Decentralized applications, or dapps, are widely regarded as one of the key use cases for blockchain technology.
In the last few years, dapps have come on in leaps and bounds, with dapp developers launching everything from games to decentralized finance (DeFi) platforms on blockchain—and a concomitant explosion in user interest.
But there's a problem. The vast majority of these dapps run on Ethereum, which has struggled to keep up with rampant demand—leading to congestion on the network and soaring transaction fees.
Now Solana, a blockchain platform that had its beginnings in 2017, is aiming to step into the breach, and succeed where Ethereum is currently struggling.
What is Solana?
Solana is an advanced open-source blockchain project that looks to leverage several breakthrough technologies to power the next generation of dapps.
The project is focused on providing a highly scalable, secure, and maximally decentralized platform that can support potentially thousands of nodes without sacrificing throughput—helping to avoid some of the challenges faced by competing systems.
It was founded in 2017 during the ICO boom and raised more than $25 million across various private and public sale rounds. The platform went to mainnet in March 2020, but is still operating as a beta release.
How does Solana work?
One of Solana’s key distinguishing features is its Proof of Stake (PoS) consensus system, which is reinforced by something known as Tower Consensus. This is a variant of a system that enables distributed networks to reach consensus despite attacks from malicious nodes, known as Practical Byzantine Fault Tolerance (PBFT).
Solana's implementation of PBFT enforces a global source of time across the blockchain through a second novel protocol known as Proof of History (PoH). This essentially provides a chronicle of previous events on the blockchain, ensuring that there's a common record of what happened and when for permanent reference.
Tower Consensus leverages this synchronized clock to reduce the processing power needed to verify transactions, since the timestamps of previous transactions no longer need to be computed. This helps Solana achieve a throughput that dwarfs most competitors (more on this later).
Beyond this, Solana includes a number of other innovations that help it stand out from the competition. Among these is its transaction parallelization technology, known as Sealevel. This allows for a parallel smart contracts runtime that optimizes resources and ensures that Solana can scale horizontally across GPUs and SSDs, which should help the platform scale to meet demands.
Solana also completely nixes the mempool system used by other platforms, and instead forwards transactions to validators even before the previous batch of transactions is finalized. This helps to maximize confirmation speed and boost the number of transactions that can be handled both concurrently and in parallel. This technology is known as 'Gulf Stream'.
What's so special about it?
When it comes to decentralized applications, speed matters. As is evidenced by the bottlenecks currently faced by the Ethereum network. Solana, however, doesn't currently suffer from these issues due to its high throughput architecture.
Solana claims that its blockchain is capable of sustaining more than 50,000 transactions per second (TPS) at peak load, which would make it arguably the fastest blockchain currently operating. To put this into perspective, this is close to 1,000 times faster than Bitcoin (max throughput ~5-7 TPS) and more than 3,000 times faster than Ethereum (max throughput ~15 TPS).
50,000 TPS, 400ms block times, secure, decentralized and no sharding 😎 https://t.co/rnIy8DnzKg
— Solana (@solana) April 8, 2020
Moreover, Solana claims an average block time of 400 to 800 milliseconds and an average transaction fee of 0.000005 SOL (or a tiny fraction of one cent). This, combined with its massive scalability, makes it well-positioned to serve up decentralized applications that can support potentially tens of thousands of simultaneous users without buckling under the load.
Solana achieves this scalability without resorting to second-layer or off-chain technologies and doesn't use any form of sharding. This makes it one of the few layer 1 blockchains capable of achieving more than 1,000 TPS.
Unlike some platforms, practically anybody can get up and running with a Solana validator and help to secure the network. The process is completely permissionless, though users will need to maintain some basic hardware to participate—namely a server that meets the minimum specifications outlined here. In total, the network currently boasts close to 1,000 validators, making it one of the more widely distributed blockchains.
Who's building on Solana?
Like many 2017-era smart contract-capable platforms, Solana already has a well-developed and rapidly growing ecosystem of dapps, many of which fit squarely into the DeFi niche. Some of Solana's most popular dApps currently include:
- ⛓ O3Swap: A cross-chain aggregation protocol compatible with Ethereum, Binance Smart Chain, NEO, and Huobi Eco liquidity sources.
- 💰 SolStarter: An upcoming IDO launchpad for projects building on Solana.
- 💻 Arweave: A decentralized data storage protocol that looks to offer permanent, massively redundant file storage.
- 📈 Oxygen: A DeFi prime brokerage protocol that allows users to extract value from their idle assets.
Solana Ecosystem News Volume Five ☀️
🔹 https://t.co/5Vloam6KaE releases Chrome extension
🔹 Raydium surpasses $250M in TVL
🔹 Over 1B USD tokenized on Solana
🔹 Phantom announces native NFT support
🔹 The SushiSwap community votes to integrate Raydiumhttps://t.co/0tqpXEtzIV
— Solana (@solana) April 20, 2021
What is the SOL token?
Solana, like the vast majority of smart contract platforms, features its own native gas token — known as SOL. As the gas token, all transactions and smart contract operations on Solana will consume SOL.
The SOL token can also be staked to help support the security of the network, allowing users to earn a proportion of the inflation as a reward. Though the feature isn't currently available, SOL tokens will also be used for on-chain governance eventually.
The token was first launched on the Solana beta mainnet in March 2020 and is currently one of the top 20 largest cryptocurrencies by market capitalization.
Where and how to buy SOL?
As one of the most popular cryptocurrencies, there is no shortage of exchanges that support SOL. As per CoinMarketCap, more than a dozen exchanges now offer SOL trading pairs, includes heavy-hitters like Binance, Huobi Global, and Bitfinex.
Right now, Binance is by far the most popular exchange for SOL and features four trading pairs: SOL/USDT, SOL/BTC, SOL/BUSD, and SOL/BNB.
Here, we will take a look at how to purchase SOL on Binance using Tether (USDT).
Step 1: Create your Binance account and top up your balance with USDT.
Step 2: Head over to the SOL/USDT spot market and navigate to the order panel at the bottom of the page.
Step 3: Select the market tab and enter the amount of USDT you would like to spend on SOL. Click the ' Buy SOL' button to finalize the order
Step 4: That's it! Your SOL will be processed at the best available price and will then be made available in your Binance account balance.
Solana: Where's it heading?
Although Solana has been in development since 2017, it has only been operating on its beta mainnet since March 2021 and there is no clear timeline for when this tag will be removed. However, unlike most beta platforms, Solana is already production-ready, and the beta tag relates mainly to the minor bugs or hiccups that may still be present.
1/Announcing the Solana Season Hackathon! #solanaszn
🏆 Up to $1 million in prizes/seed funding
🌍 Anyone with an internet connection can join
4️⃣ Additional regional tracks
🗓️ Running May 15 - June 7
🏁 Registration is live today pic.twitter.com/3yeMoW7BLy
— Solana (@solana) April 28, 2021
As for what's next for Solana, the platform will be hosting the Solana Season Hackathon between May 15 and June 7, 2021, where teams can compete to win a share of up to $1 million in prizes.
Beyond this, five new crypto funds recently pledged $20 million each to support the development of projects building on Solana in China—helping the platform solidify its global reach.
This story was updated to clarify the nature of Tower Consensus.