Solana is a high-performance blockchain platform aimed at creating and hosting decentralized scalable applications (dApps). Solana (SOL), the eponymous native token, is already in the TOP-10 cryptocurrency rating in terms of market capitalization and constantly attracts new users and investors.
Today, cryptocurrency ranks 5th in popularity and capitalization in the market. The token rate is 105, the capitalization is $45.7 bn, and the daily volume of trading is $903,5 mln.
In this article, we will take a closer look at the main features and reasons for the uniqueness of the Solana blockchain, and its present achievements.
History of the Creation
The face and founder of the project is Anatoly Yakovenko. The founding team of Solana Labs also includes Greg Fitzgerald, Stephen Ackridge, Raj Gokal, and Eric Williams. Work on the project began back in 2017.
The project was originally called the Loom Network. In March 2018, Yakovenko and Fitzgerald founded Solana Labs to develop the blockchain of the same name and conducted a successful round of funding.
The first Solana testnet appeared in February 2019, and the main network was launched in March 2020. Over 2 years, cryptocurrency capitalization has grown from $0.5 to $24 billion, and the number of validators has reached 1300.
Solana’s Unique Technology and Features
The main unique feature of the Solana blockchain is the PoH algorithm, which works in combination with the PoS and Tower Consensus mechanisms. The Solana network is also distinguished by the following technological solutions:
- Gulf Stream – a data transfer protocol with hardware support, that reduces delays;
- Sealevel – parallel transaction processing by optimizing RAM usage;
- Scalability without data fragmentation with variable block size architecture;
- Phantom is a convenient crypto wallet for accessing the Solana ecosystem;
- Built-in smart contracts and applications in Rust.
With these solutions, Solana can safely handle significantly more transactions than competitors, keeping fees low and speed fast (50,000 transactions per second and 400 ms confirmation time). This opens up wide prospects for dApps to scale. This makes Solana much more efficient and accessible than many other platforms.
Solana’s Ecosystem
Solana is a network that provides the infrastructure to build decentralized applications. Let’s look at the already implemented popular projects within the Solana ecosystem. The blockchain website states that 1229 projects from different categories have already been implemented: DeFi (175 projects), NFT (517), wallets (89), games (151), applications (226), tokens (71), etc.
The 6 most popular projects currently based on user votes on the Solana website:
- Secretum is a secure messaging and trading application based on Solana;
- OKX, one of the world’s leading crypto exchanges, listed SOL on September 30th, 2020.
- HDOKI is a gaming ecosystem with rewards secured by cryptocurrency.
- Phantom is a digital wallet tailored for Solana and Ethereum. The wallet is reimagined for DeFi, making it safe and easy to store, send, receive, collect, and swap tokens on the Solana blockchain.
- Star Atlas is a grand strategy game of space exploration, territorial conquest, political domination, and more.
- Space Falcon is a metaverse-based game on a space PvP theme and NFT.
Solana’s Technical Advancements
Solana initially used its own UDP-based protocol to transfer transactions between RPC nodes and the current leader. Unfortunately, this meant that there was no meaningful method of banning nefarious behavior or spam. To fix this, Solana implemented QUIC, a transport protocol invented by Google designed for fast asynchronous communication such as UDP, but with sessions and flow control such as TCP.
Upgrade 1.10 was released in the second quarter of 2022 and aimed to address many of Solana’s previous spam issues with three specific changes: QUIC, rate-weighted transaction QoS, and fee-based execution priority.
Local Fee Markets:
Local fee markets were also deployed in Solana. These new charge markets aim to separate fluctuations in network charges by limiting them to segments experiencing high demand.
With Upgrade 1.10, the user can attach an additional fee to their transaction to get its priority. 50% of the additional fee will go to the validator, and 50% will be burned. With such a fee, validators can then begin to prioritize transactions based on fees. The fee will still be deducted even if the transaction fails. Thus, spam transactions are punished.
The calculation of the priority fee is based on the estimated computing resources that the transaction will consume. Therefore, a transaction with less computational complexity, such as the standard DeFi operation, requires a lower priority fee compared to a simultaneous, resource-intensive NFT mint. This dynamic fee adjustment, tailored to the nature of the transaction, is a strategic innovation aimed at optimizing network performance and cost-effectiveness.
A multi-customer future:
Solana has made significant strides in building a multi-customer network, with a significant portion of its stake now run by a new customer from Jito Labs – a significant increase from the previous year. Additional validator clients are also in the works, suggesting the growing maturity and sustainability of the ecosystem.
Firedancer:
Highlighting the front-line momentum, Solana Breakpoint 2023 showed the launch of Firedancer in testnet, a validator client developed by Jump Crypto. This client is designed to increase Solana throughput to one million transactions per second with a significant increase in data throughput. Having several customers, such as Solana Labs, Jito Labs, and Fierdancer in development, is a strategic approach to network stability.
This diversity is a preventive measure against the entire network being compromised by customer-specific bugs or glitches, as evidenced by a major network outage that occurred at Solana in February 2023.
Solana’s Market Performance and Adoption
Recent strategic alliances and technological advances provide a favorable forecast for users to adopt Solana and use the network. Last year, Visa announced the integration of its stablecoin settlement system with Solana, which means facilitating seamless USDC transactions for merchants in collaboration with Worldpay and Nuvei.
The synergy between Visa and Solana comes towards a similar partnership between Shopify and Solana Pay, further expanding Solana’s ability to settle USDCs. This collaboration is timely given the observed decline in Solana’s daily active users and could catalyze a resurgence of online activity by exploiting the prevailing dominance of stablecoins in the cryptocurrency market. Such advances not only mark a step forward for Solana but also highlight the broader potential of cryptocurrency infrastructure to improve and possibly redefine the landscape of global payments.
Finally, a recent partnership with Amazon Web Services (AWS) made it possible to implement a simple node on the Solana network. This collaboration extends beyond simplifying RPC nodes to consensus nodes. Starting the AWS blockchain node makes it easier to configure the node on Solana up to a few steps. This promotion opens the door for a wider range of users to build and expand their services on the Solana platform by eliminating the technical complexities that once held back the widespread deployment of nodes.
The Rise of the NFT Solana Ecosystem
As the digital landscape evolved, the NFT Solana ecosystem experienced explosive growth, achieving cumulative sales of more than $5 billion. This jump is not just numbers, but evidence of increasing acceptance and enthusiasm for the Solana platform.
More than 2.2 million buyers, 1.6 million sellers, and nearly 43 million transactions – Solana’s market is full of activity. This living ecosystem clearly points to the platform’s growing importance in the NFT market, attracting a diverse community of digital art collectors and traders.
A significant increase in sales of NFT Solana began to manifest itself in November 2023, sales doubled and reached about $82 million compared to the previous month. This uptrend continued, reaching about $365 million in December, not inferior to Ethereum sales. Such consecutive months of steady performance not only strengthened Solana’s position in the market but also contributed significantly to NFT’s record sales.
Conclusion
The Solana project is indeed unique both in general technology and separately in the crypto industry. Very fast and cheap transactions, strong decentralization, and high scaling potential have already brought the project coin to the top by capitalization.
Now within the framework of the Solana project, there are more than 11.5 million active accounts, and with a further increase in this number, capitalization can also grow. Of course, many other factors influence the market valuation of a crypto project, but the crypto project community has always come first.
In addition to the above factors of high adoption, demand, and development, the overall bullish market trend will push altcoins up, including SOL. Many market participants see SOL as an undervalued asset with a huge upside and predict even more growth this year. Now seems to be the time to pay close attention to Solana and related projects.
