An In-Depth Look at Solana and SOL Cryptocurrency Token
- Solana is a fast and censorship-resistant blockchain platform that provides an open infrastructure.
- There are currently over 338 dApps developed for the Solana blockchain.
- Numerous developments are occurring on the Solana blockchain weekly.
- Solana has a total of $11.47 billion market cap in value locked (USD) in DeFi.
There have been numerous developments within the cryptocurrency world.
These developments have occurred across blockchain technologies competing against each other and providing enhanced solutions to issues that have been a part of the cryptocurrency industry for years.
Solana is one of those projects that attempts to improve transaction speed as well as scalability.
The developer community has dubbed Solana as the “Ethereum Killer,” and today, we’ll be exploring why this is, so hopefully, you can get a better perspective of everything surrounding Solana.
History of Solana
The idea of Solana was originally conceived in 2017. However, the network itself launched in 2020. It is led by the Solana Foundation, which has its headquarters in Geneva, Switzerland.
Solana is a fast and censorship-resistant blockchain platform that provides an open infrastructure. This is what has helped it historically when it comes to its global adoption. Additionally, it is an open-source project intended to provide decentralized finance (DeFi) solutions.
Founders of Solana
Solana was founded by Anatoly Yakovenko, who originally worked at Qualcomm. He became a software engineer at Dropbox; however, in 2017, he decided to work on a new project that would eventually become what we know today as Solana.
However, he wasn’t alone in this mission, as there beside him was Greg Fitzgerald, who was his former colleague at Qualcomm. Together, and over time, they formed what we know today as Solana Labs.
The Goal of Solana
The Solana Protocol was created to facilitate decentralized application creation and has the goal of improving the scalability through the introduction of what is known as Proof-of-History (PoH). This is a consensus mechanism that was created in combination with Proof-of-Stake (PoS).
PoH revolves around a decentralized clock, also referred to as an SHA-256 hash function used as a reference for timestamping. PoH timestamps each transaction when added to a Solana Block, which is generated every 400ms.
To power and drive all of this, we have the SOL token, the native cryptocurrency token used on Solana.
It is used to pay any transaction fees that occur on the Solana Network, where the tokens are burned with each transaction. This is where the Solana token holders can actually stake their SOL tokens to become validators on the network.
Is Solana Really an Ethereum Killer?
The Solana Network has specific features that make it quite interesting with a refreshing take on the technology, besides many features common to other blockchain networks. These include smart contracts, transaction settlements, and token issuing.
However, Solana does quite a few things to distinguish itself. It has become very appealing to many blockchain developers, who have even gone to dub Solana the “Ethereum Killer”.
It has several core components through which it has been dominating the competition, including:
- Proof-of-History — this is the global clock referenced to create a common schedule across all participants within the Solana network.
- Gulf Stream — this component is responsible for defining when and how each of the transactions is exchanged.
- Sealevel — yet another critical component, it is used as a processing engine responsible for assigning the order and execution of the transactions.
- Turbine — this defines how nodes can validate the transactions, or in other words, be able to send and receive blocks.
- Cloudbreak — this Is a memory mechanism used to keep track of the participant balances.
- Pipeline — this is a component responsible for the verification of each component of a transaction.
- Archivers — this is a network of nodes where the data is off-loaded from validators and stored.
- Delegated Proof-of-Stake Consensus — a specialized Tower BFT consensus mechanism that uses a voting and reputation system to secure the network, validate the transactions, and distribute the newly minted SOL tokens.
Now that you know how Solana works and what makes it unique let’s dive into some Solana developments.
Solana Developments
Solana enables its developers to run custom smart contracts and even design decentralized applications (dApps) to run custom smart contracts and services.
There are numerous developments on the Solana blockchain ecosystem, specifically decentralized applications (dApps).
In fact, at the time of writing, there are over 338 dApps on the blockchain, which is quite the hefty and impressive ecosystem, which has driven Solana to the success it sees today.
106 of them are specifically developed to facilitate decentralized finance (Defi), which has seen high popularity throughout the past few months.
In fact, according to DeFi lama, there is a total of $11.47 billion in value locked (USD) in DeFi.
It is clear that DeFi has been driving the cryptocurrency space, and Solana has definitely made its impact within this sphere of the crypto world.
Solana’s future vision can be summarized within a single sentence. This is a network that wants to become the blockchain for all. As such, small users should benefit from the proof-of-history (PoH) consensus, high usability, low transaction fees, and amazing scalability.
As of September 2021, institutional investors are betting big on Solana investments, with SOL-tracking products attracting a total of 86.6% of institutional inflows of digital asset products.
This is based on data from CoinShare’s “Digital Asset Fund Flows Weekly,” SOL investment products saw inflows of $49.4 million between September 6 and September 10.
Additionally, the Swiss digital asset issuer Valour expanded its exchange-traded product (ETP) suite with the launch of Solana ETP on September 14.
The ETP will track the performance of the crypto asset, the seventh-largest blockchain-backed cryptocurrency, with a market cap of $50.2bn, as of September 14.
Solana NFT Hype
We also saw Degenerate Ape NFTs sold for millions on the Solana blockchain. In fact, following the massive success of the Bored Ape Yacht Club NFT collection built on the Ethereum blockchain, these came as direct competition; however, they were built on the Solana blockchain instead.
The 13th rarest Degenerate Ape NFT was sold on 11 September 2021 for $1.1 million. It was purchased by the blockchain advisory firm Moonrock Capital, which announced via Twitter that they paid the NFT with 5980 of Solana’s SOL tokens.
Solana Overcoming Technical Issues
On 14 September 2021, the Solana mainnet-beta experienced intermittent instability. According to the official Solana Status Twitter page, resource exhaustion in the network was causing a denial of service, and engineers began work on resolving this issue.
According to Solscan data, before 8 a.m. ET, the network produced its last block.
At around 11 a.m. Anatoly Yakovenko, the founder and CEO of Solana, Tweeted that “Bots during a raydium ido are flooding the network at 300k txs per second.”
Later on, at 3 p.m., the Solana Status Twitter account posted this update: “1/ Solana Mainnet Beta encountered a large increase in transaction load which peaked at 400,000 TPS. These transactions flooded the transaction processing queue, and lack of prioritization of network-critical messaging caused the network to start forking.”
On September 15, the Solana validator community completed a restart of the mainnet Beta after upgrading to 1.6.25. This issue got resolved when the validator community elected to coordinate a restart of the network.
Market Analysis of Solana
According to data from TradingView, as of the time of writing, September 14, the Solana (SOL) token has a value of $160.84.
To better understand this value point, let’s compare it to the all-time high value and see exactly when it occurred.
The all-time high value of Solana (SOL), according to CoinGecko, Occurred on September 9, 2021, where the token raised its value to $213.47.
This leaves us to believe that the token was $52.63 higher in value at its peak, or in other words, was 32.72% higher in value. It is also an indication of the potential growth of the token when the ecosystem grows even further, and a lot more dApp developers switch to the Solana blockchain due to its low transaction times and greater scalability.
Even with its current value of $160.84, it’s still a remarkable value, and it only has the potential of climbing in value from this point onward.
Additionally, the SOL cryptocurrency token also plays another role when it comes to the maintenance as well as the operation of the Solana ecosystem. In fact, Solana rewards its validators, as well as its delegators, with a portion of the newly minted SOL tokens along with the transaction fees. This is based on the amount of SOL token staked, the set inflation rate, and the complexity and number of transactions on the network itself.
NFA Disclaimer
Please note that we do not provide financial, investment, or trading advice. Investing in cryptocurrencies or tokens is highly speculative, and the market is extremely volatile and largely unregulated. Anyone considering crypto investment activities should be prepared to lose their entire investment. Invest at your own risk!
Thank You for Reading
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