What is Solana | Solana Price | How Solana works | Proof -of -History

Introduction:

There are many blockchains that are claiming to be Ethereum killers and it’s a fairly long list — there’s Cardano, Polkadot, Cosmos, Tron And we’ll talk about all of them later. I personally feel like we will end up living in a multi-chain world in the future. But today I want to talk about one particular “Ethereum killer” project called Solana. And here’s why Solana has my attention.

For starters, it is backed by the founders of an immensely popular crypto exchange Called FTX . And one of the founders of FTX is Sam Bankman. He’s one of the world’s youngest crypto-billionaires. Of the 100’s of projects they reviewed, they picked to back Solana because of how fast it is. But more recently, Solana’s been in the news because it raised something called Pi million dollars, that is, 314 million dollars. And one of the leading firms in the fundraise was A16z, one of the world’s most popular venture capital firms. I recently also found out that Solana recently concluded a global hackathon inviting teams from around the world to participate. And over 50 teams that participated were from India. And for good reason because one of their prizes was reserved for a regional track that includes India with a prize pool of $50,000 supported by Devfolio and CoinDCX.

Speed & Fees:

Many folks think the tech behind Solana is an Ethereum killer even though personally I don’t think Ethereum is going to die. However, Solana’s tech is definitely worth having a look at. Like let’s compare some stats. First let’s look at transactions per second- aka TPS. While Ethereum can do 15 transactions per second, It’s competitors like Polkadot or Tron can do 1000 transactions per second. That’s a pretty decent competition. But Solana can do 65,000 transactions per second. If you thought that sounds impressive, let’s look at the average transaction fee. So we already know Ethereum gas fees are a bit of a problem. Sometimes the fees are as high as $15 to $30 per transaction. Meanwhile its competitors like Polkadot take around $1. But Solana transaction fees are as low as $0.0015. That sounds almost too good to be true. Usually with such scale and low fees, there has to be some trade off, right? But Solana claims to be the most performant, permission-less blockchain in the world. And it’s managed to achieve this through several new technologies which are considered a breakthrough in blockchain tech and blockchain tech as we know, is considered to be a breakthrough in internet tech And internet tech as we know is considered to be a breakthrough in computer tech And computer tech as you, well you got the picture.

Proof of History:

The Ethereum developers are solving these problems through sharding, proof of stake, layer two solutions. But Solana uses a completely different technology called . But the trilemma claims that only two of these qualities can be maximized, and usually it’s at the expense of the third. What this means is you could have extremely high security, be decentralized, however, you would have to compromise on scalability. Or you could have high scalability and high security but you will be compromising on being decentralized. So all blockchain systems have to make some sort of trade-off which depends on the application and use of the blockchain. But Solana claims that it has actually solved the blockchain trilemma. It is highly decentralized, it’s very secure and it’s very scalable. So how does it achieve this insanity?. The secret lies in a whole new mechanism called proof of history. And the team that has built it includes former employees from Google, Apple, Microsoft, Intel, you name it! So let’s try and understand what is the tech behind Solana. But in order to do so, we have to understand something called the Blockchain Scalability Trilemma also known as the blockchain trilemma. The Ethereum co-founder Vitalik Buterin had coined the term blockchain trilemma and the idea is that there are three desirable qualities of any blockchain- decentralization, security and scalability. But before we get into proof of history, let’s do a quick revision of proof of work and proof of stake. First — there was Proof of work. In proof of work, many different computers from around the world, they fight in order to be able to compute the next hash. The more powerful your computers, the more your chance of beating all the other computers. So you can get a chance to compute the hash. Now because of this mechanism, proof of work blockchains have very low transactions per second. And a higher time to add new blocks. Like bitcoin takes 10 minutes to add a new block full of new transactions while Ethereum takes about 15 seconds. That means no matter how fast your transaction gets added to the block it will at least take 15 seconds for that to reflect. This might still make sense for transactions after all, bank transactions can also take this long. But it makes no sense when it comes to building Dapps. Imagine clicking the post button on Instagram and it takes at least 15 seconds for it to post. Now multiply this experience into 10 times a day for millions of users. So people eventually realized that proof of work blockchains is not good enough to build web 3.0. So soon came a new concept came, called Proof of Stake. In proof of stake, instead of all the computers fighting against each other there’s a lucky draw. Any one computer can be chosen to validate the transaction like a lucky draw. And this depends on the amount of Ether that they have staked. What this will do is increase the number of transactions per second significantly. Like Ethereum is expected to go from 15 transaction per second to 100,000 transactions a second. But here’s the catch. Ethereum’s block time, that is the amount of time taken to add a new block goes from 15 seconds to only 12 seconds. In fact the other proof of stake chains like Cardano or Polkadot, they also roughly have the same time. So proof of stake is reducing the transactions per second, but block time isn’t changing much and there’s a very fundamental reason behind it. The reason is called time keeping. Imagine A(me), B and C. A is here on his PC. B is sitting on the table in front of me and C is on the sofa on the other side. Now imagine we are the nodes of this network. So B is closer to A than he is to C. Now imagine B does the following four things:

He took a spoon of Tang. He added it to a glass of water. He stirred it. And then he drank it. As soon as he mixes Tang into the water, D brings a message in an envelope to A and C. So we can sign it saying, yes, we agree that this has happened. The message that B mixed Tang in water needs to reach almost all nodes. Once majority consensus has been achieved, only then can the network proceed. Because A is closer, A will see all of it happen faster than C will. In this case, this difference will be less than nanoseconds. But if this distance is in kilometers, this time can increase. A might think B drank the Tang at 10:01am while C could believe it’s at 10:02am. Now this difference of 1 minute is also a lot when we are trying to build a decentralized exchange. When we trade in the stock market, we are trading in a centralized exchange and they do their own time keeping so we all accept it. However, on a decentralized exchange, things are a little different and decentralized tech still hasn’t achieved efficient time keeping which is why even in proof of stake you can’t get faster than this. Now, how do we fix it? This problem is solved by a tech that Solana is using called Proof-of-history. What is proof of history? Decentralized world works because we eliminate the need to trust any party using cryptography. This same idea can be applied to time keeping too. Using cryptography, we can create a proof of passage of time aka, a proof of history. To understand how that works, imagine I show you five photos. In one, water has Tang which started to dissolve in water. In one, B has finished half a glass of it. In one, Tang has dissolved half-way. In one, Tang is now fully dissolved. And in one, B has a spoon of Tang and a clear glass of water in his hands. You can just look at all the five photos and tell which was clicked before which other photo. By simply using the logic of entropy, we can arrange all five photos in a sequence. Now imagine if there was a rule that a photo would be clicked every five seconds for every activity that B performs. Suddenly we also have a precise idea of time. So if I make it compulsory to attach the latest photo to every block, we know that every block was created in an interval of five seconds. Suddenly every block has a kind of inbuilt clock. This is exactly what proof of history does cryptographically. It uses a mathematical function which takes 0.4 seconds to give results. So we know every block in a proof of history blockchain is 0.4 seconds apart. This result is added to every block so others can verify if this is correct. Basically we don’t need D to bring me and C a message that we will then sign. We’re just taking a photo of B every 0.4 seconds and are adding that photo to every new block. Now of course this is a very very simplified understanding of what proof of history is.

Advantages:

Now proof of history is just one of the things that makes Solana different. It has some other differentiating features as well.

(a) Scalability: Now Solana is very fast. It’s the fastest blockchain we know. But in case that wasn’t enough, Solana actually cracked a hack by which they can keep getting faster without changing much of their architecture and they have done it by believing in something called Moore’s law. Moore’s law basically states that every two years the number of transistors in a circuit will double and Solana is designed to exploit this idea. Solana parallelly runs processes in our GPU cores which means if the number of cores in the GPU keep doubling every year, Solana can keep getting faster and faster, by not changing anything in their code at all.

(b) Speed: Solana is the only blockchain today that has transactional capacities comparable to the internet that we know as of today. 0.4 seconds and we’re done. You really need to see it to believe it. And you can see it live on Solana block explorer. On this website you can see the average block time every time a new block is added. If you scroll down you can even see the current transactions per second.

© Validators: Solana has around 600 validators right now which is very less compared to Ethereum. There are over 11000 validators on Ethereum. But of course, Ether has been around for 4 years. But how many more validators join Solana, we’ll have to wait and see. But unlike Ethereum, where you need 32 ether that you need to stake in order to be a validator, on Solana there’s no set number as such. Any member can be a validator.

(d) Finality Time: One interesting concept is called finality time that we haven’t spoken about yet. Since technically anyone can change the copy of the blockchain, we introduced something called proof of work so, changing anything in the block becomes hard and time consuming which means anyone trying to make any change in the block will get caught easily. But this also means that you have to wait for your block that contains your transaction to get at a little old, so that newer blocks are added in front of it and changing anything in your block becomes that much harder. Finality is nothing but the guarantee that past transactions can not be changed. On bitcoin, the finality time is around 6 blocks, that means six into bitcoin’s block time, that is ten minutes, which means roughly about an hour is what you have to wait before you get the finality time. Similarly the finality time on Ethereum is about two to ten minutes. The faster you can add new blocks, the quicker your finality time. Now proof of history makes adding new blocks extremely quick. The finality time on Solana is very very low. Alright, now let’s talk about the Solana token which is denoted by SOL. Like Ethereum has ETH, Solana has SOL. Now as of June, 2021, the circulating supply of Solana was about 270 odd million out of a total supply of 489 million. Now given that Solana is such a quick, fast blockchain to use, naturally many new projects are being built on top of Solana. There’s Serum which is one of the first DeFi protocols to be built on top of Solana. Serum is a decentralized exchange that uses the order book method, something that centralized exchanges often use. Now Solana is the only blockchain that is capable currently of holding such an ambitious project because of the high TPS and low block time. USDC and USDT have also adopted to Solana. Remember Audius, the audio streaming platform, that was earlier built on Ethereum ,now, they too have decided to migrate from Ethereum to Solana. Now they can do that because Solana has released something called an Ethereum bridge that helps Dapps to transition to Solana. This bridge is why many believe Ethereum and Solana can coexist.

I hope the above explanations have clear your thoughts about Solana and you have learned something about it.

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