The token of one of the most popular blockchains grew by almost 3000% in 2021. What is the reason for this, how is the project developing and what are its features
The Burnt.Finance NFT protocol based on the Solana blockchain attracted $3 million in investments from Alameda Research and other crypto funds in early May of this year. Solana is also one of the largest blockchains in DeFi by the number of blocked funds — $917 million.
Solana has a large community — over 84 thousand people in Telegram, and more than 250 projects have been launched on its blockchain. According to representatives of the Solana Foundation, the current throughput of the blockchain is 60 thousand transactions per second, and in the future it may be up to 710 thousand transactions per second. Such a high transaction processing speed is based on the Proof of History (POH) solution algorithm and the Gulfstream and Turbine data transfer protocols.
How does the Solana blockchain work?
Unlike Polkadot, Ethereum and others, Solana is a first-level blockchain in which there are no sidechains or parachains. Representatives of Solana claim that their blockchain is based on the PoS (Proof of Stake) consensus algorithm, but not everyone in the community agrees with this. It is believed that Solana is based on the DPoS (Delegated Proof of Stake) algorithm.
The high speed of transaction processing in it is based on the PoH solution, which allows for time synchronization between nodes much faster, thanks to the creation of a decentralized clock. As part of the work schedule of the validator nodes (Leader Schedule) and the Turbine and Gulfstream data transfer protocols, the interaction between the nodes is synchronized. This solves the orphan block problem, which is traditional for other chains, including Ethereum, and reduces the block mining time to 0.4 seconds.
The acceleration of synchronization between nodes in the Solana blockchain makes it fast enough to compete with complex centralized systems. Other innovations of this ecosystem are archivers that perform distributed data storage, and optimization of transaction recording via Cloudbreak. Solana blockchain nodes are rewarded for processing transactions in the SOL utility token and, unlike other PoS-chains, it has no restrictions in the form of the minimum number of coins required to create a node.
Project history and team
The project is based in San Francisco and was founded in 2017, in 2018 the first version of the test network was launched. The founders of Solana are Eric Williams, PhD, BREW OS developer Greg Fitzgerald, and Anatoly Yakovenko, a former Qualcomm and Dropbox developer, 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, the Dutch auction of Solana tokens took place, the peculiarity of this sale was that its participants could return up to 90% of the transferred funds.
In June 2020, the Solana Foundation was established to promote the development of the ecosystem. The organization’s tasks also include conducting research, including with the involvement of third-party teams, educational and educational activities. For this, the Solana Foundation received 167 million SOL coins from Solana Labs.
The board of the organization, in addition to its CEO Anatoly Yakovenko, includes entrepreneur and investor, co-founder of Betting Facilities Wolfgang Albrecht, developer James Prestwich, representative of the Multicoin Capital crypto fund 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 FTX crypto-derivative exchange will launch a decentralized exchange Serum on the Solana blockchain.
In October 2020, Solana developers created a cross-chain bridge with Ethereum, which allows transferring assets between two blockchains. At that moment, 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 grew by 2955%, from $1.8 to $55 in May, according to Coinmarketcap.
Despite the fact that the Solana blockchain is working in test mode, several DeFi projects are operating on it. 48% of the blocked funds ($440 million) are accounted for by AMM (Automated Market Maker) Raydium, which copies the order book of the decentralized exchange Serum, this exchange itself ($279 million) and the aggregator Solfarm ($115 million).
Solana is still operating in the test network mode, which means that all services on its blockchain, including DeFi, are subject to failures. In December 2020, there was a failure during which the network did not work for 6 hours.
Nevertheless, the number of projects that use the Solana blockchain continues to grow. At the same time, the Solana blockchain is not so often used in practice, so many judgments about it are evaluative.
It will be possible to understand how effectively Solana will be able to solve the scalability problem only after its network starts working in the main mode and passes the test of time.