SOLANA Blockchain — Explained
Is Solana worth all the hype? Or is it just a strong marketing strategy? Solana is a technically complex blockchain, and I will try to simplify it for better understanding.
The triangle trilemma is one of the most popular methods to classify a blockchain network. It consists of security, scalability, and decentralization. These are all interrelated, and to achieve one, you have to compromise the other. A blockchain might have any two but completing the holy trinity is impossible. The blockchain ecosystem is ever-growing, with new blockchains evolving and offering one or the other solution. Ethereum, undoubtedly the most popular blockchain with almost 90 percent of the dapps built on it, has the problem of scalability. With as low as 25 transactions per second, how can one imagine it to be the center of the blockchain world? The other problem is the high gas cost, which is an outcome of scalability.
Launched in March 2020 on Mainnet Beta, Solana claims to have achieved the impossible. Solana is a super-advanced and promising blockchain project with everything going for it atm. It is the most productive network with transaction speed as high as 50,000 to 65,000 per second and a nominal fee of around $0.00001 per transaction; it’s an answer to the scalability problem of Ethereum. (Continue reading to know more)
What is Solana and why take notice of it?
Solana has seen exponential growth since its launch as a relatively new player in the crypto world. It is a high-performance blockchain that uses a proof of stake consensus mechanism. In addition, it has a low entry barrier and time-stamped transactions to maximize efficiency (more on that later).
Solana checks all the boxes-
A solid team — Solana’s team comprises former technologists from Dropbox, Qualcomm, Microsoft, and Google. Its founder Anatoly Yakovenko is the man behind the tech that made Project Tango (VR/AR) on Qualcomm phones a reality. He is a holder of 2 patents for high-performance OS protocols, among other achievements. The team at Solana has worked extremely hard to ensure several optimizations and new technologies that have enabled its existence.
A high-performance blockchain — Solana adopts an aggressive single-layer (layer 1) blockchain solution. The network does not delegate operations to other attached chains (Polygon for Ethereum). Solana’s claim to fame is its success in creating a network that surpasses today’s payment processors in terms of TPS (Transactions Per Second) and functionality.
Serious And Strong Backing — A strong project will always find the right investors. Sam Bankman-Fried, the man behind FTX and Alameda, has shown immense belief through his creation of Serum, a high-speed, non-custodial DEX on Solana. More than 500 projects are being built on the Solana blockchain.
Partner firms and projects include Project Serum, FTX, Terra, Akash, Chainlink, Civic, dfuse, Formatic, Stardust, Kin, Tempest, and more.
Proof of History
Solana has several innovations at its core, motivated by the goal of becoming as fast as centralized marketplaces. However, Solana’s key innovation, which is the primary source allowing for blazing-fast transactions, is Proof of History (POH).
As the name suggests, Proof of history is proof of the occurrence of an event. The most common way of relating an event is time stamping; however, it proves that occurrence instead of trusting the time stamp.
However, how did we get here?
Let’s rewind a little and understand what proof of work is.
Any distributed system needs to have an agreement of time. For Bitcoin, PoW functions as a decentralized clock for the system.
Proof of Work
Blockchain is but a ledger, a record of transactions that need order. This order is the fundamental requirement based on the occurrence of a transaction, and every node of the blockchain needs to have an identical copy. One order mismatch, and it’s a different blockchain.
A transaction is recorded in a given order by time-stamping each transaction. Time is a relative human concept created to serve as a reference. For now, this reference comes from atomic clocks. However, inherent errors and delays cannot exist in a utopian decentralized system. Therefore, this dependence on a trusted centralized system to verify the occurrence of an event cannot exist.
Then how do we do it in a non-centralized way?
It wasn’t until Satoshi Nakamoto solved the unsolved problem of associating events with defined points in time in distributed systems. Simply put, PoW means finding a value that is very rare and involves a lot of trial and error, which amounts to work, and work amounts to time. The SHA-2 hash of the algorithm conforms to a particular requirement, making that value difficult to find. So, if that requirement is varied, the difficulty and thus the probability of finding that hash varies. It is a direct relationship where the difficulty is adjusted dynamically so that a proper hash is found every 10 minutes. And thus, every 10 minutes, a new block gets created.
This difficulty in finding a conforming hash becomes the clock, which is now the same for everyone. The chain is tied to the ticks of this clock unambiguously by participants all over the planet. The solution of the hash (block header) of the actual block, whenever that happens, is at the tick of the PoW clock, not before and not after. Now that we have the clock’s ticks, the hash chain gives the order.
I hope it made some sense!
PoH involves using Bitcoin’s SHA256 hash function as a way of keeping time inside the blockchain. PoH isn’t a consensus mechanism; however, it does play a critical role in Solana’s POS mechanism. In PoH, you create proof of existence and then use that as a reference. A historical record is created and then used to prove the occurrence of a specific event. This back reference can be inserted as part of a signed message with the user’s signature & cannot be modified without the user’s private key. PoH allows Solana validators to add as many transactions as they can into a block since they can be easily sorted out and verified by other validator nodes later using time stamps.
When you combine this feature with Solana’s block time of 400 milliseconds, you get a blockchain that can process over 50 thousand transactions per second.
Click here for more information on Proof of History and other innovations.
Solana’s ecosystem is fueled by the SOL token (the native currency of the network). It is used for payment transactions on the network.
The maximum Supply of SOL has been capped at 489 million.
Additionally, SOL can be staked to earn rewards (an easy way to make profits if you plan on holding it).
Therefore the two primary uses for SOL in the Solana ecosystem are :
1. Staking: Users can stake SOL directly on the network or delegate them to an active validator to help secure the network.
2. Transaction Fees: SOL can be used to pay fees for sending transactions or running smart contracts.
Closing
Solana boasts remarkable partnerships and a promise to deliver scalability without compromising security or decentralization. Moreover, Solana is interoperable with Ethereum ( Wormhole project- an initiative that enables a mutually beneficial co-existence) as opposed to an Ethereum killer.
Solana undoubtedly is the modern-day Mercury that sits atop zenith when it comes to speed. Solana team believes the blockchain could theoretically scale as high as 710,000 TPS on a 1 Gigabit link and 28.4 million TPS on 40 gigabits.
However, the other side of the story consists of the recent outages and DDOS attacks that have faltered the network. Only time will tell how Solana overcomes these and builds on what it has created so far. We can only hope for all to co-exist, bringing value and innovation.
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The information provided through this work is intended solely for educational purposes and must not be treated as investment advice. Any lapses in presenting any of the information correctly are ours alone. We disclaim any liability associated with the use of this content.
