Many blockchains have yet to achieve widespread popularity and usage as quickly as Solana. However, Solana’s ecosystem is well-liked because it is scalable, uses little energy, and is compatible with smart contracts. As a result of its superior architecture, the network has emerged as a formidable competitor to other blockchains like Cardano and Ethereum; in fact, Solana has been dubbed “a big Ethereum killer.”
This article discusses the many components of the Solana ecosystem, how it stacks up against Ethereum, and the problems with the current implementation of Solana.
What is Solana?
Solana is an open-source, permissionless blockchain that maintains a fast and scalable infrastructure with low operational expenses. The proof-of-history method and a modified proof-of-stake consensus mechanism form the basis of the project’s novel hybrid consensus protocol. Solana, therefore, asserts a potential throughput of 65,000 to 71,000 transactions per second with almost zero costs and without the assistance of an extra scaling solution.
Mainly, Solana is built to support decentralized apps and smart contracts, such as NFTs (dApps). In addition, DeFi platforms and decentralized markets of all kinds are supported by the network.
In 2017, Anatoly Yakovenko and Raj Gokal created the first iteration of the Solana blockchain. Solana’s primary network and SOL token were released to the public in 2020 after a succession of test net stages.
Understanding the Solana ecosystem: How does it work?
Solana blends Tower BFT and proof-of-stake to achieve scalability and unanimity with the novel proof-of-history approach.
PoH acts as a cryptographic clock, creating a digital record that verifies the chronological sequence of blockchain transactions. Instead of streaming the transactions after the entire block has been completed, the slot leaders in this approach send them out immediately. Transaction timestamps, the backbone of the proof-of-history protocol, guarantee that nodes can properly sequence the transactions inside a block even if they are not streamed in chronological order.
Solana also has a proof-of-stake (PoS) method, in which validators “stake” coins and are then chosen to validate and add transactions to blocks. To ensure the smooth operation of the blockchain, the Solana cryptocurrency, SOL, is staked and hence cannot be removed from the system. In return, the participants in the network get compensation for ensuring the safety of the Solana ecosystem by authenticating transactions and preventing malicious activity.
In addition, remember that the proof-of-history protocol uses the PoS mechanism while also depending on the Tower Byzantine Fault Tolerance (BFT) algorithm (an improved version of practical BFT). The Solana network’s increased security and lightning-fast throughput are primarily thanks to the cooperation of three integrated protocols.
What features make Solana unique?
Solana’s fondness for intelligent contracts, low transaction fees, and lightning-fast transaction times make it a standout among blockchain platforms.
It uses a hybrid consensus method, notably the proof-of-work protocol, to address the blockchain trilemma of decentralization, security, and scalability. Due to its emphasis on scalability, the network compromises some of its decentralization in the process. Leader nodes are selected using the Proof-of-Stake method and time stamp transactions between nodes, allowing Solana to achieve this goal.
Solana’s network is said to be capable of processing over 65,000 transactions per second at costs as low as a hundredth of a penny. In contrast, some blockchains with significant decentralization suffer primarily from congestion or queuing issues due to the increased time spent confirming transactions.
Staking one’s SOL coins in the Solana ecosystem is an excellent way for investors to earn passive income. On the Solana blockchain, users may create and deploy DApps, games built on the blockchain, DeFi platforms, and mint and trade NFTs.
SOL: The Solana crypto
The Solana crypto, abbreviated as “SOL,” is the network’s official currency and how transactions are settled.
There are now over 511,000,000 SOL in circulation as of October 12th, 2022, which is more than the maximum supply. With a market valuation of almost USD 11 billion, Solana crypto is among the top 10 cryptocurrencies by CoinMarketCap’s standards.
Solana vs. Ethereum
Comparisons between Solana and Ethereum are common since both platforms support intelligent contracts and DeFi. To be sure, Ethereum dominates the DeFi/apps market with a TVL that’s about 95% bigger than Solana’s, but Solana is praised for its lightning-fast transactions and impressive performance. Compared to Ethereum’s 15–30 TPS, Solana’s transaction processing speed is far higher at over 65,000 TPS. Comparatively, Ethereum’s gas costs are rather exorbitant, whereas Solana’s average transaction fee is just $0.00025.
The Ethereum Merge has made the consensus protocol gap between the two platforms disappear since Ethereum is now run by the resource-conserving PoS method. However, although Ethereum is working on increasing scalability and decreasing gas prices, it is widely assumed that the innovative contract platform will only be able to solve the scalability problem (by sharding) soon despite the significant update.
Some criticisms regarding the Solana ecosystem
Over the years, several complaints have been leveled against Solana; the current focus is on the recent string of hacker incidents, compromised Solana wallet security, and currency thefts.
Solana’s (SOL, the associated cryptocurrency) lack of openness about its maximum supply and increasingly centralized nature are two of the leading causes for alarm. Possibly more than half of the SOL token supply is held by a small group of insiders and venture capital companies, with just around 38% set aside for the community. Even though there are over 2,000 validators in the Solana ecosystem, more than a third of the total stake is held by only 25 to 30 validators. In this setup, a tiny group of nodes controls the verification of almost a third of all Solana transactions, suggesting increased centralization.
Furthermore, Solana has often been featured in the media because of the frequency with which internet assaults against its wallets have made the news. In August, hackers stole millions of dollars’ worth of cryptocurrency from over 7,500 infected wallets. In February 2022, the equivalent of around $320 million was taken from Wormhole. Not only that, but abnormally high use last month caused the network to crash for more than 17 hours.
However, the Solana developers are acknowledging the problems and pointing out that the mainnet blockchain is still developing, so it will take some time to patch any remaining security holes completely. Nevertheless, the Solana ecosystem is growing despite the outages as crypto fans flock to the platform to take advantage of its low cost and scalability in supporting intelligent contracts.
Comments (No)