The Crypto Economy gets elongated each and every minute by cope up with various business like Crypto Exchange, Defi, NFT Marketplaces, etc, In addition to this, we can now spot out the emergence of new ecosystems just like Bitcoin,Ethereum, Binance Smart Chain, Polkadot ,etc, In the row, we can add up Solana, The brand new entirely decentralized blockchain promises quick transactions within 400 ms whereas Bitcoin and Ethreum takes 10 minutes and 15 seconds transaction time. Scalability is the consistent issue in the blockchain space, solana has come with an innovative ideology to provide solutions for those.
What is Solana ?
Solana is entirely the decentralized ecosystem founded in the year 2017 from Solana Labs by Anatoly Yakovenko that focuses primarily on transaction speed and the throughput. Solana aims to tackle problems like scalability without any compromise in security. It has the ability to handle 1000 transactions with its unique Proof of History (POs) mechanism. Solana allows other developers to build Dapps, smart contracts ,or any other projects on their network.
Proof of Stake Consensus Algorithm
Solana works on Proof of Stake Consensus algorithm along with Proof or History (POS) mechanism.Proof of Stake is now the most-picked algorithm for new ecosystems. Many Cryptocurrencies have started switching towards POS algorithms in recent days as it makes things easier, like we need not to mine blocks every time thus it allows validators to duplicate existing blocks and which also provides rewards as transaction fee. To choose validators, two common methodologies have been chosen.
- Randomized Block Selection
- Coin Age Selection
The notable advantage of the POS algorithm is security and efficiency. Here the need for creating new coins is less, thus rewards are given in transaction fee which considerably increases the stability and price of the particular currency.
How Does Solana Work ?
Solana works profoundly with Proof of History (POS) mechanism that determines the transaction time.To keep track the transactions it adopts the different approach with hash function which is entirely different from bitcoin where the transactions are bundled into blocks with a single timestamp that considerably takes time to validate,
Read More: Solana Blockchain Development
Let's look deep about the its working
Proof of History (POH) - The mechanism behind Solana
At first, it is important to understand that Proof of History is not a consensus algorithm which in turn is the mechanism that improves the time spent on transactions. The Blocks in the Bitcoin are unordered whereas solana established highly ordered transactions, that makes all the difference
All Transactions are hashed with a hash function using SHA256.
- It takes input and generates specific output which is complex for someone to predict
- The output is given to the input for next hash, Thus the transaction orders are inbuilt as hashed output
- The unbroken, long chain of transactions are created via this hashing process.
- Thus a clear verifiable order is created which neglects the need of conventional timestamps.
- Hashing also involves certain time for completion
- ordered transactions in a hash chain let validators process less information in every block.
- This hashed version confirms the new block with very less time
- The Validator can also be chosen quickly
The Eight Key Technologies Fortifies the Solana Ecosystem
To build a strong decentralized ecosystem, the solano team has built 8 technologies which are listed below
- Proof of History (POH)
- Tower BFT
- Gulf Stream
We have seen elaborately about Proof of History in the above section, let’s jump to the Tower BFT and get started.
Tower BFT runs on the Top of Proof of History that is specially designed to utilize a synchronized clock which runs lively. Here the nodes can examine and observe the validators time out.
Turbine is the propagation technique of solana that lets blocks transmit independently on a network. it estimates 500ms for 40000 node network
The Purpose of the gulf stream is to push transitions and forward it to the network edge. Since every validator aware of solana architecture and execute transactions ahead of time that also reduces the pressure for validators
It is the hyper parallelized transaction processing engine built across GPUs and SSDs. only solana authorize parallel transactions whereas others are single-threaded. Developers can easily migrate from their applications like EOS, Polkadot and Ethereum.
Pipeline is the extensive use of optimization, it is required while processing the stream of input data and different hardware is responsible. From the kernel level the data is fetched to the transaction processing unit.
Cloudbreak is the horizontally scaled memory that has the ability to add storage capacity.It also supports AOT (Ahead of Time) transactions as the validator observes the transaction and fetches data from all the accounts.
Archivers are the nodes of the network, the stored data is offloaded from validators towards it. Archivers do not take part in consensus.
Native Token of Solana - SOL
SOL is the native token of Solana which adopts the Deflationary model and burns the token in the regular period of time to increase the stability.
- SOL holder can be a network validator
- The token standard of solana is SPL
- It is a kind of utility token
- Used to Pay transaction fee
- Users can stake tokens as the part of consensus algorithm
One can store this token in solana.io wallet. Mobile based traders can use trust wallet or any other wallet that supports SOL
Top 5 Projects Built on Solana
It is a Defi app that works on the basis of AMM. The unique thing about Raydium is it provides chain liquidity to the order book. Here Liquidity providers can also generate rewards from trading fee
Serum is a decentralized exchange which provides great speed and low transaction fee. The gas fees is low as it is build on solana network
Bonfida is the connecting bridge between solana and serum users. it also display data analytics of solana network
Orca is a Cryptocurrency Exchange focused to provide ultra comfortable user experience to traders with Aggregator and fair price.It is more than AMM, when you proceed to trade, it provides all the availability form Orca, Serum or liquidity pool.
It is a kind of DEX based cross margin trading that leverages upto 5X. on-chain margin trading, perpetual futures are some of the core features of this platform.
Solana showcased its transaction speed as its trump card and started growing steadily in the market. The price of SOL and the funds for this platform added a positive look to this ecosystem. However, we get the precise answer with the increase in trade volume and user count
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