With more than 7,000 cryptocurrencies, it can be a little difficult to keep up with the various projects. Not when every project promises to be the best thing around, only to fail to live up to the hype. However, one of the projects that have delivered on its promise is the fourth generation token, Solana (SOL).
This is a unique blockchain network that looks to improve the scalability of the blockchain network. Here is all you need to know about SOL.
What is Solana?
Solana is a high-performance blockchain that supports decentralised applications and smart contracts. It employs Proof-of-Stake (PoS) consensus mechanisms and timestamp transactions for maximum efficiency.
It looks to solve one of the major blockchain challenges; scalability. Earlier cryptos like Bitcoin that use the Proof-of-Work (PoW) consensus mechanism were designed to increase transaction fees with increased network use. However, there has been a challenge as the networks become congested. Ethereum has also faced increasing transaction fees following the NFTs and Defi boom. While these projects are only capable of around 7TPS for Bitcoin and 15TPS for Ethereum, Solana can manage up to 50,000TPS.
How does Solana work?
Given the unique functionality of Solana, the developers had to come up with a unique way in which it operates. It has various components within the network that work together to make it the useful and reliable blockchain network it is.
The first major aspect of Solana is the Proof-of-History (PoH), which is not a consensus mechanism, rather a component in Solana’s PoS consensus. The Solana network delegates the transaction verification to various users, with a new leader appointed after every 4 blocks (1.6 seconds)
PoH ensures all transactions are time-stamped as they are added to the Solana network. It uses the SHA256 hash function to reference the timestamp on the blocks added to the network. A new block is generated on the network every 400ms.
Apart from the PoH, Solana has other components that make it tick. One of these components is the Sealevel which helps identify non-overlapping transactions for processing at the same time. Gulfstream helps indicate the various upcoming leaders on the network such that they can start preparing their transactions for blocks.
SOL cryptocurrency
The Solana network has a native token called SOL. It can be burned to pay fees on the Solana network. This allows users to earn passive rewards from the network’s delegated staking. The token is hard-capped at 489million coins.
SOL price analysis
Even though development on the Solana network started in 2017, the native token was launched in April 2021. While at the time of launch it was valued at $1, the token soon took a slump to hit $0.6 where it remained until July of the year.
Solana then became one of the fastest-growing cryptocurrencies when it rose from $0.75 to $214.96 in September 2021. The growth is mainly due to the NFTs boom. Various entities prefer it to the Ethereum platform. It currently trades at $202.49.
Trading SOL
As currently one of the leading cryptocurrencies, SOL remains an ideal investment. After the massive growth in the year, the token still has more growth potential. The token is available in the various top crypto exchanges like Coinbase and CoinSport.
