Solana: A “Hero” of Our Time

    01 Sep 2021

    Solana cryptocurrency (SOL) is setting new all-time price records, and the project itself is confidently becoming the DeFi industry leader. The Solana blockchain has a number of unique qualities that open up exceptional prospects for the project.

    In 2021, the SOL cryptocoin had record-setting rates of value growth and demand for its blockchain. Solana’s price has increased 2.4 times in just the past two weeks, reaching a maximum at around $ 80 point. With this, the cryptocoin confidently took tenth place among the largest cryptocurrencies by capitalization, now $ 22.10 billion. Meanwhile, only six months ago, the SOL coin was traded at $ 9, and a year ago – no higher than $ 3.28.

    This August jump is due to the fact that the Solana blockchain had achieved unprecedented transaction volume, and the network developers had released a bridge to connect it to other large blockchains. Chinese crypto-journalist Colin Wu had this to say: “Solana’s public blockchain is hitting new peaks with $ 24.1 billion in transaction volume, but some of these transactions might be fake. The sum blocked in the network’s DeFi projects today is $ 1.8 billion.”

    The project is truly remarkable in every sense. Solana is a blockchain originally (or, rather, since 2018) developed to support scalable decentralized applications (DApps). Due to a number of technical features, it has an extremely high throughput (up to over 60 thousand operations per second), with a block time of 400 ms. For comparison, the Ethereum block time is about 22 seconds, in the Litecoin blockchain – 2.5 minutes, and for Bitcoin, it is about 10 minutes. Solana is also one of the largest blockchains in DeFi in terms of the number of blocked funds – almost $ 1 billion.

    In addition, Solana has a large community of over 84 thousand people, in one way or another involved in the development, and more than 250 projects launched on its blockchain.

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    Unlike Polkadot, Ethereum, and others, Solana is a first-level blockchain without sidechains or parachains. According to its developers, the Solana blockchain is based on the PoS (Proof-of-Stake) consensus algorithm. However, third-party experts are inclined to believe that it is more likely a dPoS (Delegated Proof of Stake) algorithm. And the high transaction processing speed is made possible by the PoH (Proof-of-History) solution, which uses decentralized clocks to allow for much faster time synchronization between nodes. The interaction between the nodes is synchronized within the Leader Schedule and the Turbine and Gulfstream data transfer protocols. This solves the traditional orphan block problem, typical for other networks (including Ethereum) and reduces the block mining time to 0.4 seconds.

    From the words of Solana Foundation representatives, the current throughput of the blockchain, already 60 000 transactions per second, could go up to 710,000 transactions per second in the future, as it has a very high ceiling for growth.

    Therefore, Solana is one of the basic blockchain protocols with several times higher transaction speed and lower cost than Ethereum. This makes it one of the main competitors of “ether” in the decentralized finance industry today.

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    The Solana architecture is also notable for archivers – successful solutions that carry out distributed data storage, as well as optimization of transaction recording through Cloudbreak. Solana blockchain nodes receive SOL utility token rewards for processing transactions. Unlike other PoS crypto coins, it has no restrictions when it comes to the minimum number of coins required to create a node.

    The high network speed and capacity create interest in Solana from large blockchain applications. Only recently, an Australian energy company called Power Ledger announced its move from Ethereum to Solana. They were attracted by the high speed of transaction processing (an essential factor in the energy sector) and good scaling. Those qualities made Solana the best network for the highly loaded Power Ledger infrastructure.

    Today, the Solana project’s ambitions reach quite far: developers define their blockchain as a “public operating system available to everyone”. The project itself was founded in 2017 in San Francisco by Dr. Eric Williams, BREW OS developer Greg Fitzgerald and ex-Qualcomm and Dropbox developer Anatoly Yakovenko. The first version of the testnet was launched a year later.

    The Solana Foundation was created in June 2020. It is responsible for developing the ecosystem, conducting research, interacting with third-party teams, outreach, and educational work. A month after its emergence, the FTX crypto derivatives exchange announced that it would launch Serum, a decentralized exchange on the Solana blockchain.

    In October 2020, Solana developers introduced a cross-chain bridge with Ethereum, which allows asset transfer between two blockchains. At the same time, the first USDC stablecoin was released on the Solana blockchain (the dollar stablecoin Tether [USDT] followed suit in February), and Waves announced Gravity protocol integration with the blockchain.

    At this point, though, it’s important to mention the main disadvantage of Solana: the project blockchain is still working in test mode. And although multiple DeFi projects are running on it with almost a billion dollars’ worth of blocked funds, their stability and security are difficult to guarantee. For example, there was a major failure in December 2020, when the network stopped working for 6 hours.

    Nevertheless, today the Solana blockchain looks to be one of the most promising for implementing large-scale projects not only in the DeFi field but also for the “real world”.

    The current project involving SOL with the most potential is Wormhole, which connects the blockchains of Solana, Terra [LUNA], Ethereum, and Binance Smart Chain (they promise to add new blockchains going forward). A significant feature of Wormhole is its use of “Guardians” – nodes that monitor all networks and approve or reject transactions and the exchange of messages between them. For transactions between networks to go through, the approval of 2/3 “guardians” is required. That system allows building decentralized applications that work with several networks at once while maintaining maximum transaction speed.

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