What Is Solana?

Navigating the Solana (SOL) Landscape: An Insider's Look at Its Blockchain Mechanism

SHORT ANSWER: Solana (SOL) is a blockchain platform based on a proof-of-history (PoH) consensus. It stands out for its speed and scalability, making it ideal for hosting dApps.

In the cryptocurrency regime, blockchain platforms are constantly vying for dominance. Among these contenders, Solana (SOL) has emerged as a strong competitor, often called an Ethereum killer because of its focus on scalability and speed. This article explores the inner workings of Solana, including its unique features and the technological innovations that set it apart. How does Solana tackle the challenges faced by traditional blockchains, making it a potential game-changer in the decentralized application (dApp) landscape?

get started

Limited Time Offer: Trade $100, Get $10

Buy $100 worth of crypto and get a $10 bonus!

get started

Disclosure: eToro supports the following currencies: BTC, ADA, DASH, DOGE, EOS, ETH, LTC, NEO, XLM, XTZ, TRX, ZEC. eToro USA LLC; Investments are subject to market risk, including the possible loss of principal. T&Cs apply. *The bonus is available to Benzinga readers in the US for open states only. Served by eToro USA LLC.

Show More

What is Solana (SOL) Blockchain?

Solana is a blockchain platform that stands out for its speed and scalability, making it ideal for hosting dApps. It was launched in 2020 to address the limitations of existing blockchains, particularly in terms of transaction speed and scalability. One of its unique features is Proof-of-History (PoH), which enhances the traditional Proof-of-Stake (PoS) consensus mechanism by creating a verifiable record of transaction order, thus improving efficiency. 

Solana also prioritizes the developer experience by offering user-friendly tools and fostering innovation, attracting developers to build dApps on its blockchain. The native cryptocurrency of the Solana network is SOL, which is used for transaction fees, staking and future governance purposes, allowing token holders to participate in shaping the network's future. With its focus on scalability, speed and developer experience, Solana has become a prominent player in the blockchain sector, potentially revolutionizing how dApps are developed and operated.

History of Solana

Solana's story begins in late 2017 when Anatoly Yakovenko, a former engineer at Qualcomm and Dropbox, grew frustrated with the sluggish transaction speeds of existing blockchains like Bitcoin and Ethereum. Determined to create a faster and more scalable solution, Yakovenko conceived PoH, a pioneering timekeeping method that would later define Solana's architecture.

Key milestones in Solana's history include the founding of Solana Labs in 2018 by Yakovenko and Raj Gokal, followed by the launch of the Solana beta mainnet in March 2020, marking the platform's official debut. 

In June 2021, Solana Labs secured a substantial $314 million investment, fueling further development and expansion. The rise of non-fungible tokens (NFTs) in August 2021 coincided with Solana's growing popularity, with projects like the Degenerate Ape Academy contributing to adopting the Solana NFT marketplace.

Solana continues to evolve, attracting developers and projects with its speed, scalability and user-friendly approach. However, it has also encountered challenges, including network outages and legal controversies. Despite these obstacles, Solana remains a significant player in the blockchain landscape, poised to reshape the future of dApps.

What Makes Solana Unique?

Solana stands out from other blockchain platforms through several key features.

• Blazing-fast speeds: Solana's transaction processing speed is exceptional, and it is capable of handling thousands of transactions per second (TPS) with minimal fees. This feature makes it perfect for applications needing real-time functionality and high transaction volumes.
• Proof-of-history (PoH): Solana uses PoH alongside proof-of-stake (PoS), creating a verifiable record of transaction order. This innovation streamlines validation and contributes to Solana's transaction speeds.
• Parallel processing power: Solana's unique parallel processing architecture allows for simultaneous transaction execution, significantly boosting efficiency and scalability compared to single-threaded blockchains.
• Focus on developer experience: Solana prioritizes a user-friendly platform with robust development tools to attract developers. This approach fosters innovation and encourages the development of dApps on the Solana blockchain.
• Energy efficiency: Solana's PoS mechanism is much more energy-efficient than PoW blockchains. This focus on sustainability aligns with growing concerns in the crypto sector and positions Solana favorably.

These features combine to create a robust ecosystem, positioning Solana as a strong contender for widespread blockchain adoption. Its emphasis on speed, scalability, developer experience and energy efficiency could make it a transformative force in the future of dApps.

How Does Solana Work?

Solana's speed and scalability are the result of a unique blend of technological advancements. Solana incorporates three key technologies: PoS, PoH and a custom-built blockchain architecture. PoS, similar to other platforms, relies on validators who stake SOL tokens to verify transactions, incentivizing participation in network security based on the amount of SOL staked.

Solana's parallel processing architecture further enhances its capabilities. Unlike linear transaction processing in traditional blockchains, Solana's architecture allows for simultaneous transaction execution, akin to having multiple lanes on a highway. This approach dramatically increases the network's throughput, enabling rapid transaction processing.

Additionally, Solana integrates two essential components: Clock Tower and Sealevel. Clock Tower generates a verifiable global heartbeat, synchronizing all validators on the network, while Sealevel efficiently organizes transactions into batches for parallel processing. These components and innovations, like Turbine, a block propagation protocol optimizing data transmission, contribute to Solana's high transaction speeds and scalability.

Solana combines PoS for security, PoH for efficient timekeeping and a parallel processing architecture for exceptional throughput. These features synergize to create a blockchain platform that is fast and scalable but also secure and reliable, positioning Solana as a leader in the decentralized ecosystem.

​​Solana vs. Ethereum

Similarities

• Smart contract functionality: Solana and Ethereum empower developers to construct dApps utilizing smart contracts, automating transactions based on predefined conditions.
• Decentralized finance (DeFi): Solana and Ethereum serve as thriving centers for DeFi innovation, enabling users to engage in lending, borrowing and other financial activities without traditional intermediaries.
• Native cryptocurrency: Each platform has its native cryptocurrency: SOL for Solana and ETH for Ethereum. These tokens are used for network fees, staking and potentially governance in the future.

Differences

• Transaction speeds and fees: Solana boasts significantly faster transaction speeds, processing thousands per second, compared to Ethereum's more limited throughput of 15-45 per second, resulting in lower fees on the Solana network.
• Scalability: Solana's architecture is designed for scalability, enabling it to handle a much higher volume of transactions than Ethereum.
• Consensus mechanism: Solana uses PoS with PoH while Ethereum is transitioning from PoW)to PoS with Ethereum 2.0. PoS and PoH are generally considered more energy-efficient than PoW.
• Developer experience: Solana prioritizes developer experience with user-friendly tools, whereas Ethereum boasts a larger, more established developer community.
• Maturity: Ethereum is a more mature platform with a broader range of existing dApps and established protocols, while Solana is a newer entrant but is rapidly gaining traction.

Choose Solana if you prioritize speed, scalability and low transaction fees. Choose Ethereum if you value a mature ecosystem with a vast array of existing dApps, a large developer community and the potential benefits of Ethereum 2.0. The best platform for you depends on your needs and priorities.

How to Invest in Solana

Here's a simplified way on how to get started with investing in Solana (SOL).

1. Pick a Crypto Exchange

Begin by selecting a reliable cryptocurrency exchange that allows SOL trading. Popular choices include Coinbase, Gemini, Binance and Kraken. These platforms enable you to buy and sell SOL using different fiat currencies or other cryptocurrencies.

2. Deposit Funds

Once you've chosen your exchange, deposit funds into your account. This can usually be done via bank transfers, debit/credit card purchases (depending on the exchange) or transfers from other crypto wallets.

3. Buy SOL

Navigate to the SOL trading section on your chosen exchange and place an order to buy SOL at the current market price or set a limit order for a specific price.

4. Secure Storage

After buying SOL, store it securely. You can use the built-in wallets provided by exchanges or external hardware or software wallets that give you more control over your private keys.

Cryptocurrency values can be highly volatile. Only invest what you can afford to lose and conduct thorough research before investing in Solana or any other cryptocurrency.

Participating in the Solana (SOL) Blockchain Ecosystem

Solana (SOL) presents a promising opportunity within the cryptocurrency landscape. Its innovative blockchain technology offers high scalability, low transaction costs and rapid transaction speeds, making it an attractive option for developers and investors. Individuals can confidently engage with the SOL ecosystem by following the steps outlined for investing in Solana and staying informed about its developments. With a long-term perspective and a commitment to ongoing learning, participants can harness Solana's full potential and contribute to its continued growth and success in the evolving digital economy.