Solana is a permissionless, smart contract-enabled blockchain platform designed to optimize performance, high transaction throughput, and fast transaction speed; Solana is powered by its native SOL, which can Competes with layer 1s like Ethereum (ETH) and Avalanche (AVAX).
In this Solana Fundamentals guide, you will walk through the main components of the protocol and other important aspects such as DApps on the largest ecosystem , Token Economics and how it compares to Ethereum.
What is Solana?
Solana is a layer 1 blockchain, which means it is the base layer infrastructure, not layer 2 and sidechains, which are connected to layers Parachain-1.
Solana uses two consensus algorithms: Proof of Stake and Proof of History.
Proof of History (PoH) is the backbone of Solana – It timestamps all transactions on the blockchain to prove that they happened at a given time.
In Proof of Stake (PoS), network participants must stake a certain amount of SOL tokens to become validators and validate transactions. PoS Algorithm
Brings in a validator network to verify timestamps and confirm transactions.
How to stake Solana (SOL): To become a Solana validator
How to stake Solana (SOL): To become a Solana validator
Users who want to run a validator node must satisfy Computational requirements (CPU with 12 cores, 2.8GHz and RAM e.g. 128GM) and SOL. There is no minimum amount of SOL to become a validator, but one is required to participate in consensus “Voting Account”, which has a rent-free reserve of approximately 0.026 SOL.
Validators must vote for each block they receive Blocks are voted on; The cost of voting is 1.1 SOL per day.
Users can stake SOL to earn rewards and help secure the network, which can be allocated to one or more verifier.
Solana staking rewards depend on :
- Initial Inflation rate, which is 8%. This figure is reduced by 15% per year until it reaches a fixed rate of 1.5% per year.
Solana: History and Founders
Anatoly Yakovenko, a former engineer at multinational Qualcomm, founded Solana in 2017, the same year the white paper was published. His goal is to create an infrastructure that can surpass proof-of-work and proof-of-stake networks.
Greg Fitzgerald and Eric Williams joined Yakovenko to develop the Solana testnet and create Solana Labs, headquartered in San Francisco, California. Yakovenko announces the 2020 launch of the Solana Foundation, a Swiss non-profit organization that supports and promotes the development of Solana.
SOL Tokens: Token Economics and Where to Buy
SOL is Solana’s utility token used to pay for running smart contracts in network transactions. Another use case is staking and voting on government proposals.
Think of it as ETH for Ethereum.
The total supply of SOL is capped at 511,616,946 tokens. As of September 1, 2022, there are 349,510,121 SOL tokens in circulation, accounting for about 66.2%. The distribution phase began in 2019 with an ICO and was divided into five funding rounds, four of which were private sales.
The initial distribution is as follows:
38% donated to Community Reserve Fund (managed by Solana Foundation)
- 5.07% to Validator Sale Investors
- 1.84% to Strategic Sales Investors
- 1.6% to investors in public auctions.
The highest price for SOL on November 6, 2021 was $258.93. SOL is a popular cryptocurrency, so you will most likely find it on most cryptocurrency exchanges, including Binance, Kraken, Coinbase, and more.
Solana’s largest investor
Solana is backed by num Numerous crypto VCs around the world including Alameda Research, CMS Holdings, BlockTower Capital and Andreessen Horowitz (a16z) Companies and digital asset institutions.
Solana raised a total of
3.358 $100 million At least 37 investors in 9 rounds. The final round will be held on August 19, 2021. Solana Ventures is the investment arm of blockchain and has invested in at least 16 projects involving GameFi, NFT and DeFi. Solana VS. Ethereum: How are they different?
Each blockchain has its advantages and disadvantages. It all boils down to what works best for you or your project. Ethereum transitioned from PoW to PoS in September. Since both blockchains technically run on PoS algorithms, it all boils down to their different designs and how they implement security, so here’s a quick note about both:
Solana scalability and transaction speed
Metrics show that Solana can process around 3,500 to 4,000 transactions per second, while Ethereum can handle 10 to 15 TPS. Solana claims that the network can reach hundreds of thousands of TPS, but this claim has never been proven.
Solana’s The number of DApps has experienced a huge Over time, Solana was unable to surpass the amount of work that Ethereum could handle on a daily basis. The number of decentralized applications (DApps) on Solana is difficult to track as more projects are being built every day, but DappRadar estimates there are over 350 projects.
Some of the top DApps on Solana are:
- Magic Eden: The largest NFT marketplace in the Solana ecosystem.
Ethereum, on the other hand, hosts around 2,500 to 3,000 DApps, including Polygon PoS Bridge, Uniswap V3, Curve, Compound, and Arbitrum. According to DeFi Llama, these projects make up more than $50 billion in total value locked (TVL) in Ethereum, while Solana has $1.4 billion, making it the fourth-largest ecosystem.
Security
Whether one blockchain system is more secure than another is always worth it Negotiable. Neither Solana nor Ethereum has a well-established infrastructure, so it’s best to weigh the pros and cons of each platform.
On the one hand, Ethereum is older than Solana, which was launched in mid-2015, so it has undergone more auditing and security research. As such, its flaws and vulnerabilities are better known to the public. Proof-of-work blockchains are considered less vulnerable than PoS protocols, but have lower throughput and higher energy consumption.
Solana launched in 2020, entering the industry with a far more complex architecture than Ethereum. The protocol supports speed and throughput. But it also has a slight advantage over traditional PoS systems because it combines PoS with its mechanism, PoH, which orders transactions based on execution time rather than transaction fees, protecting the network from front-end attacks.
Final Thoughts: Solana and the Centralization Dilemma
Solana appeared in the early 2020s in search of scalable and cost-effective An alternative choice for users of blockchain. It has become one of the top networks for regular users and blockchain developers.
Solana is a club of “Ethereum Killers”; a layer 1 protocol that provides similar functionality to Ethereum, but with improved features.
However – as with any other protocol – some aspects of it have been criticized. Critics mainly emphasize Solana’s centralized ecosystem . Half of SOL tokens are owned by VC firms and insiders, approximately
For Solana, however, things are taking an interesting turn. The post-merger event sparked criticism of ethereum because more than 40 percent of the network’s blocks were added by two entities: Coinbase and Lido.
Top 7 entities that control more than 2/3 of the shares are very disappointing pic.twitter.com/VBipyFUM7g
— Martin Köppelmann 🇺🇦 (@koeppelmann) September 15, 2022
FAQ
How many transactions per second can Solana support? :
Has Solana been hacked before? : Solana’s core code has not been attacked since the protocol was launched, but like most of the ecosystem, several projects inside Solana have been exploited, hacked victims, and other attacks. In early August, hackers withdrew more than $5 million from the Solana wallet, which was attributed to a private key vulnerability associated with the mobile hot wallet Slope. In February, Solana’s largest cross-chain bridge, Wormhole, suffered a large-scale attack, losing $320 million.
What are the transaction fees for Solana? : Solana’s base transaction fee is $0,00025.
Does Solana support NFTs? :Solana has numerous NFT projects and marketplaces, Magic Eden is the most popular buy and sell NFT.
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