Solana (SOL)
5 minutes
Advanced
Solana (SOL) is a high-performance, open-source web blockchain for decentralized finance (DeFi) solutions. It is also the first blockchain to introduce "decentralized clocks," adding a timestamp to the transaction verification process. Solana solves scalability issues and provides one of the most efficient blockchains in the cryptocurrency market.
Creating
The founders of Solana are Anatoly Yakovenko, a former Qualcomm employee, Greg Fitzgerald, a former developer for BREW, and Eric Williams, a doctor of particle physics.
In 2017, Yakovenko published a draft white paper introducing the Proof-of-History (PoH) blockchain synchronization algorithm. Later, Yakovenko, together with his former Qualcomm colleague Greg Fitzgerald, created a Rust programming language-based blockchain using PoH as "internal clocks". In February 2018, Yakovenko and Fitzgerald published the official version of the project's white paper and launched the first internal test network.
In 2018, Yakovenko and Fitzgerald founded a company now known as Solana Labs. The project team includes former programmers from Google, Microsoft, Qualcomm, Apple, Intel, and Dropbox.
The project was initially named Loom by its founders, but it was later renamed to Solana to avoid confusion with the Loom Network's Layer 2 solution. The project was named after Solana Beach, a town located thirty minutes north of San Diego where Anatoly Yakovenko resides.
From April 2018 to July 2019, the project raised over $20 million in venture investments through several private token sales. In the third quarter of 2020, the public test network of the project, Tour de SOL, went live. In March 2020, the beta version of the mainnet was launched.
In June 2020, the project created the Solana Foundation - an organization aimed at developing the Solana ecosystem and promoting decentralized technologies. Solana Labs transferred 167 million SOL tokens and all intellectual property rights to the Solana Foundation.
How does Solana work?
To make DeFi accessible at scale, the Solana Foundation uses the proof of stake (PoS) consensus mechanism. This means that the mining speed depends on the amount of coins staked on a particular node.
Coins that are staked are locked up for a certain amount of time. The network uses the locked coins for self-improvement. At the end of the staking period, you receive additional coins as income.
In Solana, users and market participants can launch their own projects. These can be decentralized applications (DApps) or DeFi platforms.
Proof-of-History (PoH)
The PoH mechanism creates a record confirming that an event occurred at a certain moment in time. This process requires several sequential steps to be completed, and the final result is placed in open access for verification.
Unlike proof of work (PoW) or PoS, PoH is not a consensus mechanism, but rather a system that allows transactions to be verified based on their execution time. The transaction block is verified every 400 milliseconds, which can be considered a "second" of the Solana decentralized clock. Timestamps in Solana are possible thanks to the SHA-256 hash function, where the output data of the transaction is reused as input data for the next hash.
In the Bitcoin network, BTC miners with different local times constantly have to search for a valid timestamp for mining a block, which leads to errors and false timestamps. The PoH system significantly expands the possibilities for transaction verification.
PoH introduces a chain of organized hashes for processing. Using the last hashed state of the transaction can significantly reduce the time it takes to verify a block.
As a result, a node can verify more transactions in 1.6 seconds - up to 4 blocks. Then the mining node switches roles with another node. During the verification process, the mining node is considered the lead.
Key Features
Solana stands out with eight technical innovations. The most notable of these is Proof of History, but there are also others:
- Tower BFT is a PoH-optimized version of practical Byzantine fault tolerance.
- Turbine is a block distribution protocol.
- Gulf Stream is a protocol for transmitting transactions without using a memory pool.
- Sealevel - parallel execution of smart contracts.
- Pipelining - a transaction processing unit to optimize verification.
- Cloudbreak is an account database that scales horizontally.
- Archivers is a distributed registry repository.
Thanks to these features, the Solana network stands out for its high performance and block time of 400ms, as well as its ability to process thousands of transactions per second. For comparison, Bitcoin's block time is around 10 minutes, while Ethereum's is about 15 seconds.
SOL owners can stake their tokens using the PoS blockchain consensus algorithm. A compatible cryptocurrency wallet allows tokens to be transferred to validators who process network transactions. If successful, the validator shares staking rewards with token owners. This reward mechanism incentivizes validators and delegates to act in the network's best interest. As of May 2021, Solana had around 900 validators, making the network quite decentralized.
SOL
SOL is the native utility token of the Solana blockchain. SOL utilizes the SPL token standard in the Solana blockchain, which is similar to the ERC-20 standard in the Ethereum blockchain.
The SOL token's fraction is called a lamport, named after American computer scientist Leslie Lamport, whose research laid the foundations of distributed systems theory. One lamport is equal to 0.0000000000582 SOL.
There are three scenarios for using SOL:
- Steaking;
- Transaction fees;
- Management.
The Solana deflationary model involves burning SOL tokens.
