Introduction to Solana
Market Meditations | April 12, 2021
Solana was founded in 2017 by Anatoly Yakovenko. Yakovenko played a pivotal role in the development of technology found in smartphones today. The rest of Solana’s team consists of employees from the likes of Apple, Microsoft, Google, and Dropbox.
The project has become even more popular recently due to vocal support from FTX and Alameda Research Founder Sam Bankman-Fried who built Project Serum on the Solana blockchain. Check out my Podcast with Sam if you’d like to learn more.
What is Solana’s origin story?
- Described as having experienced a revelation during his self-induced caffeine dream, Yakovenko realized that one key flaw of all crypto blockchains is that there is not a singular trusted source of time.
- Put simply, transactions are not time stamped which leads to inefficiency.
- Leveraging his 12 years of technical experience with Qualcomm, Yakovenko began working on Solana before going on to raise $25M for the project.
- At the heart of Solana’s blockchain is a decentralised clock known as Proof of History that aims to reduce the inefficiencies present with other blockchains. More on this later.
So What is Solana Exactly?
Solana is a fast, secure, scalable crypto blockchain that supports smart contracts and decentralized applications. Yakovenko’s goal was to create a trustless and distributed protocol to democratise the financial world by solving for scalability and inefficiency issues found in other chains. Solana’s recent claim to fame among traders is the narrative of a “cheaper and faster” Ethereum.
Solana’s competitors include the likes of Ethereum, Polkadot, Cosmos, Binance Smart Chain, and Cardano to name a few. There are three factors that differentiate Solana:
1️⃣Speed. Solana’s transactional capacity rivals that of the Internet. More specifically, it creates a block every 400 milliseconds enabling 50k transactions per second (TPS). Compare this to other chains: Bitcoin at 7 TPS, Ethereum at 30 TPS, Binance Smart Chain at 300 TPS, Cosmos at 10,000 TPS, etc.
2️⃣Scalability. Scales as a L1 Blockchain at the rate of Moore’s Law. More simply, Solana’s processing speeds double every two years without the need for integrating complicated L2 solutions that compromise security and stability. Whilst it costs ≈ $300,000 for every 1 million transactions, Solana’s cost for 1 million transactions is an astounding $10.
3️⃣Security. Solana has over 350 network validators. Anybody can be a network validator with no minimum staking requirements.
There are 8 core features that enable Solana’s incredible speed, scalability, and security. They include Proof of History, Tower BFT, Turbine, Gulf Stream, Sealevel, Pipeline, Cloudbreak, and Archivers. We’ll focus on the 3 most significant ones in this article.
1️⃣Proof of History
Problem: Other blockchains do not timetsmap transactions, creating inefficiency.
Solution: Solana’s “Verifiable Delay Function” allows you to create historical records proving that an event occurred during a specific moment in time. It’s a decentralised clock that allows you to timestamp transactions.
Why It Matters: It allows the system to more easily track transactions and order events sequentially thereby reducing the inefficiency.
Problem: With other blockchains, runtimes are generally single threaded (this just means one contract at a time modifies the blockchain state). This leads to latency.
Solution: Solana’s Sealevel feature makes it possible to identify all non-overlapping transactions quickly and process them simultaneously.
Why It Matters: By processing transactions simultaneously, it allows Solana’s blockchain to reduce the runtime and latency found in other chains.
Problem: Other blockchains process transactions slowly (as mentioned above).
Solution: Gulfstream enables validators to execute transactions ahead of time.
Why It Matter: This protocol is what allows Solana to support 50k TPS.
And there you have it. A beginner’s guide to Solana’s fundamentals. For traders, make sure to check out my YouTube video, “Realistic Solana Price Target (My SOL Target),” where I help you interpret not only more detailed Fundamentals, but also do Technical Analysis and walk you through my latest thoughts on the coin’s price action.