Solana Crypto: What is Solana? SOL Explained
Solana Crypto What is Solana? In this article we’re going to explain what Solana Crypto is some of the crazy unique technological improvements that they have over ethereum and then finally we will get into some tokenomics that you could use to make a price prediction.
What is Solana ? Solana Crypto
Now before we get into the technical stuff of Solana let’s talk about why it’s amazing and who created it Anatoly akavenko is the man behind the very first white paper one of the things you need to know about him is that he’s quite smart and worked at the company Qualcomm for like a decade we tried reading the white paper and it is quite technical with a few understandable sentences here and there but his blockchain is named after the Solana beach that he really appreciated but let’s get into why Solana’s price has skyrocketed in the past few months.
First of all, Solana has a block time of 400 milliseconds which means they are very fast especially when you compare that to ethereum’s block time of 10 seconds or bitcoins 10 minutes also Solana boasts that they can handle up to around 7,10,000 transactions per second which is like 30 times the amount that visa currently handles although they’ve never actually been able to go past 50,000 in the past this doesn’t mean they can’t do 7,10,000 it just means they haven’t tried so the Solana network is fast it’s monstrous and it’s also cheap I would say that it’s comparable to the matic network with transaction fees around 100th of a penny.
What Makes them So Fast and So Cheap?
Their consensus mechanism which is a fancy way of saying how everyone agrees what the blockchain should be now they don’t use proof of work and they don’t really use proof of stake Anatoly actually described a new system called proof of history in his white paper it’s basically proof of stake but it adds in the special variable of time.
So, you need to know the proof of history is not a consensus mechanism but it is a way of integrating time into the blockchain data we use something called timestamps to place a specific date and time on the blocks and we do this so that it allows for a very fast sequencing of validators basically so that they know their order to submit blocks without having to communicate back and forth.
One big problem that other blockchains have is that they have to agree on time we’ll take this for granted but computers have to constantly be going what time is it really since they can’t do things like look at their phone or even the sun to determine it on other blockchains the nodes which is a fancy word that means computers on the network have to chat back and forth back and forth until they agree on a time and they have to do this before submitting a block and in the computer world this chatter can take up a lot of time.
Solana fixes this using proof of history to have everyone timestamp their blocks and use cryptographic proof so that they don’t have to wait on everyone to agree on the time basically we can agree on the organization of the data in the blocks after the fact meaning we don’t have to wait for other validators to check and approve our work.
let’s use one of the famous coinglid crypto stories think about it like this if you want everyone in your family to send you a letter and you want them to do it one day after the other you have to first send a letter to them and then they have to send all their letters to you the time that both of your letters are in the mail is a long period of time what if next time you saw them you just said hey send me a letter at 4 pm on January 3rd that way you would know that it’s coming in and you wouldn’t have to waste time or resources asking them to long story short you could set it up so that your uncle sends a letter on January 3rd your aunt on January 4th your cousin on January 5th and then your grandma on January 6th we want to read these letters in order. but the issue is that they each use different mail providers like you know ups and FedEx sometimes they take different amounts of time and also your uncle is on a work trip so he’s a few thousand miles away by having them all send their letters on the days that they’re supposed to they may not arrive in the exact order. but they wrote the time that they actually sent their letters in the letter so you can organize them when you get them.
Basically proof of history allows nodes to just keep throwing a bunch of blocks at us and since some people have faster internet than others we can assume that they’re telling the truth about their sending date and then organize them after we get them then add them to the blockchain now there’s a little bit more that goes into proof of history.
By the way of course in this analogy our aunt our uncle cousin and grandma were actually all just different people sending in blocks and we can use math to find out that our uncle actually wrote his letter on January 3rd. another interesting thing is that Solana has like 25 blocks being validated by 25 people at once this is how they’re actually able to surpass visa by such a large factor. speaking of how they’re similar to the proof of stake one thing that I personally liked about Solana is that there are no requirements to be a validator now before we explain this if you don’t understand proof of stake you definitely should check out our article on how to understand some of these next terms
So to compare ethereum 2.0 you must take around 32 ethereum which is equivalent to around 1,00,000 on Solana you only need to hold a very small amount of the coin and pay a fee to vote each day.
There is a catch though the voting fee is the only thing I don’t like right now it’s like one Solana per day so around 70,000 dollars a year which seems ridiculous but I mean right now there are almost a thousand people doing it so maybe they know something that I don’t.
Next, up let’s talk about something that no other big blockchain has tried yet it’s called sea level technically this is just a fun term to describe that validators can actually run smart contract code in a parallel way.
now if you’re not a developer let me explain it in simple terms let’s say you have to do the dishes you have to switch the laundry and then you gotta sweep the floor a human would have to do each one of these things in order because they’re only one human we call this a serial task one after the other in terms of Solana the word parallel means you can do them all at the same time so it’s like if you could make two more copies of yourself and actually do the dishes switch the laundry and sweep the floor all at the same time that is essentially what Solana can do processing their smart contracts something else i caught on their website was this quote which describes how they are not bottlenecked by software or ideas but instead bottlenecked by hardware.
Every time Nvidia doubles the number of SIMD lanes our network will double in computational capacity to me it’ll be interesting to see how bitcoin and ethereum handle the supercomputers that we have in 10 to 50 years from now. one more thing before we get into the tokenomics of Seoul is that you should know that Solana has vastly different smart contracts than ethereum ethereum uses a virtual machine type system to run its solidity code.
While Solana uses the rust programming language rust is a very low-level language meaning it’s much more powerful but it does require more work to create things one downside to this is that developers can’t just copy and paste their adapts and projects like many other blockchains can from the ethereum network.
Everything must be coded from scratch however they will have more power than ethereum smart contracts.
What are Tokenomics of Solana?
So, the coin on the Solana network is the soul coin and it is used for transaction fees and used all over the blockchain ecosystem from as far as I can tell Solana is both inflationary and deflationary.
It’s deflationary because for a long time 100 of all transaction fees were burned and now it’s around 50 percent that is burned but it’s also inflationary because they recently approved an inflation schedule where staking rewards are paying out around 8percent but they do get cut every few days by a very very small amount until the final staking rewards hit 1.5 in 10 years.
Now in terms of total supply they initially started out with around 500 million tokens and of course, it will keep increasing due to the proof of stake rewards
What are Early distribution?
There are four private funding rounds before their initial ico those four funding rounds and their ico sold around 36 percent of their supply and at a very cheap price too I mean they were selling these things for like 25 cents each while the price currently sits at $200 another 13% of the tokens went to the founders of the project another 10% went to the Solana foundation and the remaining 39% went to fund community initiatives. which is also currently held through the foundation.
Now some weird thing that we found out was that there was a Solana wallet holding like 13 million tokens and nobody knew why so they just burned a bunch of them definitely worth noting
One more thing worth mentioning is that Solana actually went down for around six hours in December of 2020. honestly, to me this is a little scary because a decentralized protocol should never go down it means everyone participating in the network had the same bug this problem did absolutely nothing to the price though it seems nobody panic sold due to this news.
Lastly, Solana is still in the beta stage so if you’re an investor or want to develop a dap for them you should definitely know.