The token of one of the most popular blockchains has grown by almost 3000% in 2021. What’s the reason, how is the project developing, and what are its specific features?

Solana’s blockchain-based NFT protocol, Burnt.Finance, attracted $3 million in investment from Alameda Research and other crypto funds earlier this year in May. Solana is also one of the largest blockchains in DeFi in terms of blockchain funds — $917 million.

Solana has a large community — more than 84,000 people on Telegram — and more than 250 projects have launched on its blockchain. According to Solana Foundation representatives, the blockchain’s current throughput is 60,000 transactions per second, and in the future it could be up to 710,000 transactions per second. This high transaction processing speed is based on the Proof of History (PoH) algorithm and the Gulfstream and Turbine data transfer protocols.

How does the Solana blockchain work?

Unlike Polkadot, Ethereum and others, Solana is a Tier 1 blockchain with no sidechains or parachains. Solana says its blockchain is based on the PoS (Proof of Stake) consensus algorithm, but not everyone in the community agrees. It is believed that Solana is based on the dPoS (Delegated Proof of Stake) algorithm.

Its high-speed transaction processing is based on the PoH solution, which allows time synchronization between nodes much faster by creating a decentralized clock. The Leader Schedule for validator nodes and the Turbine and Gulfstream data transfer protocols synchronize the interaction between nodes. This solves the problem of orphan blocks, traditional for other chains, including Ethereum, and reduces block mining time to 0.4 sec.

The acceleration of synchronization between nodes in the Solana blockchain makes it fast enough to compete with complex centralized systems. Other innovations in this ecosystem include archivers that perform distributed data storage and optimized transaction recording via Cloudbreak. Solana blockchain nodes are rewarded for processing transactions in the utility token SOL and, unlike other PoS chips, it has no restrictions in the form of a minimum number of coins needed to create a node.

History and team

The project is based in San Francisco and was founded in 2017, with the first version of the test network launched in 2018. Solana’s founders are Eric Williams, PhD, BREW OS developer Greg Fitzgerald, and former Qualcomm and Dropbox developer Anatoly Yakovenko, who communicates with the Russian-speaking part of the community in Russian.

Solana representatives define their blockchain as “a public operating system in which everyone can participate.

On March 23, 2020, a Dutch auction of Solana tokens took place; a special feature of this sale was that participants could return up to 90% of the transferred funds.

In June 2020, the Solana Foundation was created to help develop the ecosystem. The organization’s goals also include research, including outsourced teams, outreach, and education. The Solana Foundation received 167 million SOL coins from Solana Labs for this purpose.

In addition to its CEO Anatoly Yakovenko, the organization’s board includes entrepreneur and investor Wolfgang Albrecht, co-founder of Staking Facilities, developer James Prestvich, Multicoin Capital crypto fund representative Mabel Jung and Patrick Felton.

The project has attracted a lot of attention in the market among other blockchain companies. In July 2020, it was announced that the crypto derivatives exchange FTX would launch a decentralized Serum exchange on the Solana blockchain.

In October 2020, the developers of Solana created a crosschain bridge with Ethereum, which allows the transfer of assets between the two blockchains. At that point, the first Stablecoin on the Solana USDC blockchain was released, and Waves also announced the integration of the Gravity protocol with the Solana blockchain.

With the development of the Solana network during the current year, the SOL coin has grown 2955%, from $1.8 to $55 in May, according to Coinmarketcap.

Although the Solana blockchain is in test mode, there are several DeFi projects operating on it. 48% of the blocked funds ($440 million) account for AMM (Automated Market Maker) Raydium, which copies the order book of the decentralized Serum exchange, the exchange itself ($279 million) and aggregator Solfarm ($115 million).

Criticism

Solana is still operating in test network mode, which means all services on its blockchain, including DeFi, are prone to failures. There was a failure in December 2020 in which the network was down for 6 hours.

Nevertheless, the number of projects that use Solana’s blockchain continues to grow. That said, Solana blockchain is not often used in practice, so many judgments about it are evaluative in nature.

It will only be possible to understand how effectively Solana can solve the scalability problem once its network is up and running in mainstream mode and has passed the test of time.

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