What is Solana?

Briefly

• Cryptocurrency – SOL
• Use case – Decentralised applications (dApps); smart contracts
• What makes Solana unique? – Super fast processing speeds, low transaction costs
• Founder(s) – Anatoly Yakovenko, Raj Gokal
• Launch date – March 2020
• Consensus mechanism – Proof-of-history (POH)

Solana is a platform for building and hosting decentralised applications (dApps) and smart contracts. It is similar to other smart contract platforms like Ethereum and Cardano, but Solana prioritises transaction speed.

The Solana network can process up to 50,000 transactions per second. For context, the Visa network processes about 1,700 transactions per second. Ethereum can handle about 15 per second, but the throughput is set to increase exponentially in future. Cardano can handle roughly 250 transactions per second. 

What is Solana’s cryptocurrency?  

SOL is the native cryptocurrency of the Solana ecosystem and is used to pay for services carried out on its network. The cryptocurrency is also listed on a number of investment and trading platforms where investors can buy and sell the coin. 

What makes Solana unique? 

The Solana network is designed for speed, scale and keeping transaction costs to a minimum. 

To accommodate huge transaction volumes, other networks like Bitcoin have had to add a second layer such as the Lightning Network, and Ethereum will soon split the network through a process called sharding. Solana is able to remove this added complexity by accommodating these volumes on its layer-1 blockchain. 

This is because of Solana’s unique way of validating transactions, a method called proof-of-history (POH). 

How does POH work? 

Many programmable blockchains like Ethereum have trouble determining the exact time at which a transaction was made, and have to rely on outside programmes to assign an accurate timestamp, adding another step in the process. 

Proof-of-history solves this issue by way of a built-in mechanism that time-stamps the transactions on the network as they come in. It’s like a drive-through at a fast food chain. Your order is timestamped to ensure that each meal is processed in the correct sequence and everyone in line gets what they paid for when it’s their turn. Without the timestamp, employees would have to go around confirming each person’s order. 

It positions the Solana network as a network built for scaling, but there is a downside to driving a blockchain at this speed. 

This fast-paced nature of the Solana network has in the past led to a number of network outages, often due to denial-of-service attacks. The founder, Anatoly Yakovenko, has identified these outages as the network’s biggest challenge. You can find out more about this here.