What is Solana? 

Blockchain technology is developing rapidly and Solana continues to stake its claim as one of the most promising projects in the cryptocurrency world. With low transaction fees and high network speeds, Solana (SOL) is becoming a central hub for new decentralized applications.

In this article, we will take a deeper look at the Solana cryptocurrency, its key features, how it works, its price history, as well as how it compares to other blockchain networks.

What is Solana?

Launched in March 2020, the Solana cryptocurrency has withstood the test of time and currently ranks 5th in terms of market capitalization (at the time of this writing) with a total of $81.7 billion.

Blockchain offers an all-in-one solution for developers to create decentralized applications (dApps) and scale them easily. This is made easy because Solana offers fast transaction speeds and low fees; These are some of the biggest challenges facing other blockchain networks.

It also works on Proof of Stake (PoS) mechanism along with Proof of History (PoH) which helps in increasing its scalability without compromising its security and decentralization aspect.

When was Solana’s first blog created?

Solana’s origin block was revealed on March 16, 2020, which also marked the launch of its mainnet. From the beginning, the Solana blockchain has focused on providing efficiency and high throughput while maintaining competitive transaction fees. All of this has led to hundreds of cryptocurrency projects adopting blockchain more widely, and it has now become one of the most popular blockchain networks in the cryptocurrency world.

Key features of Solana

While the technical features of Solana are too many to list, here are some of the important features that new developers who want to develop on this blockchain should know.

1. High throughput: Solana claims transaction processing speeds of over 65,000 transactions per second (TPS). This high speed allows Solana to deliver seamless user experiences in decentralized applications built into its ecosystem.

2. Scalable architecture: Solana’s architecture uses two mechanisms: Proof of Stake (PoS) and Proof of History (PoH), allowing Solana to provide high levels of scalability without compromising security or centralization.

3. Low transaction fees: With an average transaction cost of $0.00025, Solana is an exciting place to conduct financial transactions within its ecosystem. Since transaction costs are very low, users prefer Solana to other blockchains, which attracts more users to the platform in the long run.

4. Tools for web3 developers: Solana provides a built-in toolkit for web3 suite of tools and resources. The most popular one is known as the Solana Software Development Kit (SDK). The SDK allows web3 developers to build and deploy decentralized applications while also testing their programs within the Solana ecosystem, making the entire development process efficient and fast.

So what is Solana used for and how does it work?

How does Solana work?

Solana works on unique consensus mechanisms to ensure scalability and provide low translation fees to projects in its ecosystem. It uses a hybrid consensus model that integrates Proof of Stake (PoS) and Proof of History (PoH), which is important to know to understand how Solana works.

Proof of Stake is where validators use Solana tokens to create new blocks that they are ready to ‘stake’ on the Solana network. This process ensures security and energy efficiency in the ecosystem, and in return these validators are rewarded per Solana crypto tokens they stake.

Overall, PoS is a process that supports network integrity while rewarding validators and also attracts new users to participate in the proof-of-stake process.

In addition to PoS, Proof of History is also used by Solana, which acts as a second layer of security. In PoH, timestamps and events are recorded in chronological order without relying on validators to sort them.

When there is a clear historical record, validators can process multiple transactions simultaneously, which can lead to a significant increase in efficiency and throughput in the Solana ecosystem. This is because when a new transaction is initiated, it is first verified by the PoH mechanism, which determines the timestamp, and then the validators do their job, thus ensuring a fast verification job while also contributing to the overall security process of the network.

Solana price history

Solana (SOL) has experienced a wild rise in the crypto markets. It hit an all-time high in 2021, rising to $259.96. It also witnessed the strong bear market of 2022, when the Solana cryptocurrency crashed to $7.80 in December 2022.

SOL weekly chart, October 2024 | Source: Tradingview

At the time of this writing, Solana’s market cap is $82.77 billion and its fully diluted valuation stands at approximately $103.38 billion. SOL reached a volume of $3.63 billion in the last 24 hours, indicating volatile market activity in this token.

In terms of price range, Solana ranged from $162.47 to $178.32 last week. It is currently trading at $176, marking a 13% rise in the last 7 days.

Solana and other blockchains

Solana ranks among the top 10 blockchains when it comes to key performance indicators and overall user base. Here we will compare it with three popular blockchains in the cryptocurrency market.

Solana and Bitcoin

At the time of this writing, Solana’s total value locked (TVL) is around $6.28 billion, and its total market cap is around $82.77 billion. Meanwhile, Bitcoin has a TVL of $429.52 million in terms of scalability and low gas fees, but Solana has already achieved that goal, so it’s still attracting new projects to build on its platform and a larger user base looking to take advantage of it. the low fees it offers.

Solana and Ethereum

Ethereum, the second most popular cryptocurrency after Bitcoin, has a TVL of $121.26 billion and a market cap of $297.64 billion. These figures point to Ethereum’s established dominance in the decentralized finance (DeFi) sector.

However, Solana has a big advantage over Ethereum due to its fast transaction times and low transaction costs. It’s true that Ethereum’s transition to Ethereum 2.0 is a big step towards making Ethereum more accessible for new projects, but Solana has already achieved this, which is one reason why new projects are built more on Solana than on Ethereum.

Solana vs BNB Smart Chain

BNB Smart Chain is a popular choice for both developers and users. At the time of this writing, its total value locked (TVL) is around $6.05 billion and its market cap is around $84.95 billion. By comparison, Solana’s TVL stands at $6.28 billion, indicating similar growth and user type in the decentralized finance (DeFi) environment.

Both Solana and BNB Smart Chain offer fast transaction times and slow transaction speeds. However, where Solana has an edge over the second blockchain is in higher throughput. Allowing higher transaction throughput with lower latency is one of DeFi developers’ favorite features as it helps them build more scalable applications.

Overall, both of these blockchains are viewed as high-performance and low-cost options for users and developers. And ultimately, growth and user-friendly environment will decide which blockchain will come out on top.

Solana use cases

Solana is used by various decentralized applications across multiple web3 industries. Low transaction costs and high throughput make Solana an ideal blockchain for DeFi platforms and decentralized exchanges (DEXs), which are often criticized for high transaction fees and latency rates.

Additionally, Solana is becoming more popular in the non-fungible token (NFT) market, which allows efficient minting and selling of digital art by artists and creators. Solana-based NFT platforms like Magic Eden and Solanart eliminate the high gas fees associated with major blockchains like Ethereum.

Solana also supports decentralized games built on its own blockchain. Online games have a high user base, which is effectively supported by Solana due to its high scalability and security infrastructure.

All things considered, Solana’s adaptability and developer-friendly ecosystem strengthens its position as a top blockchain platform by allowing web3 developers to build reliable applications that require scalability, security, and speed.

Solana benefits and challenges

With a unique blend of Proof of Stake and Proof of History mechanisms, Solana offers high transaction speeds of over 65,000 transactions per second (TPS) at a very low cost. Web3 projects can be effectively developed on Solana due to its scalability and the user community can be retained on Solana due to the low transaction cost offered on NFT and DeFi platforms.

But as they say, all that glitters is not gold. Solana also faces its share of challenges. While low transaction costs are a huge advantage, this also means that there are high transaction volumes and this sometimes causes outages, which is a concern in the web3 community.

In addition, some critics claim that Solana’s degree of decentralization is lower than well-known networks such as Ethereum, although its speed is a huge benefit. This may raise concerns about governance and security. Resolving these issues will be important as the platform evolves to maintain a competitive advantage in the blockchain market and attract more users.

You might also like: Ethereum community member says Solana can’t be blockchain’s ‘global backbone’

How to get started with Solana?

Getting started with Solana is easy and you can follow these easy steps to start leveraging blockchain.

1. Choose a crypto wallet that supports Solana. This may include Phantom, Metamask and the like.

2. Buy SOL tokens from a centralized or decentralized exchange and send your SOL tokens to your crypto wallet.

3. Now explore decentralized applications built on Solana. This could include dApps like Serum, Raydium, or NFT marketplaces like Solanart.

4. Read whitepapers and guides written by Solana dApps and join their online communities on Telegram and Discord. This is a great way to stay informed about upcoming opportunities or important updates that may be coming to the Solana ecosystem.

With its fast transactions, cheap fees, and scalability for DeFi, NFTs, and web3 applications, Solana remains one of the best blockchains. Although there are still issues with decentralization and network stability, its creative architecture and developer-friendly environment make it a major force in the forward development of blockchain technology. Solana’s long-term success in the changing crypto world will depend on its ability to solve these problems as usage increases.