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Solana (SOL) saw in late 2020 its adoption start picking up steam. In October 2020 Circle expanded the USDC stablecoin into the Solana network. The move came shortly after Tether’s USDT was added to it in September 2020.
Solana is a high-performance blockchain founded by former Qualcomm, Intel, and Dropbox engineers that uses a delegated Proof-of-Stake (dPoS) consensus algorithm. The network uses a unique method of ordering transactions to improve its speed and throughput significantly.
Blockchain networks have historically struggled with scalability issues, with the few that managed to solve them dealing with centralization issues. A decentralized network with small confirmation times and transaction fees has been hard to create, but the problem was tackled in 2017 with the creation of Solana.
Using what’s known as Proof-of-History (PoH), the Solana blockchain is able to handle thousands of transactions per second. PoH uses Verifiable Delay Functions to hash incoming events and transactions to allow nodes to locally generate timestamps of SHA256 computations, eliminating the need for timestamps to be broadcasted across the network.
The Proof-of-History mechanism is implemented prior to, and facilitates, Solana’s Proof-of-Stake structure. Staking on Solana involved delegating tokens to validators who process transactions on the network, turning it into a delegated Proof-of-Stake (dPoS) system.
According to the Solana team, there are eight major innovations allowing the network to scale to serve the web with capabilities matching those of a centralized system. The network has 400ms block times and can handle up to 65,000 transactions per second.
The network has already processed well over 21 billion transactions while handling over 800 transactions per second of real demand.
The Solana blockchain has a native cryptocurrency, the SOL utility token. SOL is used to pay for transaction fees when moving funds around and interacting with smart contracts on the blockchain.
Anyone holding SOL tokens can interact with applications on the network, the same way anyone holding ETH can interact with applications on the Ethereum blockchain. While Ethereum uses the ERC token protocol, Solana uses the SPL protocol.
SOL has two main use cases:
Apart from these two use cases, decentralized applications being built on top of the Solana blockchain create new ones. These applications may allow SOL to be used as collateral for cryptocurrency-backed loans, or to be lent out to earn interest.
Try our free Solana (SOL) portfolio tracker if you want to efficiently keep track of your SOL and other coin/token investments.