Solana In Crypto And Blockchain: Everything You Should Know About Solana aka SOL

Solana In Crypto

Crypto Rishi

1 month ago|8 min read

55

In this article, we’re going to explain what Solana is and some of the crazy unique technological improvements that they have over Ethereum, and then finally, we will get into some Tokenomics that you could use to make a price prediction now before we get into the technical stuff of Solana.

1.       Founders of Solana

Let’s talk about why it’s amazing and who created it; Anatoly Akavenko is the man behind the very first white paper. One of the things you need to know about him is that he’s quite smart and worked at the company Qualcomm for like a decade, I tried reading the white paper and it is quite technical with a few understandable sentences here and there, but his Blockchain is named After the Solana beach that he appreciated, but let’s get into why Solana’s price has skyrocketed in the past few months. First of all, Solana has a block time of 400 milliseconds, which means they are very fast, especially when you compare that to Ethereum’s block time of 10 seconds or Bitcoin's 10 minutes.

2.       High Speed

Also, Solana boasts that they can handle up to around 710 000 transactions per second, which is like 30 times the amount that Visa currently handles. Although they’ve never actually been able to go past 50 000 in the past, this doesn’t mean they can’t do 710 000, It just means they haven’t tried, so the Solana network is fast, it’s monstrous and it’s also cheap. I would say that it’s comparable to the Matic network, with transaction fees around 100th of a penny.

3.       Consensus Mechanism

Next up, let’s get into what makes them so fast and so cheap. The first thing that we must explain is their consensus mechanism, which is a fancy way of saying how everyone agrees, on what the Blockchain should be. Now they don’t use proof of work and they don’t use proof of stake. Anatoly described a new system called proof of history in his white paper. It’s proof of stake, but it adds in the special variable of time.

So you need to know that proof of history is not a consensus mechanism, but it is a way of integrating time into the Blockchain data. We use something called timestamps to place a specific date and time on the blocks, and we do this so that it allows for a very fast sequencing of validators, basically so that they know their order to submit blocks without having to communicate back and forth. One big problem that other Blockchains have is that they have to agree on a time, we’ll take this for granted, but computers have to constantly be going.

4.       Proof of History

What time is it really since they can’t do things like look at their phone or even the sun, to determine it? On other Blockchains, the nodes, which is a fancy word – which means computers on the network, have to chat back and forth until they agree on a time, and they have to do this before submitting a block and in the computer world this chatter can take up a lot of time. Solana fixes this using proof of history to have everyone timestamp their blocks and use a Cryptographic proof so that they don’t have to wait on everyone to agree on the time.

We can agree on the organization of the data in the blocks after the fact, meaning we don’t have to wait for other validators to check and approve our work. Let’s use one of the famous whiteboard Crypto stories. Think about it like this. If you want everyone in your family to send you a letter, and you want them to do it one day after the other, you have to first send a letter to them, and then they have to send all their letters to you. The time that both of your letters are in the mail is a long period. What, if next time you saw them, you just said: hey, send me a letter at 4 pm on January 3rd.

5.       Time

That way, you would know that it’s coming in and you wouldn’t have to waste time or resources asking them to. Long story short you could set it up so that your uncle sends a letter on January 3rd, your aunt on January 4th, your cousin on January 5th, and then your grandma on January 6th.

We want to read these letters in order, but the issue is that they each use different mail providers, like you know ups and FedEx. Sometimes they take different amounts of time, and also your uncle is on a work trip. So he’s a few thousand miles away by having them all send their letters on the days that they’re supposed to they may not arrive in the exact order, but they wrote the time that they sent their letters in the letter.

6.       Blocks

So you can organize them when you get them. Proof of history allows nodes to just keep throwing a bunch of blocks at us and since some people have faster internet than others, we can assume that they’re telling the truth about their sending date and then organize them after we get them, then add them to The Blockchain. In this analogy, our aunt, our uncle's cousin, and grandma were all just different people sending in blocks, and we can use math to find out that our uncle wrote his letter on January 3rd.

7.       Ethereum and Solana

Another interesting thing is that Solana has like 25 blocks being validated by 25 people at once. This is how they’re able to surpass Visa by such a large factor. Speaking of how they’re similar to the proof of stake, one thing that I liked about Solana is that there are no requirements to be a validator now before I explain this, if you don’t understand proof of stake, you definitely should check out our article on how to Understand some of these next terms. So to compare Ethereum 2.0, you must take around 32 Ethereum, which is equivalent to around 100 000 on Solana. You only need to hold a very small amount of the coin and pay a fee to vote each day. There is a catch though the voting fee is the only thing I don’t like right now.

8.       Sea Level

It’s like one Solana per day, so around 70 000 dollars a year, which seems ridiculous, but I mean right now, almost a thousand people are doing it. So maybe they know something that I don’t next up, let’s talk about something that no other big Blockchain has tried yet it's called sea level. Technically this is just a fun term to describe that Validators can run smart contract code in a parallel way. Now, if you’re not a developer, let me explain it in simple terms: let’s say you have to do the dishes, you have to switch the laundry and then you go to sweep the floor. A human would have to do each one of these things in order because they’re only one human. We call this a serial task, one after the other in terms of Solana. The word parallel means you can do them all at the same time.

9.       Productivity

So it’s like if you could make two more copies of yourself and do the dishes switch the laundry and sweep the floor all at the same time. That is essentially what Solana can do processing their smart contracts. Something else I caught on their website was this quote, which describes how they are not bottlenecked by software or ideas but instead bottlenecked by hardware. Every time Nvidia doubles the number of SIMD lanes. Our network will double in computational capacity; to me, it’ll be interesting to see how Bitcoin and Ethereum handle the supercomputers that we have 10 to 50 years from now.

10.   Smart Contracts

One more thing before we get into the Tokenomics of Soul is that you should know that Solana has vastly different smart contracts than Ethereum. Ethereum uses a virtual machine-type system to run its solidity code, while Solana uses rust programming. Language rust is a very low-level language, meaning it’s much more powerful, but it does require more work to create things. One downside to this is that developers can’t just copy and paste their adapts and projects like many other Blockchains can from the Ethereum network. Everything must be coded from scratch however; they will have more power than Ethereum smart contracts. Finally, let’s get into Tokenomics. The coin on the Solana network is the soul coin and it is used for transaction fees and used all over the Blockchain ecosystem.

11.   Inflationary and Deflationary

From as far as I can tell, Solana is both inflationary and deflationary it’s deflationary because for a long time, 100 of all transaction fees were burned and now it’s around 50 percent that is burned. But it’s also inflationary because they recently approved an inflation schedule where staking rewards are paying out around 8 percent, but they do get cut every few days by a very, very small amount until the final staking rewards hit 1.5 in 10 years now, in terms of total Supply they initially started with around 500 million tokens and, of course, it will keep increasing due to the proof of stake rewards.

12.   ICO and Holdings

Also on the topic of early distribution, There are four private funding rounds before their initial ICO, those four funding rounds and their ICO sold around 36 percent of their supply and at a very cheap price too I mean they were selling these things for, like 25 cents each, while the price currently sits at 200, another 13 of the tokens went to the founders of the project. Another 10 went to the Solana foundation and the remaining 39 went to fund community initiatives, which are also currently held through the foundation.

Now some weird thing that I found out was that there was a Solana wallet holding like 13 million tokens and nobody knew why so they just burned a bunch of them is worth noting, one more thing worth mentioning is that Solana went down for around six hours in December of 2020. Honestly to me, this is a little scary, because a decentralized protocol should never go down. It means everyone participating in the network had the same bug. This problem did absolutely nothing to the price, though it seems nobody panicked sold due to this news.

 

Thanks for reading.

55

Crypto Rishi

Hi, I am an anonymous crypto guy. I am trying to exchange knowledge and build a community around crypto and blockchain. Find all the informational content about crypto and blockchain on my Feeding Trends blog here. If you like the content follow me to get a regular updates.

Comments

more

Read More