Diving Into the Solana Surge: Tracing the Meteoric Rise of a Blockchain Phenomenon

November 24, 2023
9:42 am

Solana is a blockchain platform made to run scalable, decentralised apps. Currently managed as an open-source project by the Geneva-based Solana Foundation, Solana Labs of San Francisco constructed the blockchain for the project, which was founded in 2017.

History of Solana

Co-founder of Solana Anatoly Yakovenko has worked for industry leaders in technology, including Qualcomm Incorporated (QCOM), in the field of distributed systems architecture. Through this experience, he realised that a dependable clock makes network synchronisation easier. Once that happens, the network’s speed will increase dramatically, with bandwidth serving as the only limit.

In comparison to blockchain systems without clocks, like Bitcoin and Ethereum, Yakovenko calculated that employing proof-of-history would significantly speed up the blockchain. These systems found it difficult to grow above 15 transactions per second (TPS) globally, which is a small amount of the throughput managed by centralised payment systems like Visa (V), which may reach up to 65,000 TPS at peak times.

Yakavenko’s proof-of-history gets past this hurdle, with every node in the network able to rely on the recorded passage of time.

In 2018, Yakovenko recruited five others to co-found a project called Loom. However, because of the potential for confusion with an Ethereum-based project with a similar name, they rebranded the project to “Solana,” after the small beach town near San Diego, where the co-founders previously lived.

In June 2018, the project scaled up to run on cloud-based networks, and a month later, the company published a public test net that supported bursts of 250,000 TPS

By the 12th of Dec 2023, Solana had processed over 253 billion transactions at an average cost of $0.00025 per transaction.

Solana’s technology

Blockchain software-induced speed constraints are eliminated by Solana’s architecture through the usage of algorithms. It is decentralised, safe, and scalable as a result. With a 40 gigabit network, its architecture could theoretically support up to 28.4 million TPS, and a limit of 710,000 TPS on a normal gigabit network.

Solana’s blockchain operates on both a proof-of-history (PoH) and proof-of-stake (PoS) consensus model. PoS permits validators (those who validate transactions added to the blockchain ledger) to verify transactions based on how many coins or tokens they hold; PoH allows those transactions to be time stamped and verified very quickly.

Solana vs Ethereum

It is inevitable that Solana has been compared to Ethereum, the top blockchain for decentralised apps (dApps), given its quickly growing ecosystem and adaptability:

Smart contracts: Solana and Ethereum have smart contract capabilities, which are crucial for running cutting-edge applications like decentralised finance (DeFi) and non-fungible tokens (NFTs).
Consensus: Solana and Ethereum both use a proof-of-stake (PoS) consensus mechanism, where validators stake their cryptocurrency as collateral for the privilege of earning rewards for assisting the blockchain. Solana improves PoS by also implementing PoH.
Speed: Much of the buzz surrounding Solana in 2021 was due to its distinct advantage over Ethereum in terms of transaction processing speed and transaction costs. Solana processes more than 2,700 transactions per second (on Dec. 12, 2023), and its average cost per transaction is $0.00025. In contrast, Ethereum can handle fewer than 15 TPS, while average transaction fees are around $2.62.

What are Solana’s Fractional amounts?

Solana has an infinite supply of SOL tokens. The circulating supply was 426 million SOL on the 12th of Dec, 2023.

SOLs are available in fractional amounts called lamports; a lamport has a value of 0.000000001 SOL. Lamports are named after Solana’s biggest technical influence, Leslie Lamport, a computer scientist best known for his work in distributed systems.

Key Takeaways

Solana is a blockchain whose purpose, use cases, and capabilities rival (and possibly exceed) that of Ethereum. It is one of the more popular blockchains, and its token, SOL, commands a decent share of the cryptocurrency market.