What is Solana SOL Cryptocurrency? Definition and How it Works

what is solana used for

Georgia Weston is one of the most prolific thinkers in the blockchain space. In the past years, she came up with many clever ideas that brought scalability, anonymity and more features to the open blockchains. She has a keen interest in topics like Blockchain, NFTs, Defis, etc., and is currently working with 101 Blockchains as a content writer and customer relationship specialist. Cloudbreak is the horizontally-scaled accounts database of the Solana blockchain. It helps in achieving the desired levels of scalability on the SOL network. Basically a data structure, Cloudbreak is an ideal pick for concurrent read and write operations across the network.

what is solana used for

In practice, once you have a wallet that can hold SOL and Solana-based tokens, such as Phantom or Sollet, you can interact with the numerous apps there. You can trade one token for another on a decentralized exchange such as Raydium, or you can buy an NFT on the Solanart marketplace. Whatever you do on Solana, you’ll pay the small fee mentioned above, which sounds pretty good compared to Ethereum.

What are the features of Solana?

But the tech we use to transfer cryptocurrencies has a major issue — it’s slow. To put things into perspective, let’s consider the Ethereum network, which can process about 15 transactions per second, compared to the tens of thousands on Visa’s network. Anatoly Yakovenko, a former contributor to Qualcomm and Dropbox, founded and announced the platform in 2017 when he published the Solana whitepaper. He is a software engineer with experience in compression algorithms and distributed systems. Together with Eric Williams and Solana’s CTO, Greg Fitzgerald, the team aims to make Solana a trustless and distributed protocol to deal with the traditional issues that exist on the Bitcoin and Ethereum blockchains.

Visa Taps Solana and USDC Stablecoin to Boost Cross-Border Payments – CoinDesk

Visa Taps Solana and USDC Stablecoin to Boost Cross-Border Payments.

Posted: Tue, 05 Sep 2023 14:55:00 GMT [source]

The system pushes transaction catching and forwarding to the end of the network. This allows validators to reduce confirmation times, execute transactions ahead of time, and reduce the memory load coming from the unconfirmed transaction pool. Consider Ethereum’s comparatively low tps and the large number of smart contracts. The network is slow, has huge transfer fees, and has a huge carbon footprint, as it still operates on the proof-of-work consensus.

This requires miners to validate transactions and produce new bitcoins with each new block. Miners must cooperate to achieve consensus, such as establishing when a transaction took place. Decentralized transactions are possible thanks to the blockchain technology.


Hardware requirements may cost up to $6,000 or more to start a node so those who wish to become a validator should prepare to make an investment. Solana’s leading platforms are the decentralized exchange Serum, the open liquidity mining platform Quarry and the Solana staking platform Marinade Finance. Data from Messari shows that nearly 50% of Solana’s initial token allocation went to insiders, like venture capital firms. It takes each validator the same amount of time to complete this process.

  • That’s proof of work; it’s effective but the network can end up consuming a lot of electricity.
  • More recently, in November 2022, it was revealed that Solana had financial ties to Alameda Research and FTX, both founded by Sam Bankman-Fried.
  • Solana (SOL) is a cryptocurrency that was designed to work similarly to and improve upon Ethereum.
  • And while validators on the Solana network also consume power to operate, their power usage is far lower than that of, say, Bitcoin miners.

Don’t confuse proof-of-history (PoH), the network’s permissionless clock, for a consensus mechanism. The PoH technology allows the implementation of proof-of-replication (PoRep), for batch verification, across millions of Replicator nodes around the world. Archivers tell the network how many bytes they have available for storage. Based on the total available storage of Archivers and the number of Replicator identities, the network divides the ledger into the right pieces to match the replication rate and fault tolerance. Another component of this high-speed blockchain is the turbine protocol, which packs data that requires transferring between the nodes into smaller data packets. Transmitting data in smaller increments helps with the bandwidth issues and increases the network’s processing speed.

Solana SOL

The most popular Solana apps are decentralized exchanges (DEXs) and lending apps. The network can also support wrapped assets and stablecoins, such as USD Coin. The Gulf Stream feature is the memory pool system, often called mempool. It helps forward the transactions to validators before the finalization of previous transactions. Solana’s efficient runtime is also aided by the Sealevel engine, which allows the processing of transactions in parallel. This is a foundational development in the blockchain industry, as Solana is the first blockchain to be able to perform parallel processing for the same instruction but having different inputs.

Solana jumps on Visa stablecoin announcement as bitcoin and other cryptocurrencies remain flat – CNBC

Solana jumps on Visa stablecoin announcement as bitcoin and other cryptocurrencies remain flat.

Posted: Tue, 05 Sep 2023 17:19:25 GMT [source]

Solana’s architecture aims to demonstrate a set of software algorithms that eliminate software as a performance bottleneck when combined with a blockchain. The combination enables transaction throughput to scale proportionally with network bandwidth. Yakovenko’s previous work experience was in the field of distributed systems design with leading technology companies such as Qualcomm Incorporated (QCOM). This experience made him aware that a reliable clock simplifies network synchronization, and when that occurs, the resulting network would be exponentially faster, with the only constraint being its bandwidth.

Token distribution

The crypto sector takes away intermediaries from the design of conventional financial services by introducing peer-to-peer transactions. However, popular cryptocurrencies such as Bitcoin and Ethereum have prominent limitations in terms of scalability. It is impossible to scale up the time required for reaching a consensus Commodity trading strategy on a specific order of transactions. Solana’s cryptocurrency SOL became one of the most valuable cryptos as investors and teams were quick to back this PoS blockchain alternative. In particular, the GEN Z crowd jumped on board, buying the project’s Degenerate Apes NFTs and embracing its speedy, low-cost transactions.

Any estimates based on past performance do not a guarantee future performance, and prior to making any investment you should discuss your specific investment needs or seek advice from a qualified professional. But as with all cryptocurrencies, investors should consider speaking with a financial advisor before investing in Solana. Build your identity as a certified blockchain expert with 101 Blockchains’ Blockchain Certifications designed to provide enhanced career prospects. Given the many successful partnerships, SOL has registered a 66000% surge in price. Solana Labs plans to further accelerate platform building and plans to launch an investing and trading desk for the network. When comparing in size and history development, Solana’s competitors count SKALE Labs, 1Token, ARK, and Cindx.

  • ETH 2.0 is an upgrade that everyone in the DeFi community is expecting — it can highly improve scalability, lower fees, and increase the throughput.
  • Tower BFT capitalizes on the benefits of the synchronized clock in Proof of History.
  • As a matter of fact, the new blockchain platform could easily perform almost 50,000 transactions per second.

The answer to this question can help us find out the reasons for developing the SOL blockchain platform as a competitor to Ethereum and Bitcoin. In the case of cryptocurrencies, the order of transactions would rarely coincide with the order of blocks on the blockchain. The protocol burns all fees paid in SOL, which makes it a deflationary mechanism and helps incentivize users to stake SOL directly from their compatible crypto wallets.

Solana’s staking system

The Swiss Foundation, which has an independent board, holds the community tokens. The platform’s permissionless blockchain can generate a throughput of 50,000 TPS due to its one-of-a-kind architecture. In traditional centralized systems, there is no need for a clock because all nodes of the system can trust that the timestamps are accurate. Until Ethereum 2.0 fully rolls out, it should leave room for next-gen blockchains to get a share of the dapp market. Ethereum uses the smart contract feature to deploy decentralized applications (dApps). However, the sheer volume of these self-executing contracts clogged the network.

The Solana network is validated by thousands of nodes that operate independently of each other, ensuring your data remains secure and censorship resistant. Broadly, it’s important to note that many people who trade cryptocurrency are speculating, often taking fliers in search of explosive growth, rather than investing based on firm theories. While the price of each SOL token has dropped dramatically in recent weeks, it has never reached the heights of the largest cryptocurrencies like Bitcoin or Ethereum.

Where to Buy SOL

The move came after Visa announced it will introduce settlement of the USDC stablecoin over the Solana network. The native token of the Solana blockchain jumped Tuesday after Visa announced it will expand its stablecoin capabilities to the Ethereum alternative. If you want to take out a loan against your Bitcoin, you often have to turn to centralized lenders, like BlockFi, which filed for bankruptcy in November. With tBTC, investors can take out loans against Bitcoin on the Solana blockchain while avoiding the limitations of the Bitcoin Network and the risk of using a centralized loan platform. When someone mints tBTC on Solana, they send Bitcoin to be “wrapped,” which involves a process of decentralized review. The crypto is held in custody in a wallet that is validated by 51 of 100 people operating “nodes” on the Threshold Network that review and agree the crypto you’ve sent is correct and authentic.

This keeps the chain relatively decentralized while simultaneously allowing for faster, more secure computations. For those who need a refresher, the proof-of-stake mechanism is a process of transactions https://investmentsanalysis.info/ for creating new blocks in a blockchain using a system of validators. Most early cryptocurrencies, such as Bitcoin and Litecoin, use a proof-of-work algorithm to define the blocks in their chains.

In PoS systems, this isn’t as easy to achieve, so Solana also uses a technology called Proof of History, which it claims helps the network more efficiently determine the time of transactions. This and other innovations, Solana claims, make it more secure and perform better than other blockchains. Ethereum has first mover advantage, and with its massive ecosystem, it is second only to Bitcoin in terms of market capitalization.


Mais Notícias

Deixe um comentário

O seu endereço de email não será publicado. Campos obrigatórios marcados com *