Beginners Guide View Non-AMP

What is Solana Blockchain? A Beginners Guide

Written by: Qadir AK

March 27, 2022

There’s competition everywhere, and there’s a lot of it in the crypto world as well.Blockchains are the backbone of cryptocurrencies, thus if you want to develop your currency, you must first improve your blockchain.

Scalability is a most  important challenge for Blockchain, and competitors are just working to enhance it. 

Blockchains like bitcoin have drawbacks like transaction time and speed, so a competitor called Ethereum came up with a solution with faster transaction, more privacy and decentralization. 

Ethereum’s founder had said you can’t have decentralization, scalability, and security all at once. Because security is critical and decentralization is one of the basic ideas of blockchains, most projects face the difficulty of growing without jeopardizing the first two. 

Here’s where our Solana enters the picture. In 2017, Solana was created by Anatoly Yakovenko as a strong support to the crypto industry. The Solana blockchain that claims to have figured out a way to solve this problem and promises to offer faster transactions with lower transaction fees. 

What is Solana?

Solana is a decentralized crypto computing platform that promises to achieve high transaction speeds while maintaining scalable applications. Solana is an open source, high-performance, permissionless project that enables anyone around the world to develop crypto apps and scale today. 

The native cryptocurrency that runs on Solana blockchain is called SOL, which is utilized for transaction fees and staking. It also entitles owners to vote on future upgrades. 

As a layer 1 blockchain, Solana scales well. This implies it doesn’t need off-chain solutions to speed up transaction processing or avoid bottlenecks. 

The third-generation blockchain architecture developed by Solana is intended to make smart contracts and decentralized application (DApp) development easier. 

Solana is not only ultra-fast and low-cost, but it also avoids censorship. This means that the network will stay available for apps to function freely and that transactions will never be halted.

The scalability here assures that transaction fees are less than $0.01 to its users and developers. Solana is all about speed, with block times of 400 milliseconds. And as hardware improves, the network improves as well.

Solana is the world’s fastest blockchain and cryptocurrency ecosystem, with dozens of projects spanning DeFi, gaming, NFT world, Web3, and more.

Solana’s Blockchain

Solana is modeled by both Proof-of-History(PoH) and Proof-of-Stake(PoS). PoS allows validators to verify transactions using the number of coins or tokens they have while PoH enables those transactions to be time stamped and confirmed in a short period. 

Here Proof-of-stake are Owners of cryptocurrencies guarantee, or “stake,” their coins to a validator via Proof-of-Stake. Validators are chosen to add the next block of transactions based on how much their stake is, how long they have staked for, and a variety of other criteria, rather than competing with other computers to solve complicated puzzles as in Proof-of-work.

The goal is to determine the amount of commitment among network participants and to reward them for it. The network becomes more decentralized and safe as the stake grows in relation to circulating supply.

On the other hand,  Proof-of-History is a technique for demonstrating that transactions are in the appropriate order and were discovered by the right person.

A validator ingests transactions and forms a block in Solana’s blockchain, which is divided into slots or spans of time. To save time, leaders are chosen ahead of time for each slot in this method.

The proof-of-stake method chooses a node (or validator) to be the “leader” of a slot based on the amount of SOL owned. Each validator is in charge of keeping track of the passage of time, often known as a proof-of-history sequence, as well as the next block of transactions for the slot they were assigned to. 

Key Features

Proof of History (PoH): PoH consensus process contributes to the network’s increased efficiency and throughput rate. As a result, having historical records of events or transactions makes it easier for the system to track transactions and keep track of the events’ order.

Tower Byzantine Fault Tolerance (BFT) algorithm: The BFT system acts as a safety net for the Solana ecosystem, ensuring that a single node failure does not disrupt the entire system’s operation. This approach allows the nodes to keep working despite multiple failures. 

Turbine: The Turbine protocol increases data transmission to blockchain nodes. Turbine accomplishes this by dividing the data into smaller packets. This enables Solana to handle bandwidth difficulties while simultaneously increasing its total capacity to settle transactions more quickly.

Gulfstream: The Gulf Stream protocol is vital in pushing transaction caching and forwarding to the network’s edge. This allows validators to execute transactions ahead of time, resulting in speedier leader switching and less memory burden on validators due to unconfirmed transaction pools. 

Sealevel: Solana makes it possible to execute numerous smart contracts at the same time. Solana becomes a more cost-effective blockchain network as a result of this. This unique feature is known as “Sealevel”.

PipeLine: Pipelining is the technique of assigning a stream of input data to various hardware components. As a result, this approach enables transaction data to be swiftly checked and copied among the network’s nodes. 

Cloudbreak: Solana employs a horizontal scaling strategy, which allows the company to expand its scalability. Cloudbreak is a database that allows you to read and write transaction data. It is also in charge of bridging the gap between hardware and software.

Archivers: Archivers are used to store data. Data on Solana is transferred from validators to Archivers, a network of nodes. These nodes can be small and they will be checked periodically to verify they are storing the correct data. 

What Makes Solana Different?

Solana is well-known in the cryptocurrency world due to the blockchain’s extraordinarily fast processing speeds. Solana’s hybrid protocol enables for substantially faster transaction and smart contract execution validation. Solana has also gained a lot of institutional attention due to its lightning-fast processing times.

Solana is a one-of-a-kind initiative in the blockchain market due to its novel blend of PoS and PoH. This hybrid consensus prioritizes speed and decentralization. 

Validators are chosen through proof-of-stake on a standard blockchain. They then generate the next block of transactions and disseminate it to the rest of the network’s nodes. The rest of the network then compares the new block to their own ledger version.Here nodes can decide whether or not to validate the new block. 

By hashing the output of one transaction and using it as the input of the next, Solana produces a chain of transactions. Solana’s main consensus mechanism is named after this history of transactions: PoH, a principle that enables for better scalability of the protocol, which improves usability.

In general, the more and better a blockchain’s scalability is determined by the number of transactions per second it can accommodate. However, time differences and more throughput slow down decentralized blockchains, implying that additional nodes confirming transactions and timestamps takes longer.

In a word, Solana’s design tackles this problem by selecting a single leader node based on the PoS method for message sequencing between nodes. The nodes must vote on the validity of blocks and transactions before they may join the chain. Nodes communicate their votes to the leader, who is then in charge of collecting the votes and signing off on the block.

As a result, the Solana network benefits, decreasing workload and increasing throughput despite the lack of a centralized and precise time source. 

Finally to bring to the spotlight,  the Solana blockchain is dedicated to providing decentralization, security, and scalability all at once.

Working of Solana Blockchain

PoH and PoS are used by Solana to process transactions efficiently. PoH is a simple approach to validate transactions without having to communicate with nodes. PoS is a method for validating transactions in which people stake their cryptocurrencies.

PoH is based on a simple formula that assigns a “leader position” to a particular node, and any node holding the leader position must generate the whole “proof of history” statement. After acquiring the responsibility, the blockchain network’s leader node coordinates with other nodes to construct a proof of history declaration. 

This leader node is responsible for the execution of current transactions, and it  publishes the transactions with “verifiers” in their final nodes. In order to “verify” transactions, verifiers repeat the process. Verifiers also make copies of the transactions, which they then disseminate.

The Tower Byzantine fault tolerance (BFT) algorithm, which is an optimized variant of the practical Byzantine fault tolerance (pBFT) protocol, is used in PoH. It is used by Solana to reach an agreement. The Tower BFT keeps the network secure and operational while also serving as an additional tool for transaction validation.

PoH can also be thought of as a high-frequency Verifiable Delay Function (VDF), a triple function (setup, evaluation, and verification) that generates unique and dependable results. VDF keeps the network in order by confirming that block makers have given the network adequate time to go forward.

When compared to bitcoin and ethereum’s blockchain networks, a combination of PoH and PoS works best for Solana, allowing it to process at a cheap cost. 

Solana Tokenomics

With a live market cap of $32,644,117,935 USD, CoinMarketCap now ranks #8. There are 324,932,451 SOL coins in circulation, and the maximum supply is unknown. The current Solana price is $100.46 USD. 

A total of 489 million SOL tokens will be released into circulation, according to the Solana Foundation. Approximately 260 million of these have already hit the market.

The following is the SOL token distribution: 16.23% of tokens were allocated to an initial seed sale, 12.92% to a founding sale, 12.79% to team members, and 10.46% to the Solana Foundation. The remaining tokens have either already been sold in public or private transactions, or are on their way to the market. 

Projects Built on Solana

Let’s take a look at some of the most popular Solana projects right now

Name of the ProjectDescription
RaydiumRaydium is a liquidity provider and Automated Market Maker (AMM) for the Serum Decentralized Exchange, built on the Solana blockchain (DEX). Raydium has a first-mover advantage as an AMM within Serum, and it will play a crucial role in integrating new and current projects and protocols into the ecosystem.
Audius Audius is a blockchain-based music streaming network that provides producers ultimate control over the content they create, so it’s no wonder that it’s gained a lot of traction in recent years. Prior to switching to Solana, the project was launched on the Ethereum blockchain.
Hedgehog Markets Hedgehog is a prediction markets platform that creates passive revenue for limited partners. Here users can hedge or trade on a variety of outcomes, including election results, sporting events, and auction selling prices
GARI Network Chingari, one of India’s most popular social networking apps, was developed by the GARI network. GARI was founded by Chingari in order to facilitate a huge digital economy. Users will be rewarded with GARI tokens for generating and sharing viral content, as well as for tipping other users who appreciate their videos.
Star Atlas Star Atlas is a multiplayer exploration game based on the blockchain that intends to create an open economy within its metaverse. The game will allow players to acquire ATLAS tokens simply by interacting with other players and achieving success in the game. Due to its dual economy, which employs ATLAS tokens as its main currency and POLIS tokens for governance, Star Atlas claims to be the ‘world of opportunities.’

Solana Staking System

You can help safeguard the network while also earning benefits by staking your SOL tokens.

The number of tokens staked determines the amount of SOL awards. Validators handle transactions and operate the network, thus you can stake by delegating your tokens to miners.

Delegating stake is a shared-risk, shared-reward financial concept that could give long-term benefits to token holders. The financial incentives of token holders (delegators) and the validators to whom they delegate are aligned to achieve this.

The more stake a validator has, the more likely it is to be picked to write new transactions to the ledger. The more transactions a validator writes, the more incentives it and its delegators receive. Validators that set up their systems to process more transactions get greater incentives as a result of keeping the network working as quickly and smoothly as possible. 

Validators raise costs in the operation and maintenance of their systems, which are passed on to delegators in the form of a charge calculated as a percentage of the rewards obtained. This is  the commission term for the fee. Validators may compete with one another to give the lowest commission for their services, because they gain greater rewards as more stake is assigned to them.

Solana and NFT

Solana has an excellent reputation for launching NFTs. We were spun out of a Solana initiative in order to realize our aim of producing the best NFT creation experience in the world.

Solana is ideal for NFTs of various forms because of its fast throughput and inexpensive fees. There are over 5.7Million and more NFTs,  minted with a total market cap of 970 million with average minted cost of $1.5. 

SOL price has been climbing since the launch of the Degenerate Ape NFT collection, owing to increased developer activity on the Solana environment, increased institutional interest, the developing DeFi community, and the expansion of the NFTs and gaming vertical on Solana. On September 9, 2021, the price of Solana reached an all-time high of $216.

Some of the famous  solana NFTs are Metaplex, Solanart, Solanalysis, Solsea and more.

The Future of Solana

As the non-fungible token (NFT) craze continues to gain traction, Solana is ideally positioned to profit from it. Solana price estimates are hot on the promising outlook, as one could expect. 

It combines segregated communities, dispersed attestation, and a modular weave of modules that are industry-specific. As a result, the project has grown into a behemoth that creates a faultless and dependable ecosystem, resulting in a highly collaborative and customer-friendly interface based on deep learning for both the public and private sectors. The Solana blockchain market is currently expanding at a considerably faster rate, with initiatives ranging from NFT to Web3, DeFi, and many others. 

Various cryptocurrency experts’ Solana price estimates have had no effect on Solana’s ability to surpass its competitors. With recent advancements in decentralized exchanges, NFT marketplaces, yield aggregators, and online games, among other things, the Solana market has set greater benchmarks and will continue to do the same. 

FAQs

  • Is Solana a Good Investment?

Yes, according to our predictions, the price of Solana will rise. At the time of writing, Solana pricing is around $100.53, however the average Solana price is predicted to go high. It is preferable to prepare for a long-term rise, say over a period of at least five years.

  • Is Solana a Ethereum killer?

Solana’s speed, as well as its scalable ecosystem, have earned it the title “Ethereum Killer.” In comparison to Ethereum, the cost per transaction for Solana is substantially cheaper. Unlike other applications, the software used to create Solana is more popular among developers, making development easier. 

  • Why does Solana have a low gas fee?

Because of the longer block time and larger block size, the Solana network has an extremely cheap transaction cost of only $0.00025 per transaction.  

Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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