Currently, the introduction of blockchain to various industries, led by Ethereum (ETH), is progressing, but the problem of scalability has become apparent due to the enormous network that accompanies the increase in users.
Early blockchains such as Bitcoin (BTC) can only process about 5 transactions per block for 10 minutes per block. Since Ethereum is also limited to about 15 per second, there is a problem with processing speed, but the number of transactions is only increasing with the development of DeFi (decentralized finance) and so on.
Bitcoin and Ethereum chains use a consensus algorithm called PoW (Proof of Work) (Ethereum will later move to PoS), but in PoW the transaction approval speed is the machine power of the nodes participating in the network. The disadvantage is that the processing speed becomes slower as the number of nodes increases.
Solana has achieved high-speed transactions by adopting its own consensus algorithm “PoH (Proof of History)”. It claims to be “the world’s first web-scale blockchain” because of its high processing speed.
Features of Solana
Solana is a Proof of Stake blockchain that aims to solve the standard Byzantine general problem, but it has remarkable transaction processing power, and it is said that about 200 nodes can perform 50,000 transactions per second. This is achieved through eight innovations, including the adoption of the Proof of History, a method of synchronizing time between unreliable nodes, proposed by current CEO Anatoly Yakovenko in 2017.
Proprietary consensus algorithm
According to Yakovenko, Solana’s primary goal is to “align the network with the performance of individual nodes,” which requires optimizing the communication within the network.
PoH is a unique feature of Solana and greatly contributes to the omission of communication. By synchronizing the time between validators, the processing of the entire network will proceed regardless of the communication status of the network. This allows Solana’s validators to participate in staking while skipping communications.
Solana use case
Solana is a layer 1 blockchain and publishes a standard called SPL as well as standards such as Ethereum’s ERC-20. Interoperability is also ensured, and a system that allows the exchange of ERC-20 and SPL tokens is also provided. Compared to Ethereum’s soaring gas bills, Solana’s fees are low at $ 0.00001 per transaction, and various projects have announced the adoption of SPL. It can be said that such an announcement is the background to the soaring price of SOL.
USDT / USDC
To take advantage of Solana’s extremely fast processing speed, Tether announced the USDT token launch on Solana in September 2008. Currently, the market capitalization of USDT is over 4 trillion yen, which is the largest stable coin in the market.
Related: Solana starts supporting tether (USDT)
In October 2008, Circle and others announced that the US dollar peg stable coin USDC will be compatible with Solana. USDC is also compatible with Ethereum, South African Rand (ALGO) and Stella (XLM).
Related: US dollar stable coin USDC adopts high-speed blockchain Solana
There is also a move to build a DEX (Distributed Exchange) on Solana, noting that it is faster and cheaper than Ethereum. Serum is a DEX (decentralized exchange) announced by the crypto asset (virtual currency) exchange FTX in July 2020, aiming to solve the current problems of DeFi. Raydium, also a Solana-based DEX, has been announced to integrate with the major Ethereum-based DEX, Sushi Swap. Since there are some cases of moving from Ethereum to Solana in dApps development, there are some views that it will eventually become a dApps development platform that will be comparable to or replace Ethereum.
Related: FTX, what are the advantages of “Solana blockchain” that adopted the decentralized exchange Serum for launch?
Mutual bridge with Ethereum “Wormhole”
In October 2008, Solana announced the “Wormhole” bridge that interconnects Ethereum and Solana. Wormhole connects Ethereum (ETH) and ERC20 tokens to SPL tokens, the token standard for the Solana blockchain. This allows tokens on the Ethereum network to benefit from Solana’s processing speed and low cost, but it is also possible to return value to the Ethereum network at any time.
Related: Solana project announces “Wormhole” to connect to Ethereum network in both directions
Music streaming service “Audius”
Audius is a music streaming service similar to Spotify and LINE MUSIC. As the number of users increases, it has announced that it has decided to partially move from Ethereum to Solana. Staking and governance are done on Ethereum, but the actual streaming etc. is done on Solana. In April, Audius started the service “Audius Collectibles” that can display NFT (Non-Fungible Token). With the new service, it is possible to display your own NFT like a gallery or gallery, and some artists are already exhibiting.
Utilized by virtual currency exchange AscendEx
In March, AscendEx, which provides cryptocurrency services to cryptocurrency traders including Seki investors, announced that it is compatible with the Solana Program Library (SPL) for deposits and withdrawals of cryptocurrencies such as USDT and USDC. We have introduced a mechanism that allows exchange users to send and receive at low cost and at high speed, and the corresponding stocks are SRM, USDT, USDC, FIDA, MAPS, and OXY.
New listing on Coinbase
In May 2009, Solana (SOL) was newly listed on Coinbase, a major US exchange.