Solana has created a name for itself as the second-largest NFTs network. According to Nansen, the network hosts more than 53,000 NFTs collectibles placing it second behind Ethereum. More so, amidst stern competition, Solana is forging ahead to remain a force to reckon with in the industry. However, the project suffered a huge setback that could hamper its growth for years to come. This article will provide insightful knowledge about Solana, illuminating details about the project that hasn’t received much recognition.
Solana is a crypto-computing network with a focus on providing high transaction speed, without compromising its security. The network can process up to 50,000 transactions per second. The network employs a Proof-of-History consensus mechanism which has aided it in achieving high transaction speed. Solana is flexible and it can power a wide range of crypto projects like NFT, DeFi, and Stablecoin.
Founded in 2020, Solana relies on its proof-of-history (PoH) consensus mechanism to enhance scalability. The network aims to stand out by providing swift processing of transactions to boost its usability. With the aid of its consensus mechanism, Solana offers low transaction costs while ensuring scalability and fast processing.
Worth mentioning that Solana’s proof-of-history is backed by an underlying proof-of-stake (PoS) consensus mechanism. As the main component, the PoH is responsible for the processing of bulk transactions. On the other end, the PoS serves as a monitoring tool for the PoH processes, it helps in validating each sequence of blocks created by it.
The network’s hybrid protocol offer has been effective in reducing validation times for both transaction and smart contract execution.The platform has gained much recognition for its speed and high performance. It has grown in acceptance that many tipped it to Ethereum and challenged the dominant presence of the smart contract platform. In addition, SOL is the utility token to the Solana ecosystem.
Team Members and Background
The brains behind the project are two former staff of Qualcomm, Anatoly Yakovenko and Greg Fitzgerald. Qualcomm is an American multinational firm with its headquarters in San Diego, the firm creates semiconductors, software, and services relating to wireless technology.
Yakovenko is a Russian computer engineer, growing up in the Soviet Union made him obsessed with computers from age five (5). He moved to the United States and bagged a degree in computer science at the University of Illinois.
In Qualcomm, Yakovenko’s expertise saw him move rapidly to the position of senior staff engineer manager in 2015. Thereafter, he had a brief stint as a software engineer at Dropbox.
Anatoly Yakovenko is mainly regarded as the brain behind Solana. In 2017, he began working on Solana before partnering with his ex-colleague at Qualcomm, Greg Fitzgerald. Greg is the principal architect and Chief Technology Officer of Solana. He previously worked on numerous Open Source projects. Later on, others partnered with them and they launched Solana and its native token SOL three (3) years later.
Tokenomics of SOL
Presently, the total supply of SOL is 539 million, with 394 million circulating supply. Initially, the Solana foundation announced that about 489 million SOL will be released. Though the present figure has exceeded the initial plan.
The distribution structure of SOL sets aside 25.6% for the initial seed sale, consequently, 20.4% of the coin went to a founding sale initiative. Furthermore, team members shared 20.2% of the token among themselves, while 20.2% went to the Solana Foundation. 2.6%, 3.0% and 8.2% all went to Public Option sales, Stategic sales, and Validator sales.
Solana utilizes SOL as its native token, by that, the token is used to pay network fee on the ecosystem. Also, one can become a validator on the network by staking the token. Meanwhile, like other crypto assets, holders can trade SOL for another token or for fiat. Trading the token can aid investors to earn a profit from the arbitrage.
Holders of the token have the right to vote in future upgrades, as their holding of SOL automatically grants them membership status in Solana’s DAO. Likewise, investors can make money by acquiring SOL and keep it till it increases in value. This offers the investor an avenue of passive income. However, in situations like this, it may take a while for the coin to soar in value. In that regard, such a plan will need a long-term commitment.
Though, the team behind the project has refused to embrace the sobriquet of referring to Solana as an Ethereum killer. Nevertheless, the token is focused on providing a solution to the tridelima of blockchain, Ethereum inclusive. Below are similar projects that can serve as alternatives to Solana:
- Cosmos: Cosmos is an ecosystem of blockchains that offers high scalability and interoperability. The network focuses on establishing an internet of blockchains to ensure sovereignty among the networks and a pathway of interaction between them. With that, Cosmos is equipped to process transactions swiftly, making the blockchain ideal for various use cases. The network is powered by a combination of BFT and Tendermint consensus algorithm.
- Cardano: Cardano focuses on processing transactions swiftly without consuming high energy; it offers high security and stability due to its programming language; Haskell. The network is built on a distinctive proof-of-stake consensus mechanism known as Ouroboros. Cardano is widely regarded as the father of all Ethereum killers, read this article to fully understand how the network operates.
- Avalanche: Avalanche entered into the crypto space as an open, programmable smart contract platform for decentralized applications like Ethereum. The network is compatible with Solidity, the programming language used by Ethereum. With that, developers from Ethereum can build on the network, and deploy it for custom private or public blockchains as subnets. The network is suitable for a variety of projects like DeFi protocols, stablecoins, and NFTs.
Future of the Project
The future is bright for both Solana and its native token. The network has been able to attract a host of DeFi and NFTs projects which have helped gain more utility for SOL. At a time, the network is second behind Ethereum as the largest NFT blockchain. Attracting more projects and gaining utility for the SOL will be beneficial to the two. However, the position of the project is currently under fierce competition as a result of other fast-growing networks with similar attributes to SOLANA.
Drawback and Weaknesses
Before the downfall of Sam Bankman-Fried (SBF) and his crypto empire, the former FTX CEO was a vocal proponent of Solana. At a time, he told reporters that the project could be the critical infrastructure for the future of crypto. The relationship between SBF and Solana waxed stronger when he built Serum a DEX on the network in 2020.
.@solana and @FTX_Official have teamed up for a@ProjectSerum meme campaign! Let's see your favorite Serum based memes for a chance to win up to 25 FTT.https://t.co/2xPjQje431— Solana (@solana) August 5, 2020
Additionally, at the time, SBF, FTX, Alameda Research, and Solana conducted a transaction worth 58 million SOL. As at when SBF’s $32 billion crypto empire exploded, the Solana Foundation had $1 million worth of cash on FTX. The collapse of FTX dealt a huge blow to the project and its token, raising questions about its credibility.
For SOL, the token dipped by almost 48% at the height of the FTX crisis. The whole FTX saga at one point affected the growth and stability of SOL. Though, the project has bounced back, attracting more developers and projects to its ecosystem. Nonetheless, the FTX crisis is one of the major setbacks the network has witnessed so far.
Solana network continues to lead in active users 🔥 https://t.co/ySUZBxz2GJ— Solana (@solana) January 6, 2023
Indeed, Solana has proven itself to be a worthy alternative to Ethereum due to the volume of developers, and projects it has attracted in recent times. The project alongside its native token is bound to enjoy more growth in the future, this is due to its performance in recent years.