Solana review| In-depth analysis of SOL tokens & Solana network

By | May 8, 2021

Solana was introduced in 2020 as the first global web-scale blockchain. Currently, Solana is ranked as the 15th best cryptocurrency as per coinmarketcap.  The cryptocurrency’s ambitious goal to provide a simple fix to solve many problems of several blockchain networks has made it one of the most profitable cryptocurrencies. 

In this article, I have analyzed the full price chart of Solana, studied its project, and compiled an in-depth review to conclude if Solana is worth investing in. So without further adieu, let’s get into the details:

fostering a dedicated global community of over 650,000 members, entering some remarkable partnerships, and amassing over 350,000 validators.

What is Solana?

Solana has been around in the crypto markets since the first quarter of 2020 and has constantly shown bullish trends. Identical to the Ethereum network both decentralized applications and smart contracts are supported by Solana’s blockchain.

Now for the tricky part, the USP (Unique selling point) of Solana is that it functions on a single blockchain solution(layer 1), unlike other similar blockchains like Polkadot and Ethereum that delegate operations to other attached chains (layer 2).

 Solana can process 50-65,000 transactions per second. And in theory it can process upto 70,000 transactions per second (TPS). In comparison to its competitors, Ethereum’s 15 TPS and Bitcoin’s 7 TPS.

The reason why Solana can process such high transactions per seconds with utmost efficiency is because it runs on the Proof of Stake (Pos) consensus mechanism that authorises timestamped transactions along with  a low barrier entry. Solana has already announced plans of getting further improvements to this system for optimal efficiency.

Solana Token (SOL)

SOL token

History of Solana

Solana is a project that was first introduced in a whitepaper by Anatoly Yakovenko, founder of Solana back in 2017 before launching globally in 2020. Yakovenko compiled the whitepaper with his plans of launching a blockchain network for distributed systems that runs on a new timekeeping technique called Proof of History (PoH).

Yakovenko would then release the first official version of Solana’s whitepaper in Feb 2018 after launching a demo network and the initial internal testnet along with Greg Fitzgerald who has been with Yakovenko since their Qualcomm days.

Solana’s ambitious project was funded by an impressive $20million in a Series A round in July 2019 after the announcement of a seed round in April 2018.

The project then went on to raise $1.76 million after being listed in a public token auction hosted on CoinList, shortly after the official launch of the Solana’s mainnet in March 2019 

Based out of San Diego, California, Solana Network is funded by the Solana Foundation for all community building efforts and ongoing developments while Solana Labs, the creators of the Solana crypto and blockchain remain as the major owners of the project.  

Solana has witnessed exponential growth since the launch of its mainnet in 2020. As of May 2021, Solana has welcomed several innovative projects like Terra, USDT, Audius, Chainlink, Serum, Akash, and USDT in the Solana ecosystem that has more than 51 million blocks. 

Solana’s Consensus Details

Originally PoH was developed to be one of the components in the PoS consensus of Solana before eventually being adopted as a consensus mechanism on the Solana blockchain.

By implementing the PoH technology,  Solana is capable of generating historical records on the network. By timestamping these records it becomes easier to remember and implement them in any future operations.  

Timestamping also allows Solana network validators to maintain their own clock which is a feature that is still not available on other blockchain solutions where validators have to compulsory communicate for an agreement to be reached that time has passed.

Solana has implemented Tower BFT, a unique PoS-based consensus mechanism. The model can reduce latency and communication overhead by leveraging Solana’s PoH technique as a clock. This is possible due to the passage of time being encoded in a simple SHA-256, sequential-hashing verifiable delay function (VDF). 

PoH may yet not be a finished outright consensus model, however, there is no denying that it has the potential to be a gamechanger for the structure of blockchain networks when it comes to capacity and speed.

The Solana network delivers the functionality of a centralized system without compromising on decentralization or security. This is mainly due to its innovative hybrid consensus model that allows the network to revolutionize the limits of confirmation times. 

An individual would require highly advanced hardware as the GPU requirements are comparatively higher than most protocols. Our experts calculate a cost of roughly $5500 for a commendable setup.

Solana Network’s Proof of History vs Other Blockchains

PoH soon became popular as the next best innovation in the Blockchain industry. The idea of investing in a solution to one of the major drawbacks of the distributed ledger system (Concluding to reach a consensus on the order of transactions on time) provided an investment opportunity with massive returns.

In the whitepaper, Yakovenko makes a case that by exponentially increasing the scalability of a cryptocurrency blockchain, without compromising on the decentralization or security of the network simply by timestamping transactions.

Yakovenko’s goal is to deliver a vital piece for crypto networks to scale to new heights by using his then newly technique that could automate the transaction ordering process for blockchains.

Yakovenko got the idea for the Solana blockchain network by his combined experience of developing and implementing database solutions at Intel and Google. However, since those were in a centralized capacity, building a decentralized platform required proper planning to execution to perfection which is why Yakovenko took 3 years to finally launch Solana after the initial release of its whitepaper in 2017. 

Future predictions for Solana

As per the roadmap of Solana’s Foundation, the mainnet has plans to upgrade on delegated Proof-of-Stake (dPoS) from its current Tower BFT PoS-based consensus mechanism.

By migrating on the dPoS, Solana token holders can be involved in the block production process. It will also provide an opportunity for Validators to earn more rewards by staking tokens on their own to become a validator, or by delegating their tokens to trusted validators.

Solana does not have any minimum staking requirement although leader selection is a stake-weighted process. A validator has the authority to propose the next block as part of the leader selection process. Moreover, validators also have the authority to contribute to Solana Network’s overall security. Anyone who finds the project appealing can become a network validator as Solana provides opportunities to all individuals to become validators.

The Solana network implements the pseudorandom method for leader selection. So the amount of SOL staked by an individual determines the probability of the individual’s chances of becoming a leader which produces blocks. Stakes of misbehaving nodes are slashed and the resulting funds are transferred to block generation rewards.

Why is Solana network Blockchain different from the others?

The Solana Blockchain prides itself on having three distinctive features. Let’s take a look at them

1. PoH Technology: The Solana Blockchain is the first of its kind to adopt a Proof of History mechanism.

2. Gulf Stream: This allows the Solana network to identify small batches of potential leaders which makes it possible to accumulate transactions prior to producing blocks.

3. Sealevel: By enabling this feature the network is able to instantly identify and simultaneously process all non-overlapping transactions. 

Solana (SOL) Price Analysis 

Solana has always shown bullish trends since the SOL token was launched on the cryptocurrency trading platforms in March 2020.

SOL which was introduced in the cryptocurrency markets with the price of $1USD per SOL was expected to have a tremendous boom after its introduction on the Binance trading platform. Unfortunately, this move had a bearish trend on the price of the token as it dropped down to roughly 59 cents USD. The bearish trend continued for SOL token until the first half of July 2020 as its price remained in the 60 cents-$1 range.

July 2020 was a turning point for Solana mainly as the news of its launch on the popular cryptocurrency derivatives exchange FTX, Serum was announced. By the end of July 2020, the price of Solana stood at an impressive $5USD from $1USD. SOL then remained stable near the $3USD range throughout 2020.

The Solana price was one of the major focal points during the 4th quarter of 2020 bullish run of the crypto market.  SOL token went from $1.5 on January 1, to a then peak of $16.9 on the 23rd of February 2021.

SOL is currently trading at the $43.55 range with a market capitalization of $11,866,693,937 and is regarded as the 16th largest cryptocurrency as per Coinmarketcap. 

It was announced by the Solana Foundation announced that there will be a total of 489 million SOL tokens. However, as of May 2021, the circulating supply stands at 272,637,428 SOL and the total supply stands at 494,519,162. 

Where can you use SOL Tokens?

SOL tokens holds significance within the network for a couple of reasons: 

Staking: A Solana Network user is eligible to stake SOL tokens directly on the network while also having the option to delegate SOL to an active validator in a bid to improve network security. Users simultaneously receive inflation rewards in return for staking their SOL tokens.

Transaction Fees: Just as you would expect from any top token users can use their SOL to run smart contracts or pay fees required for sending transactions.

Solana promising partnerships

The Solana Foundation lays emphasis on delivering large-scale access to decentralized finance and has also proposed plans of an innovative hybrid consensus model which makes Solana a mouth-watering investment prospect for institutional traders and small-time traders from all across the world.

Solana formed several intriguing partnerships and integrations in 2020 with top cryptocurrency multinational institutes including Chainlink, Tether, Terra, Akash, Circle, Audius, and, Arweave.

Solana is reputed as one of the world’s fastest performing blockchain networks. The credits for this achievement go to Solana’s  PoH consensus mechanism and constant innovations like Sealevel, Tower BFT, Gulf Stream, and Proof of Replication.

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