What is Solana (SOL) | Whitepaper Summary

WHAT IS SOLANA?

Solana is an open-source blockchain, and it supports smart contracts and NFTs. It is a permission-less and high-speed layer-1 blockchain. Solana was created by Anatoly Yakovenko, Greg Fitzgerald, Stephen Akridge, Raj Gokal in 2017 and it is a crypto that works on the proof-of-history (PoH) consensus mechanism.

In PoS, the blocks are verified by the machines of coin owners where the owners keep their coins as collateral to validate blocks. At that time, the blockchain transaction speed was very low, almost 15 transactions per second that time, Visa and master-card did almost 65k transactions per second.

Yakovenko and Gokal were trying to make a new blockchain that can be used on a global scale. Nowadays, Solana has roughly a speed of 65k transactions per second, and it is the most used blockchain technology in the world due to its cheap transaction cost and fast speed.

SOLANA WHITEPAPER SUMMARY (ARCHITECTURE)

The cluster is the highest level of organisation within the Solana ecosystem’s architecture. Many clusters can coexist within the ecosystem. The purpose of a cluster is to enable the scaling of the ecosystem.

Anyone can run an application-specific cluster tailored for their specific needs with which they would not need to rely on the other clusters. Each cluster maintains a ledger. A Ledger is a set of entries, containing transactions that are signed by clients. Each cluster has one validator called the Leader which is responsible for validating and time-stamping the set of transactions into a PoH chain.

For the purpose of the whitepaper this chain is called the “Real ledger” Additionally, a “Virtual ledger” is maintained that contains only ticks and can be generated from the last entry of the previous slot. A Tick is just a ledger entry, similar to the “ticks” that clocks make every second.

They are added to the ledger when the leader node chooses not to add a verified transaction to the ledger. Whereas a transaction is a change that a client chooses to make in the blockchain. A verified transaction is one where the transaction has been verified by the leader node.

Additional Read: Ethereum vs Solana vs Polygon

The comparison between the Real Ledger and the Virtual Ledger in Solana

Leaders are assigned according to a “Leader rotation schedule”. The leaders change every slot. It may be possible that the current leader may not have majority confirmation of the existing ledger, or may not have the last entry of the previous slot (due to connectivity). In such a case, the leader may choose to start with the last entry of the Virtual Ledger. This creates forks within the cluster. The rest of the validators are responsible for voting on the Proof of History (PoH) forks.

Proof of History

Other blockchains like EVM compatible chains maintain a “Wall clock” against which transactions are time-stamped. Solana on the other hand uses Proof of History (PoH). The ledger starts with the Genesis Config, and each entry hence is either a validated transaction or a “tick”.

The ledger is formed as follows:

(n+1)th entry ← HashOf(nth entry + transaction/tick)

ADVANTAGES OF SOLANA (SOL)

Solana divides the responsibilities of time-stamping entries and voting on chains. This makes consensus achievement extremely fast and scalable.

Since transactions are validated and verified by a Leader node in a cluster (during a slot), there is no competition for transactions to be included (as in Ethereum). This allows transaction fees to be very low. According to Solana, transaction fees are guaranteed to be below $0.01. Anyone with a processor and stake can come forward to be a validator.

Unlike other chains like Bitcoin where architectures are designed to keep computation competitive (Proof of Work blockchains), Solana embraces computation. For example, GPUs are extremely efficient for Solana’s computation requirements, and the faster the validator’s computation ability, the faster the cluster can be at validating transactions.

Audius, the decentralized music streaming platform and Brave, the browser, also integrate a few features that are dependent on Solana. Some major DeFi protocols such as Raydium, Orca and Drift protocol are also based on Solana.

Additional Read: Cardano vs Solana

SOLANA’S TOKENOMICS

Solana’s native token is the SOL. Supply There is no upper limit to the number of SOL that can be generated by the network. As of writing, there are 523,897,723 SOL in the network.

Mechanisms of Generation SOL is generated when Solana’s validators earn by staking their resources to participate in validation. The amount of earning is directly proportional to the staked amount. Mechanisms of Flow Owners of SOL can send them to other accounts, or to programs called smart contracts.

Mechanisms of Destruction SOL is destroyed or burnt when a validator performs illegal actions. The stake is slashed (meaning a portion of the staked amount is destroyed), which incentivises the validator against illegal actions. Validators whose stakes are slashed earn lesser rewards in future due to reduced stake amounts.

SOL PRICE PERFORMANCE OVER THE YEARS

SOL/USDT | Source: Tradingview

Additional Read: Solana Price Prediction

SOLANA FACES STIFF COMPETITION IN THE CRYPTO SPACE

Solana Whitepaper: The most important thing which makes Solana different from other crypto or Ethereum is the proof of history concept; Solana’s ambitious design aims to solve the blockchain trilemma, a unique idea or, we can say, a unique way proposed by Ethereum creator Vitalik Buterin.

This trilemma describes a set of three significant challenges that developers face when building blockchains: decentralisation, security, and scalability. Blockchain is designed in such a way that it sacrifices one of the aspects in favour of the other two. Solana makes a chain of transactions by hashing the output of the current transaction and using it as the input of the next transaction.

Few toughest competitors of Solana –

1. Bitgert
   ● In current days this is very impressive in the crypto industry
   ● Gas fees of Bitgert are almost 0 (~0.0000000000001)
   ● The lowest gas fee is the biggest reason for attracting investors to invest money; that is why the price of Bitgert is skyrocketing.
2. Centcex
   ● It is the toughest competitor of Bitgert
   ● Centcex lab is funded to develop an unlimited number of projects.
3. Cardano
   ● It gives competition to Solana in terms of speed
   ● Cardano has another project for competing with the zero gas fee of Bitgert
4. Avalanche
   ● Not a very great competitor
   ● Has the fastest smart contract
   ● Not have its own blockchain
5. Polygon
   ● It is possible that the MATIC coin may be become an inferior coin due to other coin development
   ● Although it is performing well in the market
6. Litecoin
   ● It has remained in the market for more than a decade.
   ● Litecoin team just launched powerful MWEB

CONCLUSION

We have seen how Solana is trying to solve problems that other blockchains face. In this whitepaper we have seen how Solana can be scalable and maintain transaction verification speed.

For developers who wish to build applications on Solana, knowledge of the basic architecture is important, followed by knowledge of Rust/C++. The key parts of Solana (Client, validator node, etc) are written in Rust, hence it is preferable to learn development using Rust.

HOW TO INVEST IN SOLANA (SOL) 

Use this three-step process to buy your first SOL token using the CoinDCX, crypto investing app.

• Sign Up for the CoinDCX account: Enter a valid email address and a user name on the sign-up page. Once the Email Id has been verified, set a strong password to secure your account.
• Verify the account: You need to complete your KYC, to buy a SOL token on the CoinDCX platform. All you need to do is upload the documents and your account will be set up in 15 minutes.
•  Buy SOL INR: After the account has been verified, you can deposit any amount of fiat currency you are comfortable with and start your crypto journey!

Additional Read: Ethereum Whitepaper Summary 

Disclaimer: User Generated Content – Original Content created by a member of BITS Pilani, under the consultation of Dr. Amit Dua, Assistant Professor, Computer Science Department, BITS Pilani, Pilani Campus in association with CoinDCX. The views and opinions expressed within this post belong solely to the author.
Author: Madhav Madhusoodanan, Tikesh Vaishnav