What Is Solana (SOL)?

Solana is an open-source blockchain that has an especially high throughput. The main functionality of Solana is the creation of decentralized applications (dApps), smart contracts, and other projects. SOL is the native token of the network. Take a look at the Solana price chart above to see the current SOL price.

In essence, Solana is really similar to Ethereum. It’s like an alternative to Ethereum that offers more advanced scalability features and extremely fast transaction speeds. Ethereum can handle 40 transactions per second while Solana can handle up to almost 70,000 transactions per that same second.

Solana network employs a unique consensus model created specifically for the Solana blockchain that is called Proof-of-History (PoH). It also incorporates the well-known Proof-of-Stake (PoS) mechanism. Though, essentially, ​​Proof-of-History could be simply perceived as an improved version of Proof-of-Stake.

PoH was developed by the founder of the Solana himself – Anatoly Yakovenko. The protocol's structure ensures scalability and quick processing while maintaining low transaction costs. It’s responsible for transaction processing. 

Essentially, PoH records successfully completed operations and the interval between them. The time-based consensus method does not require confirmation of a transaction by all network nodes. Verifying that event A occurred prior to event B is all that is required. Each block sequence that is generated by the PoH processes is then validated by PoS, which is utilized as a monitoring tool for those operations.

​​Thus, the timestamp on each block can be reliably checked and verified because of this unique consensus mechanism used by Solana. A strategy like this cuts down on the amount of time needed to stop other participants from producing identical blocks. Besides, it drastically reduces the amount of time needed to validate a transaction or a smart contract.

The Developers of Solana

The story of Solana began in 2017 when Anatoly Yakovenko started constructing the network. He firstly released a whitepaper that described the new Proof-of-History consensus mechanism. Together with Greg Fitzgerald, Yakovenko founded the Solana Labs project. Soon after, Raj Gokal and Stephen Akridge joined the endeavor, and the four of them launched Solana blockchain in March 2020.

What Is SOL?

As mentioned before, SOL is the native token of the Solana blockchain. Essentially, the main purpose of SOL is to be a payment method for transaction fees. 

Though it also serves as a governance token. Nodes can stake (or lock) SOL tokens in order to take part in governance and improve their chances of being selected to create blocks. Besides that, token holders have the option of assigning their SOL coins to other validators, giving them access to their votes in exchange for a share of the block rewards.

In order to hold SOL tokens, it’s necessary to have a crypto wallet. Solana supports a variety of wallets. For more experienced users Solana suggests utilizing Command Line Wallets, which support several wallet kinds. For regular users, on the other hand, Solana suggests using Ledger Live, Binance Wallet, or Ledger Nano S.

Tokenomics of SOL

SOL is inflationary, which means that it doesn’t have a fixed token supply. The biggest portion of the initial Solana token supply is dedicated to public and private sales as well as a release to the crypto market. The remaining portion was dedicated to the initial seed sale, a founding sale, the Solana Foundation, and the team behind Solana. In 2018, during the initial SOL seed sale, the Solana price was $0.04.

Overall, due to a remarkable bull market, the SOL price increased by almost 700% in 2021. After that, the blockchain experienced a surge in popularity which brought SOL next to other huge cryptocurrencies in the crypto market.

Besides, a huge impact on the Solana price was made by the debut of the Degenerate Ape NFT collection. Mostly due to the growth of the NFTs and gaming vertical and increased developer activity on the Solana network.

However, the SOL price and Solana’s ambitions to become the "Visa of crypto" were affected due to the numerous disruptions experience by the blockchain. Additionally, It was claimed that Solana used unethical tokenomics to benefit venture capital investors. As of February 2022, this has led to a retracement in the Solana price.

In any case, SOL is still a widely used cryptocurrency that is a strong rival to other leading cryptocurrencies.