Let’s talk about Solana

Solana is often branded as a competitor and alternative blockchain to Ethereum. The project was founded in 2017 by The Solana Foundation based out of Switzerland. 

Solana is a Layer 1 blockchain hosting around 350-360 applications & tools. Solana aims to solve the issue of scalability. For context, blockchains have three qualities: Decentralization, security, and scalability. To maximize two components, the third will generally be compromised. Most teams will elect to sacrifice scalability to improve the decentralization and security of the blockchain. When this happens, the node circuit and block validation process takes longer as there are far more checkpoints for security measures and more components in place to automate and decentralize the blockchain. Thus scaling suffers as it cannot maintain a higher rate of transactions due to it simply taking too long. 

That is, it’s a cause-and-effect matter when using a regular consensus like PoS or PoW. Solana aims to improve this.

Solana’s Architecture

Solana uses a hybrid consensus mechanism. While it is a Proof-of-Stake blockchain, it adds another mechanism… Proof-of-History. 

So what is Proof-of-History?

“Proof of History is a sequence of computation that can provide a way to cryptographically verify passage of time between two events.”

With PoH, any node at any given time may be designated as the Leader node. The Leader node verifies a cluster of transactions at once. All user messages, transactions, and data are processed in a verifiable passage of time. Think of this as a single file order of blocks with timestamps on each block.

As this single file order of transactions is waiting to be verified by the Leader node, transactions are delegated between other nodes to speed up the process. These transactions are then executed and published with a signature of the final state, while simultaneously being published to replication nodes for verification. 

Aside from this, Solana also leverages these technologies to improve its PoH consensus:

• Horizontal Scaling (adding more servers so transactions are distributed across multiple nodes).
• Turbine Block Propagation (Transmitting data using User datagram protocol (UDP) only while implementing a random path per packet through the network as block producers stream their data). 

PoH allows Solana’s transaction process to be faster than almost every layer 1 blockchain. For comparison, Solana has an 800 millisecond block throughput time, which allows it to compute 65,000 transactions per second. Compared to Ethereum which is currently doing 15 to 20 transactions per second – a number that is expected to increase with coming upgrades – Solana’s throughput is tremendously impressive. 

The secure code of Solana also stops output being predicted from the input. 

Main Features Of Solana

1. Stake Pools – Solana’s very own censorship-resistant staking pools. 
2. Grants – Teams can submit an application for a grant to build on the Solana network and receive full or partial funding from the Solana Foundation. 
3. Delegation Program – The opportunity to become an independent validator on the Solana blockchain. 
4. Server Program – Contractual access to hardware usually reserved for large organizations.

Is Solana decentralized?

The main issue with Solana is that Proof-of-History sacrifices decentralization, putting the network at risk of both security an reliability issues. As it speeds up transactions and verifies clusters in one go via the Leader node, it has very few validators. Theoretically speaking, anyone with the computing resources necessary could potentially hijack and disrupt the network single-handedly.

The project is also highly prone to bugs and errors, causing it to have had several major network outages.

SOL Token 

SOL Token was launched initially with a total capped supply of 500 million tokens. Eventually, this was changed by the founders and was reset to an unlimited amount. 

However, it has an inflation rate of 8% which is programmed to drop 15% annually until it reaches an inflation rate of 1.5% a year – projected to happen in 2031.

The current total supply of circulating SOL tokens is 373.27 million.

SOL current token distribution

*data sourced from CoinGecko and CoinCarp.

An estimated 285 million tokens are owned by: 

Founders – 40.6%

Community Reserve – 20.0% 

Team – 20.2%

Validators – 8.4%

Community members – 7.5%

Individual wallets – 3.4%

The remaining estimate of 88 million tokens is much less transparent and harder to determine the exact owners. However, the rough estimate for ownership is: 

Community Members ≈60%

Individual wallets ≈30%

Founders ≈10%