Solana aims to create the best solution for the well-known blockchain trilemma:
Decentralization一the transfer of control and decision-making from a centralized entity to a distributed network;
Security一the ability of the network to withstand external attacks, keeping data unchanged through encryption;
Scalability一the ability of the network to withstand the load of a large number of users and maintain a high throughput of transactions per second.
Solana is a project that aims to develop a scalable blockchain protocol for creating decentralized applications and smart contracts. The project is a direct competitor to Ethereum, Cardano, EOS, and other large-scale ecosystems.
Solana looks to provide scalability without any impact on decentralization and security. The project achieves this using a combination of the Proof-of-Stake (PoS) algorithm and its own Proof-of-History (PoH) algorithm. Solana's current peak performance is 65,000 transactions per second and a block creation time of 400 ms.
PoH has created a solution to the blockchain timing problem. When used with a consensus algorithm such as PoS, PoH can reduce the cost of exchanging transactions and commands within the network. As a result, the average cost per transaction is less than one cent.
Solana supports writing programs on the blockchain using the programming language Rust. These key features allow developers to experiment and deploy applications quickly. At the same time, they can use familiar methods of building programs without the hassle of sharding or finding Layer 2 scalability solutions.
Solana solves the project's challenges using eight key technologies.
The first one is Proof-of-History. This is a time-optimized protocol for transaction confirmation when organizing the order of transactions. It is used in tandem with Proof-of-Stake. It is a decentralized clock that solves the problem of synchronization. PoH allows the creation of a chronological record confirming that an event occurred at a certain point in time.
Other blockchains require communication between validators, who must agree that time has passed. PoH keeps the network running through automatic rotation, without the involvement of validators. PoH also allows Solana to optimize block creation time, bandwidth, and registry storage.
Other Solana technologies are:
Tower BFT is a PoH-optimized version of the Practical Byzantine Fault Tolerance consensus algorithm;
Turbine is a data transfer protocol;
Gulf Stream is a protocol for transmitting transactions without using a mempool;
Sealevel is a virtual machine for smart contracts;
Pipelining is a transaction processing tool used to optimize the validation process;
Cloudbreak is a horizontally scalable database;
Archivers are decentralized storage.
SOL is the native utility token of the Solana blockchain. SOL uses SPL, a token standard in the Solana blockchain, similar to the common ERC-20 standard in the Ethereum blockchain.
The SOL token's smallest denomination is called a Lamport—named after American computer scientist Leslie Lamport, whose research laid the foundation for distributed systems theory. One Lamport equals 0.00000000000000582 SOL.
There are several uses for this token:
For the average cryptocurrency user, it is primarily an investment tool. You can engage in investing and/or trading SOL tokens on cryptocurrency exchanges.
For a professional investor, it is to use SOL for staking on cryptocurrency exchanges or special platforms. In this case, SOL is used to validate transactions on the network and participates in the PoS consensus process.
Developers can use the SOL token to govern the entire Solana platform. This includes making suggestions and voting on the overall development of the network.
The token is also used to pay transaction fees on the network (similar to ETH in Ethereum).
Before founding Solana, Anatoly Yakovenko was a senior staff engineer-manager at the US multinational corporation Qualcomm. In 2016, Yakovenko moved to Dropbox as a software engineer and then left the company to create Solana.
In 2018, Yakovenko and his former Qualcomm colleague Greg Fitzgerald founded a company now known as Solana Labs. The project team included former programmers from Google, Microsoft, Qualcomm, Apple, Intel, and Dropbox.
The founders named the project Loom but later renamed it Solana to avoid confusion with the Level 2 Loom Network solution. The project is named after Solana Beach—a town thirty minutes from San Diego, where Anatoly Yakovenko lives.
In June 2020, they created the Solana Foundation, an organization to develop the Solana ecosystem and adopt decentralized technology. Solana Labs gave the Solana Foundation 167 million SOL tokens and the rights to all intellectual property.
Solana was launched during the ICO boom in 2017 and raised $25 million in public and private funding. Its first challenge was to address the time it took for networks such as Bitcoin and Ethereum to reach consensus, leading to the inclusion of PoH in the consensus algorithm, as opposed to more well-known, established consensus mechanisms.
In 2017, Yakovenko published a draft white paper in which he presented the Proof-of-History blockchain synchronization algorithm. Later, Yakovenko and his former Qualcomm colleague Greg Fitzgerald created a blockchain in the programming language Rust. In February 2018, Yakovenko and Fitzgerald published the official white paper version of the project and launched the first internal test network.
In the third quarter of 2020, the public test network of the Tour de SOL project went live.
Solana is currently developing its beta version of the core network. In addition to developing the solution itself, the project is actively recruiting new participants into its ecosystem. To this end, during 2021, several cryptocurrency venture funds have been established in China by Solana Labs, and new venture funds will focus on expanding Solana's ecosystem in Ukraine, India, Brazil, and Russia. The funding will support the development of blockchain applications in DeFi, NFT, and cybersecurity.
In June 2021, Solana Labs, in turn, raised $314 million in a private token sale. The round was led by prominent venture capital firms Andreessen Horowitz (a16z) and Polychain Capital, in conjunction with Alameda Research, CMS Holdings, CoinShares, and others. Solana Labs will use the funds raised to create a venture capital unit to invest in its own ecosystem and launch a studio to develop projects based on Solana.