What Is Solana (SOL)?
The Solana network is a blockchain-based network that provides fast transactions as well as high throughput. This network makes use of a unique method of ordering transactions that makes it faster. SOL, the native cryptocurrency of the network, is used for payment of transaction fees and for interacting with smart contracts.
Introduction
Scalability is considered to be one of the most difficult challenges when it comes to blockchain technology. The rise of these networks often entails challenges in terms of transactional speed and confirmation times that are associated with their growth. Solana aims to address these limitations while maintaining security and decentralization without compromising any of those things.
The Solana blockchain was founded by Anatoly Yakovenko, a member of Solana Labs, in 2017. This blockchain adopts a new system of verifying transactions. A number of projects, such as Bitcoin and Ethereum, have scalability and speed problems. With the Solana blockchain, thousands of transactions can be completed per second via a process called Proof of History (PoH).
How does Solana work?
Solana is a new Proof-of-Stake blockchain that has been designed for third generation applications. It has created an innovative method of creating a trustless system through which it can determine the time of any given transaction by implementing a system called the Proof of History.
Cryptocurrencies require you to keep track of the order in which the transactions are made. To make this happen, Bitcoin bundles up its transactions into blocks, each of which has a timestamp. Nodes will have to verify each block by reaching a consensus with each other. This process adds a significant delay to the time it takes for the nodes across the network to confirm a block. So, let us get a closer look.
What is Proof of History?
SHA256 is the hash function used by Solana for storing all the data stored in events and transactions. In this function, one input is used to produce an output that produces a unique output that cannot be predicted in advance. As part of the Solana algorithm, the output of a transaction is used as input for the next round of hashing. There is now a built-in mechanism for inputting the transaction order into the hashed output.
A long, unbroken chain of hashed transactions is created with the help of this hashing process. In this way, a validator can add transactions to a block in a clear, verifiable order, without needing a conventional timestamp to help safeguard against duplicates. Validators can also easily determine the length of time it has taken for hashes to complete, since they can verify the amount of time passed by easily.
As part of the Proof of Work consensus mechanism, Proof of History is a process that is different from the Proof of Work mechanism used by Bitcoin. In Bitcoin, it is comprised of large groups of unorganized transactions. The time and date are always added to the blocks mined by BTC miners based on their local clocks. Other nodes' clocks may differ or even appear to be incorrect in some cases. Once a timestamp is input, nodes must figure out if it is valid.
It is becoming more and more common to use chain hashes as the way to order transactions, so validators process and transmit a lot less information in each block. The time taken to confirm a new block after it is confirmed using hashes of the most recent state of transactions is greatly reduced when a new block is confirmed using a hashed version.
In order to utilize Proof of History, it is necessary to understand that this is not a mechanism of consensus. In fact, it is instead an improved way of confirming the order of transactions in a faster manner. It is much easier to select the next validator for a block when combined with the proof of stake. This indicates that the network can choose a new validator quicker because nodes need less time to validate transaction orders.
Solana’s key features
In their blog post, the Solana team says that they have developed eight core technical features in order to match centralized functionality to the capabilities of blockchain technology. The most notable of them would be Proof of History, but the others would include:
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Introducing the tower BFT - the PoH-optimized version of Practical Byzantine Fault Tolerance
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TURBINE - a protocol for propagating blocks
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Gulf Stream — an implementation of Transaction Forwarding without Mempools
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SeaLevel — Parallel implementation of smart contracts
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Pipelining — a Transaction Processing Unit for data validation optimized
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Cloudbreak - An Accounts Database that Can Be Scaled Horizontally
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Archival Service - Distributed Ledger Storage
A high-performance network with 400ms block time and thousands of transactions per second is created by combining these features. For context, Bitcoin takes roughly 10 minutes to produce a block, whereas Ethereum takes approximately 15 seconds to produce a block.
Those who are holders of SOL tokens have the option to stake their tokens as part of the blockchain's PoS consensus mechanism. It is possible to stake your tokens with validators who are responsible for processing the network's transactions using a compatible crypto wallet. Whenever a validator is successful, those who stake their own tokens get a share of the rewards. By incentivizing validators and delegators in this way, the network is able to promote its interests. Solana has around 900 validators as of May 2021, which makes it pretty much a decentralized network.
What is SOL token?
Solana's native cryptocurrency, SOL, functions as a utility token that keeps track of all operations within the company. Whenever users make transfers or interact with smart contracts, they will have to pay transaction fees to SOL. In order to keep its deflationary model intact, the network burns SOL. Network validators can also obtain SOL with the network burns SOL. As in Ethereum, Solana allows developers to create smart contracts and blockchain-based projects based on the blockchain.
In SOL, a protocol called SPL is used. The Solana blockchain uses the SPL token standard, which is like the ERC-20 protocol of Ethereum. Tokens for SOL can be used in two main ways:
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When you use smart contracts or the network, you will have to pay for transaction fees.
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The Proof of Stake algorithm is the method by which the consensus is reached.
The use cases for SOL being created by DApps built on top of Solana are also expanding. To give an example, Chainvote is building a DeFi (decentralized finance) application to vote on corporate governance, which uses SOL tokens. During the first two quarters of 2021, the price of Solana saw a 30 times increase, making it one of the most popular picks among investors and speculators.
How to store SOL?
To store SOL tokens, you may use a cryptocurrency wallet such as the sollet.io wallet (developed by Serum Academy), Trust Wallet for mobile devices, and other wallets that accept SPL. For those who would like to stake their Sol, it is necessary to use a wallet that has the functionality to support staking. Use either the SolFlare wallet or the Solana command-line tools to store your cryptocurrency. Stake accounts can be created in the wallet in which case validators can be delegated your tokens along with your stake account.