Solana (SOL), officially debuted in March 2020, is an open-source blockchain platform that offers fast, safe, and scalable decentralized applications and marketplaces.
The network can handle a throughput of more than 65,000 TPS when using GPUs, and it is one of the most performant permissionless blockchains in the world.
Unlike Bitcoin, which uses the Proof-of-work (PoW) consensus algorithm as the system's decentralized clock, Solana employs the Proof of History (PoH) and Proof of Stake (PoS) consensus.
This hybrid model of consensus is one of its unique properties. As a developer, you can use PoH to construct historical records that verify an event that occurred at a given point in time. In addition, you can confirm transactions based on how many coins or tokens you own and speed up transactions by using PoS consensus.
Let's look at some of the pros and cons of the Solana blockchain.
- Solana is capable of processing 65,000 transactions per second while charging extremely cheap costs (0.00025$ per transaction), a combo every project founder or developer craves for. The Solana blockchain presently hosts a diverse set of dApps and smart contract initiatives. As a result, it is one of the world's most frequently used blockchains.
- Solana has achieved great levels of scalability by utilizing Proof of History. It is Solana’s main innovation (there are 7 other innovations as well). PoH is a synchronization technique that fixes the clock problem (issues related to authenticity of timestamps in a decentralized platform). At each node, there is an internal clock that displays the same time. It gives each transaction a timestamp and prevents bots and miners from influencing transaction order. Solana is capable of achieving high transaction throughput because of this fast and consistent synchronization.
- Solana has developed economies of scale and kept application fees incredibly cheap because of Solana's scalability. Both developers and users are ensured that the transactions cost less than $0.01 (Solana claims it will be below $0.01 forever).
- Solana is paving the way as a more eco-friendly alternative to Ethereum and other blockchain’s proof-of-work consensus. Solana is more energy efficient. It's faster, and the network doesn't need miners because of the consensus methods, so there's no need for a lot of computational power. That’s why it is often called the “Ethereum-killer”.
- Network stability is a problem for Solana as it has a smaller user base and a shorter track record. Solana blockchain experienced intermittent instability back in September 2021, and its reputation took a knock. This was due to a large spike in transaction demand, which peaked at 400,000 transactions per second. It lasted for 18 hours.
- When compared to other Layer 1 networks, Solana has a large number of tokens controlled by insiders and that is why it has been critiqued for unequal token allocation. The allocation is about 48% for insiders as shown in the graph. In comparison, insiders possess between 15 and 17 percent of the total quantity of Ethereum and Cardano, which both sold over 80% of their tokens in a public sale.
Image source: Messari
- Ethereum is a well-established blockchain network with many active projects (close to 3000). According to its website, Solana claims to have over 400 projects, including DeFi, NFTs, and gaming. This amount represents a little over 13% of all Ethereum projects. However, Solana is still in its early stages, and progress has been rapid.
- Solana has been critiqued for not being properly decentralized. The Ethereum blockchain currently has approximately 200,000 validators, whereas the Solana network has only 1338. The network will be more secure if there are more validators.
- Solana does not have a set number of coins. Solana began by increasing its supply by 8% every year. That rate of inflation falls by 15% per year until it reaches 1.5 percent, where it will remain permanently. Investors looking for a blockchain with no inflation should look elsewhere.
- Due to the newness of the blockchain technology, there is a shortage of experienced developers in the field. Solana's blockchain development is done in Rust, and there aren't enough Rust developers out there right now. As a result, there’s a desperation for Rust and forming product development teams for the project founders is extremely challenging.
Projects on Solana
Solana provides a cost-effective platform for dApp developers to create applications. This open-source blockchain, which has over 350 Solana projects, can benefit everyone.
Image Source: Solana News
Most of these projects are focused on the hottest market areas, such as DeFi, blockchain gaming, and NFTs.
Solanart, an NFT marketplace, runs on the Solana network, which allows NFT purchasers to benefit from faster transaction speeds and lower fees than those on the Ethereum network. Demand for smart contracts and NFTs are surging, which might help Solana prosper in the long run.
Serum is another excellent example for developers and project founders. It is a protocol for decentralized exchanges (DEX) that is known for its transaction speed and low costs. Serum provides a great guide full of project ideas for anyone wanting to get involved in their ecosystem.
Many intriguing and viable Solana projects have been created on the network since the mainnet started in March 2020. Hundreds of projects chose this blockchain because it is a scalable solution with low transaction fees.
The Solana ecosystem has been used to create Star Atlas, a blockchain multiplayer exploration game. The game aims to create a metaverse with an open economy where players may enjoy complete freedom while earning ATLAS tokens.
Phantom, the user-friendly wallet for the Solana ecosystem, teased a long-awaited feature: a mobile wallet. According to the company website, it will be available on iOS in January 2022.
In addition, the Phantom company recently announced a collaboration with MoonPay to provide convenient on-ramp services. An exchange or compatible service where you can provide fiat money in exchange for cryptocurrencies is known as a cryptocurrency on-ramp. This collaboration allows you to purchase Sol right from your Phantom wallet's home page using MoonPay.
The success of all these projects has pushed the price of SOL to a new all-time high in November 2021. Solana's cost-effectiveness attracts new dApp developers to the network every day, expanding its ecosystem and strengthening the entire Solana community.
As a result, Solana competes with Ethereum, the market's most popular smart-contract platform.
Roadmap for the Future
Just one thing on the Solana roadmap remained unfinished as of December 2021: the full mainnet release. Mainnet Beta, initially launched in February 2020, is yet to get out of this Beta period. We can see its full release in 2022, but the date has not been decided yet.
Apart from this, there appear to be suggestions for on-chain governance and multiple ongoing GitHub initiatives. However, in recent months, progress appears to have halted.
This isn't to say that the platform development is finished. Solana Labs raised $314.15 million through a private token sale in June.
According to the company's news statement, Solana Labs plans to utilize the funds to speed up the development of dApps and platform development. The business will also develop an investment arm and a trading department for the Solana network.
Despite its recent issues, Solana has shown a lot of promise and generated a lot of buzz in the blockchain community. It is a relatively new platform that employs novel approaches such as PoH, so it's natural to have a few bumps along the road.
However, like with any fledgling venture with high hopes for success, such challenges must be rectified quickly so that the project can continue to develop and expand. So far, it appears that Solana's creators are devoted to doing just that. For example, following the DDoS attack in December 2021 , Solana saw a significant increase in development activity.
So, while it's still unclear whether Solana will reach its full potential, if the platform's developers stay devoted to the project and keep enhancing it, it might become one of the most formidable competitors in the blockchain sector.