Solana’s significant price rally between the end of July and the beginning of November 2021 made several headlines. As a result, many wondered, “what is Solana?”. Labeled as one of the giant “Ethereum killers”, Solana made its mark in 2021 and will continue to do so through 2022 and beyond. With its speed and low transaction fees, Solana attracts many developers. As you know, where there are developers, there’s progress. Numerous decentralized applications (dapps), NFTs, SPL tokens, and DeFi protocols live on Solana, and new projects are continuously emerging on this “proof-of-stake/proof-of-history” hybrid blockchain. As such, you might want to consider building on Solana. Using the right tools makes it a lot easier than you might think. However, if your project is in the initial stages and you are considering Solana but need an answer to the “what is Solana?” question, you’ll find this guide tailor-made, just for you!
As we move forward, you will learn the ins and outs of Solana. By discovering the answer to “what is Solana?”, you’ll become informed and empowered. Hence, it will be easy for you to decide if you want to build on top of this incredible chain. Those of you who decide to give Solana a chance will be able to start building immediately. With Moralis, the best Web3 backend platform, and its Solana API, you can create Solana dapps in minutes. Moreover, a Moralis expert created a brilliant tutorial that we will share with you later on. In the tutorial, you’ll learn how to use Moralis’ SDK effortlessly. In addition, when using this “Firebase for crypto” platform, you can further speed up your progress by exploiting the ultimate Web3 boilerplate. However, let’s now focus our attention on “what is Solana?”.
What is Solana?
At its core, Solana is a public and open-source programmable blockchain. That means it supports smart contracts, which are one of the key aspects of blockchain development. Also, Solana supports the development of fungible and non-fungible tokens (NFTs) and a wide range of dapps. Like all programmable chains, Solana has its native coin or token called “SOL”. The latter has a two-fold purpose. First, it provides network security with its hybrid DeFi staking consensus. Second, it serves as a means to transfer value on the Solana chain.
Solana was launched back in 2017 by Anatoly Yakovenko and Raj Gokal. They are still significantly involved with Solana Labs, with Yakovenko as its current CEO and Gokal as the COO.
Solana falls into the category of proof-of-stake (PoS) chains. Moreover, Solana theoretically supports throughput of around 65,000 transactions per second. On top of its speed, it offers transaction fees below one cent of a dollar. Compare that to the leader among programmable chains, Ethereum, where fees can be hundreds of dollars. As such, you see why Solana attracts users. Furthermore, the latter is also one of the main reasons why many devs focus on building on top of Solana. Nonetheless, many skeptics continue to doubt Solana’s level of decentralization.
What is Solana? Let’s Dig Deeper!
The above overview gives you an idea about Solana, but as mentioned, we are here to dig deeper into the “what is Solana?” question. As such, we’ll take a closer look at the Solana chain and its core protocols. Furthermore, we’ll explore what makes Solana different. In addition, we will also briefly go over the tokenomics of Solana’s native token, SOL. Last but not least, we will cover Solana’s pros and cons.
What is the Solana Blockchain?
Now that we’ve covered a primary part of the “what is Solana?” question, let’s explore the Solana blockchain. As mentioned in the introduction, Solana is able to offer such low transaction fees by running on a hybrid protocol. The latter includes a commonly known PoS protocol, where staked SOL does the “mining”. As such, it ensures that the Solana blockchain maintains accurate information across all nodes. However, the second part of their hybrid protocol is a less-known concept. Solana calls it “proof-of-history” (PoH). Let’s take a closer look at each of these two protocols since they are an important part of the “what is Solana?” topic.
Solana’s PoS Overview
PoS is a common alternative to the proof-of-work (PoW) protocol. However, unlike PoW, which uses computing power to ensure safety and verify transactions, PoS does that based on staked tokens. This means that certain owners of SOL tokens pledged their coins to a validator. The latter is a computer (node) that runs Solana’s software with its copy of the latest version of the chain. Hence, validators for PoS are what miners are for PoW. Moreover, instead of solving a difficult mathematical problem, Solana validators append the next block based on the details of their staking. Among several criteria, these details include the amount and the period for which validators’ SOL is staked.
As you can see, in PoS, it is all about the level of commitment network participants can bring to the table. Of course, they get rewarded for their contribution in relation to the amount and period of their commitment. Moreover, the level of decentralization is obviously correlated with the distribution of validators and the ratio of staked circulating supply. This is where the tokenomics of SOL come to play.
Solana’s Proof-of-History Overview
It wouldn’t be fair to address “what is Solana?” without taking a closer look at one of its core innovations. Solana’s PoH (proof-of-history) protocol, as they named it, is a particular way of using the PoS concept. The PoH method proves that transactions are in the proper order or sequence. Moreover, the transactions also need to be found by the right “leader”.
To understand this concept, you need to know that the Solana blockchain is broken down into periods of time (slots). It is within these slots that validators process transactions and create new blocks. Furthermore, to save time, the so-called “leaders” are selected in advance for each slot. In addition, the mechanism chooses leaders based on their PoS protocol. It does so primarily by accounting for the amount of SOL staked. Moreover, each leader must keep a count or tally of the passage of time (a.k.a. the proof-of-history sequence). On top of that, leaders are also responsible for tallying the next block of transactions for their slot. If you are interested in learning more details about Solana’s PoH mechanism, we recommend checking out their documentation.
The PoH protocol reduces latency and increases throughput. It achieves this by allowing leaders to stream transactions to other validators in real-time. That way, leaders do not have to wait to fill an entire block with transactions to send the block forth. Moreover, the PoH values (timestamps) also enable other validators to verify transactions as they come in.
Comparing Solana and Other Blockchains – How is Solana Different?
Although this article’s primary focus is to answer the question of “what is Solana?”, it would be beneficial to see how Solana compares to other blockchains. Aside from SOL’s tokenomics, the core difference between Solana and other PoS chains lies in its consensus. As such, the above-described PoH mechanism is the center point again. While PoH makes things faster, there are some concerns about it. In particular, around Solana’s voting method, which according to skeptics, causes centralization.
In a typical PoS blockchain, nodes or validators are chosen to create the next block of transactions. Once the chosen node creates a block, it broadcasts the details to the entire network of nodes. These nodes then audit the latest block by comparing it with their version of the ledger. They do this by comparing their version of the ledger and the new block with all other nodes. Finally, it is up to each node to agree if the new block is valid or not. Moreover, if the majority of validators confirm that the new block is legitimate, it is added to the chain.
If you compare this to Solana’s PoH method, you see that their nodes validate transactions before creating an entire block of transactions. Furthermore, Solana’s nodes vote on the legitimacy of the new blocks by sending their votes to the leader. Then, it is the leader alone that’s responsible for tallying the votes. As such, this raises the question if the level of decentralization is sufficient or not. We leave it up to you to investigate that further.
SOL and Solana Tokenomics
You can explore Solana’s tokenomics in detail using e.g. CoinMarketCap or Solana’s whitepaper. However, here are the key metrics:
- Total supply of SOL: 511,616,946
- The maximum supply of SOL: not defined
- The current circulating supply of SOL: 326,352,527.93
- Annual inflation rate at the time of Solana’s launch: 8%
- Promised inflation rate decline: a yearly amount of 15%
- Target annual inflation rate: 1.5%
Moreover, we’ve already explained that SOL is used to transfer value and for staking. The “transfer value” also includes paying for transaction fees related to smart contracts on Solana and other transactions. Furthermore, we must point out that Solana’s validators receive inflation-based rewards. Solana does that by weighing the amount of the individual validator’s stake against the number of the total staked SOL tokens. Furthermore, to determine yield, the total SOL amount staked is measured against the total token supply.
Nonetheless, let’s also look at the image above. It clearly indicates that almost fifty percent of Solana’s initial token allocation went to insiders. That means venture capital firms and other whales control a major part of SOL tokens. As such, the public had access to a relatively small amount of SOL, which is another yellow flag for Solana’s decentralization. Now, let’s move into the final section of our “what is Solana?” article by looking at Solana’s pros and cons.
What is Solana? – Pros and Cons
As you can see, like most things, Solana has its ups and downs. As such, let’s list them here so that you can refer to them when deciding whether to build on Solana or not.
Solana’s Pros
- Speed – Solana is offering a throughput of around 65,000 transactions per second. As such, it is one of the fastest chains.
- Low Transaction Fees – Solana’s average cost per transaction is $0.00025. Moreover, Solana’s scalability ensures transactions remain less than $0.01 for both developers and users.
- Scaling Solution – Solana ensures composability between ecosystem projects by maintaining a single global state as the network scales.
- Fast-Growing Network – Thanks to all of the above three pros, Solana has been growing fast by attracting many devs. As such, teams from all across the globe are launching various NFT projects, dapps, and DeFi protocols on Solana.
Solana’s Cons
- SOL Supply – The fact that SOL doesn’t have a maximum supply defined is alone one of the cons. However, there was also some controversy around SOL supply back in 2021, when Solana apparently lent market makers more than ten million SOL tokens without disclosing that to the public.
- Signs of Centralization – As pointed out, there are potentially some centralized aspects to Solana. This includes a disproportional node distribution and somewhat of a centralized staking system. Hence, if decentralization is your core concern, you need to further investigate this blockchain. As such, we leave it up to you to decide whether you want to believe the “decentralized and unstoppable” statement on Solana’s official website.
- Solana’s Outages – So far, Solana has experienced a number of network issues. Some of them included total network shutdowns. For instance, in September 2021, there was a 17-hour period when Solana was offline.
Beyond “What is Solana?”
Now that you can answer the “what is Solana?” question with confidence, you are ready to roll up your sleeves and start building. By creating phenomenal dapps, you can go full-time crypto in no time. You just have to decide which chain you want to utilize for your build. If Solana’s speed and low transaction fees convince you, make sure to use the video tutorial below. In it, a Moralis expert will show you how to create a SOL token and how to build a Solana dapp in minutes. However, in case you find Solana too centralized, you can build on top of other chains. When you create your free Moralis account, you also get to build on top of Ethereum and other popular EVM-compatible chains. Moreover, since Moralis is all about cross-chain interoperability, the Moralis team adds new reputable chains regularly.
What is Solana? – The Full 2022 Guide – Summary
We’ve covered a lot of ground herein. You’ve learned quite a bit about Solana during our “what is Solana?” quest, and you can now make an informed decision about whether or not Solana deserves your attention. In our opinion, its speed, low fees, and popularity are enough to make it a valid alternative. As such, creating SPL tokens or Solana dapps offers you a lot of opportunities. Fortunately, you can let the pinnacle of the current Web3 tech stack cover your backend needs. Nonetheless, even if Solana is not the chain you want to focus on, Moralis is still the tool for you. It supports Ethereum, Avalanche, Polygon, BNB Chain, and Fantom, with other reputable chains in the pipeline.
So, if you are JavaScript-proficient or know your way around Unity, you can become a Web3 developer today. To get going, use some of the tutorials on the Moralis YouTube channel and the Moralis blog.
Aside from countless example projects, the above two outlets also offer easy-to-understand explanations of various crypto aspects. As such, they may serve your free crypto education needs. For instance, some of the latest topics focus on how to set up a BNB wallet, how to create a Web3 video streaming service or a Web3 Netflix clone, how to create an ETH wallet or a multi-chain wallet, the benefits of Web3 gaming, Web3 metaverse, how to build a metaverse game, NFT power-ups, and much more. However, if you are interested in a professional blockchain development education, Moralis Academy is the number one platform!
