What is cryptocurrency Solana (SOL) and how does it work?

What is Solana (SOL)?

Solana is an open infrastructure for building scalable crypto apps. The architecture is censorship resistant, fast, and secure, and designed to facilitate global adoption. To keep time on the blockchain, Solana employs an innovative process known as Proof of History. PoH is not a consensus mechanism, but it does play an important role in Solana’s Proof of Stake consensus mechanism.

The result of PoH and Solana’s other key innovations is a network that is highly scalable – in fact, Solana boasts a maximum throughput of 50,000 transactions per second. The blockchain remains low-cost and fast as it scales, with an average transaction fee of $0.00025, a block time that’s usually under one second, and a sub-second finality.

Solana also maintains composability between ecosystem projects through its single global state, which means that it’s not necessary to integrate with multiple shards or Layer-2 solutions. Other benefits to building on Solana include audited, enterprise-grade security and the flexibility to code in popular languages such as C, C++, and Rust.

How Does Solana Work?

Proof of History

The concept of Proof of History involves proving that a message occurred before or after a known event, rather than relying on a timestamp. This is similar to how a photo of a hostage holding the latest edition of a newspaper proves that the hostage was alive after that particular newspaper was published. Solana uses Bitcoin’s SHA256 mining algorithm with the addition of a Verifiable Delay Function to create a historical record of events on the blockchain.

The hash function loops continuously, using each previous output as the next input, meaning the order of transactions is recorded. This means that validators on the blockchain can pack as many transactions as possible into each block as other validators can organize them according to the historical record after the fact. The result is a very high transaction throughput.

 

Sealevel

For most blockchains, their throughput only applies to basic token transactions. For Solana, however, the 50,000 TPS capacity also applies to smart contracts. The virtual machines of Ethereum and EOS have runtimes that are single-threaded, which means that the blockchain state is only modified by one contract at a time. Solana, on the other hand, implements Sealevel, which is a runtime that can process tens of thousands of smart contracts in parallel.

Who Are The Founders of Solana? (History of Solana)

Solana was built by Solana Labs, which was founded in San Francisco in 2017 by a team of software engineers with Anatoly Yakovenko at the helm. Yakovenko, along with several other members of the Solana team, spent many years working at the Fortune 500 company Qualcomm, which provides semiconductors, software, and wireless technology services for mobile phones. Qualcomm is based in San Diego, just slightly south of California’s Solana Beach, which inspired the name of the crypto project.

Though initially uninterested in cryptocurrency, Yakovenko had the idea to improve upon blockchain efficiency with Proof of History during a caffeine-induced fever dream. He teamed up with Qualcomm colleague Greg Fitzgerald to work on the project, who is now Solana’s principal engineer. Solana released its whitepaper and internal testnet in February 2018, while the Solana mainnet and the SOL token launched in 2020.

What Makes Solana Unique?

The main concept that sets Solana apart from any blockchain that came before is that of Proof of History, which provides it with the highest throughput of any Layer-1 blockchain at time of writing. This also applies to smart contracts, thanks to Sealevel, which is the world’s first parallel smart contracts runtime.

These are just two of the eight core innovations that give Solana unique selling points to attract global businesses. The others are Tower BFT, which is Solana’s custom implementation of Practical Byzantine Fault Tolerance; Pipeline, a web-scale transaction processing unit; Turbine, Solana’s block propagation protocol that solves the blockchain scalability trilemma; Cloudbreak, the project’s horizontally-scaled accounts database; Gulf Stream, a mempool-less transaction forwarding protocol; and Archivers, Solana’s blockchain data storage solution.

What Gives Solana Value?

The value of the Solana network comes from the eight core innovations listed above, which allow the network to outperform most other blockchains and provide a scalable environment for global businesses to deploy crypto apps.

The value of Solana’s native SOL cryptocurrency is derived from its utility. SOL can be used to secure the network through staking, either as a validator node or a delegator. This is a profitable choice for SOL holders as stakers receive half of transaction fees and most of the emission of new tokens. SOL is also useful to developers and users of crypto apps within the Solana ecosystem as it is required to pay transaction fees. As the Solana ecosystem grows and the blockchain processes more transactions, SOL will become more valuable as there will be greater demand from stakers, developers, and users.

How Many Solana (SOL) Coins Are There In Circulation?

There are currently SOL in circulation out of a total of SOL. When SOL launched, it had an initial total supply of 500 million tokens but there is no capped max supply. The initial inflation rate for Solana is 8%, which will reduce by 15% each year until 2031, when it will reach its stable long-term inflation rate of 1.5%. Currently, half of each transaction fee is burned, which means that a greater transaction volume would slow the growth of the circulating supply.

Other Technical Data

Of the initial SOL supply, the team kept 12.79%, 10.46% went to the Solana Foundation, 12.92% was allocated to a founding sale, 16.23% to an initial seed sale, and the rest to public and private sales. Solana Labs raised $25.66 million in the SOL initial coin offering and received another $314 million from a private token sale, which saw the participation of Andreessen Horowitz, Alameda Research, and ParaFi Capital.

Solana SOL

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Bitcoin BTC

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Ethereum ETH

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XRP XRP

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How To Use Solana?

The Solana blockchain is used for creating and deploying apps in a fast, low-cost, and scalable environment. Crypto derivatives exchange FTX selected Solana to launch its non-custodial decentralized exchange Serum. There are more than 200 other projects in the Solana ecosystem, including wallets, stablecoins, non-fungible tokens, and decentralized finance applications.

The native token SOL is used for securing the network through staking and paying fees for transactions and smart contract executions. The token will also be used to vote in network governance in the future.

How To Choose a Solana Wallet?

There are many places you could store your SOL and the wallet you choose will likely depend on what you want to use it for and how much you need to store.

Hardware wallets or cold wallets like Ledger or Trezor provide the most secure option for storing cryptocurrencies with offline storage and backup. However, they can require more technical knowledge and are a more expensive option. As such, they may be better suited to holding larger amounts of SOL for more experienced users.

Software wallets provide another option and are free and easy to use. They are available to download as smartphone or desktop apps and can be custodial or non-custodial. With custodial wallets, the private keys are managed and backed up on your behalf by the service provider. Non-custodial wallets make use of secure elements on your device to store the private keys. While convenient, they are seen as less secure than cold wallets and may be better suited to smaller amounts of SOL or more novice users.

Online wallets or web wallets are also free and easy to use, and accessible from multiple devices using a web browser. They are, however, considered hot wallets and can be less secure than hardware or software alternatives. As you are likely trusting the platform to manage your SOL, you should select a reputable service with a track record in security and custody. As such, they are most suited for holding smaller amounts of cryptocurrencies or for those making more frequent trades.

Kriptomat offers a secure storage solution, allowing you to both store and trade your SOL tokens without hassle. Storing your SOL with Kriptomat provides you with enterprise-grade security and user-friendly functionality.

Buying and selling SOL, or trading it for any other cryptocurrency, is done in mere moments when you choose our secure platform as your storage solution.

Solana Proof of Stake

The Solana network is secured through the Proof of Stake consensus mechanism. Participants can either set up a validator node and process transactions or delegate their tokens to a validator. SOL holders who do this are rewarded with half of transaction fees on the network, as well as issuances from token inflation. The validation process is made more efficient thanks to Proof of History.

Conclusion

Solana’s fast, scalable, and programmable blockchain provides the infrastructure necessary for building apps that can achieve global adoption. Its massive throughput, low cost, and fast finality make it one of the best-performing blockchains available.

The project provides eight core innovations, chief among which is Proof of History, which keeps time on the blockchain and dramatically increases its capacity. SOL is the native token of Solana and is used for staking and paying transaction fees.

Solana’s highly performant system architecture could attract a range of apps and businesses, and as the ecosystem expands, the project and its SOL token could become increasingly valuable in the future.

Solana FAQ

Who can be a validator on Solana?

Anyone can run a validator node and read the “Running a Validator” information on Solana’s documentation website for help and advice on getting started. Unlike most crypto projects, there is no minimum stake required to be a validator on the network.

What are clusters on the Solana network?

A cluster is a group of validators on the network that maintains a single ledger with a specific category of transactions. For instance, one Solana cluster could be responsible for maintaining a virtual world, while another Solana cluster could be tasked with hosting a decentralized exchange.

How to Buy Solana?

Buying SOL is as easy as visiting Kriptomat’s how to buy Solana page and choosing your preferred method of payment.

How to Sell Solana?

If you already own SOL and hold it in a Kriptomat exchange wallet, you can easily sell it by navigating the interface and choosing your desired payment option.

Solana Price

Solana price is influenced by a lot of the traditional factors such as project news and development details, market sentiment, the flow of assets on exchanges, and the economy in general. 

SOL price is additionally affected by the token’s inflation rate, the amount being burned, and the growth of the Solana ecosystem.

The current Solana price is EUR.

The 24-hour trading volume of SOL is EUR. SOL is currently ranked of all cryptocurrencies by total market cap, with a market cap of EUR. It has a circulating supply of and a max supply of .

Register now to begin your journey into the world of Solana and cryptocurrencies with with Kriptomat!

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