What is Solana (SOL)? Guide for Dummies

Solana became one of the hottest projects in 2021 following explosive growth and NFT hype. Here’s everything you need to know about it.

As innovative as it may be, blockchain technology faces particular challenges, including high fees, scalability issues, low throughput, and more.

Several projects in the DeFi space compete to become the first web-scalable blockchain and ensure that users have the best experience by tackling these common issues.

One of these, which is gaining traction in the DeFi community, is Solana. This open-source, censorship-resistant blockchain leverages a comprehensive set of technologies to amplify scalability and deliver a robust network for building decentralized applications (dApps).

  1. Introduction to Solana:
  • Solana gained popularity in 2021 amid explosive growth and NFT hype.
  • Addresses challenges in blockchain technology, such as high fees and scalability issues.
  1. Solana’s Features and Technologies:
  • Open-source, censorship-resistant blockchain.
  • Utilizes Proof of History (PoH) as a consensus mechanism for scalability.
  • Achieves 65,000 transactions per second (TPS) without second layers or off-chains.
  • Tower BFT, Turbine, Clusters, Gulf Stream, and Pipelining are key technologies enhancing Solana’s performance.
  1. History and Foundation of Solana:
  • Founded in 2017 by Anatoly Yakovenko with the idea of improving existing blockchain mechanisms.
  • Solana ICO raised over $25.6 million in March 2020, with an additional $314 million in June 2021.
  1. Team and Backers:
  • Founding members Yakovenko, Fitzgerald, and Williams.
  • Solana Foundation and Solana Labs work on development.
  • Backed by high-profile companies and institutions, including Multicoin Capital, Tether, Chainlink, and more.
  1. The SOL Token:
  • Native utility token used for staking and transaction fees.
  • Inflationary token with a decreasing supply and 1.5% annual inflation rate.
  • Became the 7th largest cryptocurrency by market capitalization in 2021.
  1. Solana’s Competitors:
  • Competes with Ethereum, Polkadot, and Binance (BSC) in the DeFi space.
  • Boasts faster processing speed, lower fees, and a better user experience.
  • Notable for its non-linear and hybrid system.
  1. The Rise of NFTs on Solana:
  • Gained popularity due to the rise of non-fungible tokens (NFTs).
  • Offers a cost-effective and quick platform for minting NFTs, leading to substantial YTD gains.
  1. Downsides and Challenges:
  • Vulnerable to centralization due to the limited number of validators.
  • Criticized for potential bugs and delays, still labeled as a beta mainnet.
  • Experienced two major outages in September.
  1. Conclusion:
  • Despite challenges, Solana is a high-performance blockchain with industry support.
  • Positioned as a leading platform for various DeFi applications and played a key role in the NFT boom in 2021.

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