What is Solana, and What are Its Use Cases?
Since the introduction of the first decentralized Bitcoin network in 2009, blockchain technology has advanced by leaps and bounds. What was once a secure computer network for exchanging digital currencies has now evolved into a realm where entire virtual ecosystems are built and maintained.
Today, myriad blockchains are now available to the public, each carrying out and storing unique transactions. In addition, many online services are provided by blockchain networks to meet the needs of internet users.
Solana is a modern blockchain that differs significantly from the Bitcoin network. Solana makes use of modified cryptographic algorithms to create a fast and scalable blockchain.
In this article, we will go over the fundamentals of Solana to give you an idea of what it is and some unique use cases as well.
What is Solana?
Solana is a blockchain network founded by the Swiss Solana Foundation, a non-profit that focuses on the development of the blockchain system.
The foundation’s mission is to make Solana the world’s most ‘censorship-resistant network’ in the world. We’ll explain that bit later on in this article.
The blockchain is based on a 2017 whitepaper by Anatoly Yakovenko, a software engineer who had worked at Qualcomm and Dropbox.
Yakovenko devised a system for validating transactions based on an innovative concept called ‘proof-of-history.’ Proof of history allows blockchain nodes to validate transactions simultaneously. This feature enabled the blockchain network to complete transactions at a faster rate, making it closer to conventional payment systems like VISA.
Yakovenko worked with co-founders Raj Gokal, Greg Fitzgerald, and Stephen Akridge to launch Solana in March 2020. The name is derived from the Solana beach in California, where the co-founders used to spend their time together.
The blockchain is implemented in the Rust language for its memory safety features and the lack of garbage collectors. Rust allows it to run smoothly on Linux kernels with highly intensive workloads.
Solana has an active developer community that updates the blockchain to add new features. You can view all the market stats for Solana on its dashboard, aptly named Solana Beach.
What are the features of Solana?
Solana is a fourth-generation blockchain, and it comes with all the bells and whistles of its predecessors, along with some more features. These new features allow it to perform fast transactions in a scalable way. Here is a list of Solana features.
Open Source Code
Like many other blockchains, Solana has an Open Source application. That means anyone can download the source code and implement it for personal and commercial use.
Solana’s native currency is Solana or simply SOL. SOLs are also available in smaller denominations called Lamports. Lamports are named in honor of the famous American computer scientist Leslie Lamport who is known for his important work on distributed systems and computing efficiency.
Proof of Stake
Solana allows users to stake SOL coins in a similar manner to the blockchains like Ethereum, to help process transactions faster and more efficiently. These are done with validator nodes that run several internal processes to securely process transactions.
The staking algorithm also allows users to vote for changes to the blockchain suggested by members of the Solana developer community.
Proof of History
This is the core innovation of Solana. Proof of History (PoH) is a consensus method that takes the time of a transaction and merges it with Proof of Stake to process the transaction.
The time, in this case, is based on block height, which is simply the block number where the transaction is taking place. Combined with a Verifiable Delay Function algorithm, the blockchain can efficiently timestamp events taking place.
Each node can add a block without specifically agreeing to the other node. The nodes agree to the PoH timestamp instead.
With PoH, Solana uses a synchronized clock for the entire blockchain. PoH can be used by a validator to get a replay of events within the blockchain. The net result is extremely fast transaction speeds, with as many as 50,000 TPS.
Solana uses several services on top of the network to improve efficiency. Think of it like a technology stack where different layers perform a specific function.
With these services, Solana can be used to build decentralized applications (Dapps) and Decentralized Financial Institutions (DeFis)
Another core innovation of Solana is horizontal scaling, which allows it to add more computers to its processing network to distribute computing resources. Tasks can be processed by multiple computers running in parallel to take true advantage of distributed resources.
The network can also connect seamlessly between CPUs, SSD, and GPUs at the hardware level. Here are some of the distributed systems within Solana.
- Gulfstream: This is a mem pool allocation system that automatically forwards queued transactions to nodes that have fewer transactions in-line to process. The system results in empty mem pools and near-instant transactions.
- Cloudbreak: A cloud-based network for distributing inputs to other nodes for cloud storage
- Sealevel: a network of smart contracts that allows users to run multiple smart contracts at once while distributing workloads to other nodes when required
Solana uses the Turbine protocol to transmit information in smaller pockets to nearby node clusters called neighborhoods. This allows it to validate transactions faster.
Leader nodes on rotation
Leader nodes are nodes that are expected to validate transactions within a cluster. A single node is assigned to be a leader by the network. This increases efficiency within a node cluster.
In Solana, leader nodes are rotated periodically, preventing malicious or nonfunctional nodes from blocking transactions and slowing down the network.
Miniscule block times
Solana has a 400ms block time. Short block times make transactions extremely fast and allow it to easily process thousands of transactions per second.
What makes Solana different from other blockchains?
High censorship resistance
In blockchain terminology, censorship refers to the blockage of network activity by preventing specific nodes from joining the network and validating transactions.
Censorship prevents users from adding new blocks to the blockchain. Censorship can be attributed to malfunctioned nodes or intentional sabotage by malicious threat actors.
Solana is designed to curb blockchain censorship through its rotating validator nodes. For each validator, smart algorithms calculate the minimum number of nodes needed to be compromised to censor the network.
High transactions speeds
Many popular blockchains like BTC (7 TPS) and ETH (30 (TPS) have slow transaction speeds. To achieve higher transaction speed, a separate network is needed, which can cause issues if users are stuck with older wallets.
With its extremely short block time, Solana can perform transactions at blazingly quick speeds. That makes it as efficient as VISA and Mastercard. It can also be used for running apps in real-time.
Solana can handle high network traffic volumes, unlike many first and second-generation blockchain networks. Solana can also be used for enterprise-level applications while delivering a satisfying user experience.
A big software trend today is an ecosystem architecture in which applications can provide a range of interconnected services under one roof. Solana can be used to design applications with ecosystems from the get-go.
The scalability also keeps transaction costs low (often under 1 cent).
Solana has a layered architecture that makes it interoperable with other applications and blockchains for managing and trading digital assets, like cryptocurrencies, NFTs, or personalized records.
What are Solana’s use cases?
Solana is home to several projects that take advantage of its scalability and flexibility. Developers have been coming up with creative ways to use the blockchain. Here is a list of some of its use cases.
Decentralized financial institutions (DeFi) provide a consolidated range of online financial services without the need for any conventional banks.
DeFis include exchanges, Decentralized Cryptocurrency Exchanges (DEXs), digital wallets, and automated financial contract systems.
Examples of Solana-based DEXs include Orca, and Serum, which allow users to trade cryptocurrencies in a non-custodial process. Solana is also the backbone of stablecoins like Saber which give users a liquid option for cross-cryptocurrency margin trading.
A few developers have created systems that allow users to deposit or lend currencies over the Solana blockchain. Users can earn interest or configure automated repayments. Examples include Apricot Finance and Solend.
NFT apps and marketplaces
Solana has been used to create NFT applications that allow users to mint and trade digital artwork. Users can create their own NFT storefronts and tools to generate NFTs, or integrate them into other applications like games.
Examples of Solana NFT marketplaces include Metaplex and Solanart.
Yes, Solana is home to a few games that have Play to Earn (P2E) systems which allow players to earn cryptocurrencies and NFTs by playing the game. Games can be online metaverses like:
- Multiplayer worlds like Chainers and Aurory,
- Survival-puzzle games like Naga Kingdom.
One of the most exciting developments over the Solana blockchain includes new apps that take advantage of the latest internet technologies. The apps are also decentralized, meaning that they are stable and open to all users on the internet.
- Audius: a decentralized audio streaming app that allows users to share and listen to music from all over the world
- Squads: a Solana-based treasury fund management application designed for teams trading assets together
- Alchemy: a Scalable web development platform that allows developers to quickly build Dapps over the Solana blockchain
- Dispatch: an analytics platform that enables application developers to track user engagements for Dapps
Solana offers very fast, scalable solutions that enable traders and developers to provide a wide range of services to netizens around the world. The sky’s the limit for what developers can achieve.
The editorial content of OriginStamp AG does not constitute a recommendation for investment or purchase advice. In principle, an investment can also lead to a total loss. Therefore, please seek advice before making an investment decision.