Solana (SOL) is a cryptocurrency that runs on a fundamentally new blockchain that uses a unique consensus mechanism called Proof of History (PoH). Its name is translated as “history proof algorithm,” and such a mechanism is based on adding timestamps to blocks. This allows you to determine precisely when an event or transaction occurred.
What is this cryptocurrency, and how does it work?
Solana’s network is characterized by high bandwidth. The SOL blockchain can carry out up to 710 thousand operations per second (for comparison, VISA only supports 65 thousand operations per second). At the same time, the commissions in the network are minimal, and the cryptocurrency is completely decentralized. Currently, the SOL transaction fee is about $1 for every $100,000 of transfers. Solana’s development strategy provides for an even greater increase in the speed of transfers without increasing commissions.
It is the Proof of History algorithm allows the project to provide support for such a number of transactions. The importance of this technology lies in the fact that most networks spend time and resources to synchronize the time of transactions between network nodes. The creators of SOL have implemented a centralized clock by which all nodes can be checked without spending resources on it.
Also, the high throughput of Solana is provided by the Turbine protocol. Its essence lies in the fact that each node (node) does not send information to the entire network but shares data only with neighbors, and they, in turn, with their neighbors. Smart contracts are launched in parallel using the Sealevel protocol, which also ensures a high speed of operation.
History of the emergence of SOL
The Solana cryptocurrency appeared at the end of 2017. Her idea was invented and implemented by former engineers from Qualcomm, Intel and Dropbox. Anatoly Yakovenko, a native of Russia, became the founder and executive director of the project. Also contributing to the development were Greg Fitzgerald, Stephen Akridge and Raj Gokal.
Today the Solana team consists of more than twenty specialists.
Features of the Solana project
The development of SOL followed a path never seen before. While other ecosystems have created new levels in their blockchains, Solana developed one level. This level reduces the cost of entering the ecosystem and ensures ease of operation. In addition, this approach allows Solana to maintain compatibility with other sibling systems and systems based on Ethereum.
The Solana blockchain is very attractive to developers. Firstly, the system allows you to write applications inside it, not on third-party resources. This ensures the integrity and convenience of development. Secondly, the system uses the very popular Rust programming language. As a result, developers do not need additional knowledge to work in SOL.
The role of the Solana project and the SOL cryptocurrency
The Solana ecosystem is tightly integrated into the modern crypto world. For example, Tether released a stablecoin* USDT on the Solana blockchain. In addition, the SOL cryptocurrency is closely related to the Serum protocol. For example, the Serum exchange used a system created by Solana to develop the exchange. In particular, Serum has created a central limit order book (CLOB) in the chain that is updated every 400 milliseconds to ensure that traders get up-to-date asset prices quickly.
*Stablecoin is a cryptocurrency that is rigidly pegged to assets, such as the dollar or securities.
Solana is one of the few decentralized systems that allows you to write applications on its platform that work quickly and stably while maintaining low prices for users. To understand the allure of this simple advantage, look at the cost of transactions on the Ethereum network, which can reach tens and even hundreds of dollars. In the future, this may help translate banking applications into the Solana ecosystem, for example. Among the popular applications based on SOL are Audius, Oxygen, and Akash (the full list can be found in the corresponding section of the Solana website ). The Maps.me navigator integrates the wallet together with Solana into its services.
Naturally, the Solana ecosystem’s development and growing popularity entail the SOL tokens’ growing popularity. The coin is represented on many popular exchanges, and its rate is steadily growing. The total amount of emission of SOL tokens is 500 billion coins. Tokens are used as the platform’s internal currency, including paying commissions and launching network programs.
Reasons for popularity or underestimation
Now the SOL cryptocurrency is popular in a narrow circle. First of all, it attracts users with the speed and cheapness of transactions, but in terms of development, it has not yet been able to reach a fairly stable level. However, Solana is a project with high potential. Another feature of the SOL cryptocurrency is its suitability for automated trading using bots.
SOL’s reputation was heavily affected by the outage in December 2020. Due to accumulated errors, transactions with cryptocurrency were not made for more than 6 hours, making it unreliable in users’ eyes.
Now (May 2021), SOL is in the TOP-20 currencies by capitalization, according to Coinmarketcap . It is relatively stable and attracts both large investors, such as Multicoin Capital and Foundation Capital, and ordinary users.
Solana has taken the right direction of development towards scalability, a single-level mechanism of operation and a popular programming language. To what extent will the project be able to stay on course, how will this affect the stability of the system? Time will tell. In the meantime, the project looks like an interesting alternative solution and is suitable for long-term investments.