Solana is a layer-1 blockchain platform for decentralized apps, focused on speed and scalability.
The blockchain and its native token, SOL, are relatively new as it was founded in 2018 and traded starting in 2020. But it quickly became one of the fastest-growing crypto networks to date and for good reason.
As Ethereum’s network grew more congested and transaction fees skyrocketed in 2021, alternative layer-1 (“L1”) blockchains with low fees and the ability to scale like Solana began to take market share.
Solana is able to handle more transactions per second (400-800 milliseconds per transaction) and keeps fees at a fraction of a penny ($0.00025).
How does Solana work?
The high speed is mainly due to using its Tower Consensus system (custom implementation of the Practical Byzantine Fault Tolerance algorithm) on top of a Proof-of-History (PoH) consensus system, a unique combination that reduces the processing power needed to verify transactions.
Another nifty feature of Solana is its Sealevel transaction parallelization technology. This involves a parallel runtime for smart contracts, which enables Solana to scale horizontally across GPUs and SSDs to meet network demands.
As a result, this makes Solana one of the fastest smart contract platforms out there as it can theoretically do 65,000 transactions per second, which is around 4,000 times faster than Ethereum and 10,000 times faster than Bitcoin.
What is the SOL token?
SOL is the native utility token for the Solana network and is mainly used to stake on the network (to help secure the network) and for transaction fees.
It started with an initial supply of 500M tokens and with a starting annual inflation rate of 8%, but the inflation rate will decrease annually until it reaches an inflation rate of 1.5%.
Team Background
Solana was created by A-list software engineers from the likes of Intel, Dropbox, and Qualcomm.
Back in 2017, its CEO Anatoly Yakovenko wrote a whitepaper on the concept of timekeeping techniques for distributed systems. Dubbed Proof of History (PoH), this innovation could help eliminate the issues of scalability and the time needed to reach a consensus on transactions.
Solana was co-founded by Eric Williams, Greg Fitzgerald, and Raj Gokal.
It had the backing of former crypto exchange FTX, which had launched several Solana-based projects.
Solana is also backed by well-known venture capital firms like Andreessen Horowitz, Alameda Research, BlockTower Capital, and Delphi Digital.
Notable Projects:
- Solend: algorithmic, decentralized protocol for lending and borrowing
- Serum: Decentralized Exchange
- Quarry: open protocol for launching liquidity mining programs
- Raydium: An on-chain order book Automated Market Maker
- Marinade Finance: Liquid Staking Protocol
- Saber: Automated Market Maker, focused on stable pair trading
Project Network Stats:
- Holder Addresses: 4.9 million
- Current supply: 548M
- Maximum supply: None
- Inflation Rate: 6.67%