Over the past decade, the crypto space has seen an explosion of blockchain-based solutions tackling various issues plaguing the world. Thanks to high-performance platforms with smart contracts functionality, we can now leverage blockchain technology to drastically improve our lives.
This current wave of Web 3.0 applications started on Ethereum, the first blockchain network for building and deploying smart contracts. However, Ethereum has had its fair share of woes in recent times, particularly in the form of high transaction (gas) fees and scalability challenges.
The “world’s supercomputer” is now a victim of its success, and this has led to the emergence of strong competitors. Ethereum 2.0 was proposed as a series of upgrades to tackle various performance, scalability and security issues on the network, but the exact ETA on the final phase of the upgrade remains unknown.
As Eth2 continues to be delayed, several smart contract platforms have risen in popularity on the back of Ethereum’s ongoing battle. These include Cardano, EOS, Polkadot, and more recently, Solana.
In this article, we’ll briefly look at Solana from a beginner’s viewpoint: how it came about, what it is, and what problem it’s trying to solve. We’ll also examine the Solana token, SOL, along with its tokenomics. The second part will serve as a deep dive into the Solana ecosystem, why the project was created and how the underlying technology works on a lower level (be sure to look out for this).
What Is Solana?
“Solana is the first web-scale blockchain for fast, secure, scalable, decentralized apps and marketplaces,” the official website previously read.
Solana is a high-performance blockchain network that allows users to build smart contracts and dApps. The platform uses a Proof of Stake (PoS) consensus mechanism with an added Proof of History (PoH) component for timestamping transactions.
This allows the network to process high-throughput transactions at scale, up to 65,000 transactions per second. Solana is far more efficient when compared to existing blockchains, notably Ethereum at a measly 15 transactions per second.
So, in simple terms, Solana is a highly scalable blockchain offering better performance in decentralized applications without sacrificing decentralization or scalability. Unlike projects like Polygon and Polkadot which delegate tasks to smaller sidechains (sharding), the Solana network is a Layer-1 solution existing solely on its standalone blockchain.
The project is developed by San Diego-based company Solana Labs. The team, led by Solana founder and CEO Anatoly Yakovenko, houses former Dropbox, Google, Microsoft, Apple and Qualcomm employees. The team has adopted a long-term development vision due to Yakovenko’s experience working as an engineer at Qualcomm.
How Was Solana Created?
Anatoly Yakovenko previously worked at Qualcomm for 12 years where he led operating systems development. Unlike several founders in the crypto space, he wasn’t initially fascinated by cryptocurrency, although he briefly mined Bitcoin when he developed a deep learning network.
Solana was founded in 2017, in what Andy Yakovenko describes as a “caffeine-induced fever dream at 4 am.” He discovered how to create a decentralized clock for time-stamping transactions on a blockchain using the SHA-256 encryption algorithm.
Yakovenko believed timestamping transactions would make a blockchain network more scalable without sacrificing its security or decentralization. He knew since he’d already seen Google and Intel implement a similar technology for their centralized database systems. Even more, Solana’s architecture draws inspiration from the popular decentralized storage platform Filecoin.
Yakovenko quietly published the Proof of History whitepaper in November 2017 and continued working with CTO Greg Fitzgerald and Stephen Akridge. Together, they built a testnet and founded Solana Labs in 2018. The three founders were later joined by COO Raj Gokal.
The team actively developed the protocol from 2018 to 2020. The mainnet was launched in March 2020 and a token sale of 8 million tokens via CoinList raised $1.76 million. The Solana Foundation, a Switzerland-based non-profit organization was created to support the project and promote blockchain education.
SOL is the native utility token of the Solana blockchain. SOL is burned to pay transaction fees or run smart contracts on the Solana blockchain. It can also be staked to become a validating node. Validators are chosen based on stake to verify transactions and earn staking rewards.
Non-validating users can also act as delegators by allocating their SOL holdings to validators and receiving passive rewards. In the future, SOL will function as a governance token, and holders will be able to vote on key protocol decisions.
According to Solana, “…a SOL may be split as many as 34 times. The fractional SOL is called a lamport. It is named in honor of Solana’s biggest technical influence, Leslie Lamport. A lamport has a value of approximately 0.0000000000582 sol (2^-34).”
SOL has a total supply of 500 million. The initial distribution of SOL tokens is as follows:
- 15.86% to Seed Round investors
- 12.63 to Founding Sale investors
- 5.07% to Validator Sale investors
- 1.84% to Strategic Sale investors
- 1.6% to CoinList Public Auction Sale investors
- 12.5% to Solana team members
- 12.5% to the Solana Foundation (for blockchain education and adoption)
- 38% to the Community reserve fund (held in Coinbase custody by the Solana Foundation)
How Does Solana Work?
It’s noteworthy that 8 core innovations make up the Solana network. We’ll briefly cover one of them, Proof of History, in this article.
Although “PoH” sounds like a name for a hybrid consensus mechanism, it’s not. Quite on the contrary, Proof of History is a component designed into TowerBFT, Solana’s PoS consensus mechanism to digitally timestamp transactions added to a block. The SHA-256 hash function acts as a “decentralized clock” by generating repetitive outputs every 400 milliseconds.
TowerBFT uses PoH to record transactions and reach faster consensus without incurring massive messaging overhead and transaction latency. Picture PoH as a built-in efficiency mechanism. Then, there’s the added benefit of preventing rollbacks since PoH creates a historical record of validated transactions.
No doubt, Solana is a fascinating project — yet it’s incredibly complex. For this reason, we split this article into two parts: one for the basics and the second part for the more technical details.
Yakovenko has said in the past that the Solana community is focused on performance and, in his words, “geek out on shaving milliseconds of confirmation times and benchmarking the latest hardware.”
In all, the Solana blockchain currently supports up to 65,000 TPS and 400-millisecond block times, with 917 global validators currently. The network allows blockchain applications to scale transaction throughput while maintaining decentralization and security.
More about Solana:
Solana Blog: https://solana.com/news