin offering (ICO). During the public coin offering, one $SOL coin sold for $0.20.
From the outset, Solana’s development concept is based on resolving the “triple threat” faced by, for example, the Ethereum network: high fees, low scalability, and security concerns.
Solana Labs currently runs the Solana blockchain, supported by the Solana Foundation, a Swiss non-profit organisation dedicated to community development and project financing.
What is Solana?
Solana is a decentralised Proof-of-Stake open-source web blockchain that supports developers and institutions worldwide in building decentralised applications and decentralised exchanges. Solana is currently one of the most scalable programmable blockchains, making it one of Etherea’s biggest competitors.
Solana is a third-generation blockchain. On top of that, it implemented the technique of creating a trusted system into their system by determining the exact time of the transaction called Proof-of-History.
In contrast to the consensual solutions of the most well-known cryptocurrencies on the market, the Solana blockchain came up with an innovation that has not yet existed on the market.
While Bitcoin produces a new block every 10 minutes, Ethereum every 15 seconds, and Polkadot every 6 seconds, Solana has been able to push this time down even more. Their Proof-of-History solution ensures that new blocks are produced every 400ms, significantly faster than other third-generation blockchains.
Transactions within the Solana blockchain are encrypted using the SHA-256 hash function. This feature is known to transform any input into a unique output that is virtually unpredictable. Solana takes each transaction output and uses it as input for the next hash function. As a result, the order of transactions is integrated into every single hash output.
Using this approach, Solana’s developers have found that it is possible to implement a “virtual clock” in a consensus algorithm that validates transactions at exactly the same time for all network validators. This clock is time-synchronised for all validators, which means that nodes in the network can agree on the time order of the transaction without having to communicate with each other – because each node has its own synchronised clock.
In practice, this means a massive time saving, as there is no need to wait separately for each validator, who typically verifies the transaction’s validity using a timestamp.
However, it is important to understand that Proof-of-History is not in itself a consensus mechanism. Instead, it is a technique that ensures more efficient use of time when confirming the order of transactions. In combination with the Proof-of-Stake algorithm, selecting another validator is faster and easier. This ensures that nodes need a minimum of time to verify the order of transactions.
Main Features of the Solana Blockchain
In addition to Proof-of-History technology, the basic features of the Solana blockchain include other innovations that make the Solana an innovative web-based blockchain.
- Tower BFT – Tower BFT is an implementation of pBFT (Practical Byzantine Fault Tolerance), optimised for Proof-of-History. In essence, it is a technology that takes advantage of virtual clocks, making it possible to reach a rapid consensus without the need for communication between nodes – which ensures the high speed of each transaction.
- Gulf Stream protocol – Gulf Stream plays an important role in caching transactions and redirecting them to network output. Solana can scale up to 50,000 transactions per second thanks to the Gulf Stream protocol. In essence, this protocol defines when and how transactions are exchanged, which drastically shortens the transaction confirmation time and reduces the memory requirements of unconfirmed transactions.
- Turbine – This protocol facilitates data transfer to individual blockchain nodes. The turbine splits the data into smaller packets, helping Solana increase overall transaction processing speed.
- Sealevel – Sealevel is a parallelised transaction processing tool that allows Solana to scale horizontally between GPUs and SSDs. Simply put, Sealevel allows concurrent transactions in the same chain, which improves the overall functionality of the network.
- Pipelining – A process by which data entry is assigned to the various entities that are further responsible for it. Therefore, this mechanism allows rapid validation and replication of transaction information at all nodes within the network.
- Cloudbreak – Cloudbreak is a data structure that is optimal for simultaneous reading and writing on the network. This data structure facilitates efficient scalability in the Solana network.
- Archives – The archivers act as nodes – they store the blockchain’s entire history.
Solana Delegated Consensus Proof-of-Stake
To secure its blockchain, Solana has created a consensus mechanism called Tower BFT, which includes a delegated Proof-of-Stake (DPoS).
DPoS uses a voting and reputation system to secure the network, verify transactions, and distribute newly issued SOL tokens. Therefore, anyone who owns SOL tokens can participate in the network operation.
Each SOL token can be locked by network participants for staking, for which they collect rewards. Participants may also choose to delegate their SOL tokens to other validators, increasing the likelihood of block verification and block reward.
Native Network Token – SOL
The Solana network’s native token is the $SOL coin that acts as the network’s fuel. Users of the Solana ecosystem need SOL tokens to pay transaction fees to perform transactions or interact with smart contracts.
Solana burns part of the SOL tokens as a part of its deflationary monetary model. The total supply of SOL coins is 511,616,946, with almost 337 million SOL already in circulation. At the time of writing this, one SOL trades for 57.32 USD.
The native SOL token is primarily used for three purposes:
- The reward for users who are staking.
- A tool for paying fees related to transactions and interactions with smart contracts.
- Governance – the use of tokens as part of decision-making processes.
The Solana ecosystem is currently one of the fastest-growing crypto ecosystems, with several interesting projects emerging every day. The most notable projects operating on Solana’s blockchain currently include:
- Serum – Decentralised exchange office with the possibility of cross-chain swaps between multiple blockchains.
- Raydium – An automated market maker and liquidity provider operating on the Solana blockchain for the decentralised exchange Serum.
- Oxygen – Brokerage protocol focuses on creating and providing liquidity, loans, or mediating leverage for trading in the asset portfolio.
Audius – A streaming music platform that currently has more than 1 million active users. Audius recently became a partner of the popular social network TikTok.
As a relatively new blockchain project, Solana was able to solve many of the problems of more traditional blockchain platforms in a short time. Solana has introduced a new transaction verification structure and an even more efficient consensus algorithm to the world of crypto.
The main goal of this platform is to solve the blockchain trilemma, which assumes that a decentralised network can satisfy only two of the three main features – decentralisation, security and scalability. Solana claims that it solved the trilemma with its eight fundamental innovations, but the future will show whether this will be enough for the mass adoption of the blockchain.
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