What is Solana (SOL) detailed explanation? How does Solana work?

Solana is an integrated open source blockchain with the goal of synchronizing global information at the speed of light. The network focuses on fast transactions and high throughput to encourage consumers to use cryptocurrencies and blockchain at a large scale. Solana optimizes latency and throughput, and is committed to implementing it through functions such as the new timestamp mechanism "History (PoH), the block propagation protocol Turbine, and parallel transaction processing.

Since its launch in March 2020, the main network has undergone multiple network upgrades, further improving the network's performance and resilience, including QUIC, equity-weighted quality of service (QoS) and the local expense market.

With history (PoH) and parallel transactions, the Solana network is built on a decentralized, license-free global blockchain, but its performance is comparable to that of a centralized system. Users can pay the handling fee and interact with the smart contract through the native token of the network. Another innovation in the network is Token Extensions. This is a rich set of functions built-in native to the token program, which can realize complex operations such as confidential transfers.

 Introduction

Scalability is one of the most severe challenges of blockchain technology at present. In the process of continuous development, the transaction speed and confirmation time of these networks are often limited. Since Solana is built on a new architecture, these restrictions can be broken without affecting security or decentralization.

Founded in 2017 by Anatoly Yakovenko of Solana Labs, the Solana blockchain has become one of the most widely used blockchains in the world. Solana adopts a number of innovations such as PoH and parallelization, and the transaction processing volume per second (TPS) of an efficient global state machine can reach tens of thousands of transactions.

 How does Solana work?

Solana belongs to the third generation Proof of Stake (PoS) blockchain. This blockchain uses the following unique innovative technologies to achieve high throughput, fast transactions and low handling fees:

•  Parallelization: The ability to process multiple transactions at any specific time.

• Proof of History (PoH): A method to verify time without traditional timestamps.

•  Tower Byzantine Fault Tolerance – PoH-optimized version of practical BFT.

• Turbine: A block propagation protocol that keeps the network synchronized.

• Gulf Stream — Memory pool-free transaction forwarding protocol.

•  Solana Virtual Machine: Parallel Smart Contract Runtime System.

These features create high performance of the network, with block production time up to 400 milliseconds and transaction processing per second (TPS) of tens of thousands. For reference, Bitcoin’s blocking time is about 10 minutes, while Ethereum’s blocking time is about 15 seconds.

SOL holders can pledge their tokens, making them part of the blockchain PoS consensus mechanism. With a compatible cryptocurrency wallet, you can pledge your tokens to the verifiers who process online transactions. After that, successful validators will share the reward with the relevant token stakeholders. This reward mechanism encourages validators and client to put network interests first when acting.

As of January 2024, Solana has 2,145 validators and the Satoshi Nakamoto coefficient is 31.

 Historical proof

Tracking the order of transactions is a crucial task for cryptocurrencies. To do this, Bitcoin bundles transactions into blocks where a single timestamp is added. Each node must verify these blocks consistently with other nodes. However, this process causes nodes to acknowledge blocks throughout the network for a long time. Solana adopts a new approach—Proof of History (PoH).

Solana's events and transactions are both hashed by the SHA256 hash function, which produces a unique and extremely difficult-to-predict output value through an input value. Solana will use the output value of the transaction as the input value for the next hash operation. At this time, the transaction sequence is built into the hash output value.

This hashing process creates a long and continuous chain of hash transactions. This allows the transactions that validators join the block to have a clear and verifiable sort without the need for traditional timestamps.

Hashing can also take a certain amount of time, so the validator can easily verify the total duration of the experience. By sorting transactions in the hash chain, the amount of information that validators process and pass in each block has decreased. Using the hash version of the latest transaction status can significantly shorten the block confirmation time.

Historical proof is not a consensus mechanism, it is a way to shorten the time required to confirm the order of transactions. When used in conjunction with proof of stake, it becomes much easier to choose the next verifier for the block. The time required for nodes to verify transaction order is significantly shortened, and the network can select new validators more quickly.

 low cost

Solana costs are extremely low, with an average cost of $0.00025 per transaction. The low cost significantly lowers the threshold for getting started with Web3, as fuel costs on other chains significantly increase the cost of a single purchase.

 Energy efficiency

Since Solana's node verification transactions are time-consuming and resource-consuming, and no mining like a Proof of Work (PoW) network, the network has become one of the most energy-efficient blockchains.

The Solana Foundation, a nonprofit organization dedicated to protecting and supporting the Solana network, regularly publishes third-party audits of Solana's energy consumption impact, and compares Solana's average energy consumption with other blockchain projects and home use. The latest report released in 2023 shows that energy consumption per transaction has dropped by 25%, from 0.879 kJ to 0.658 kJ.

 What is Solana (SOL)?

SOL is Solana's native utility token, which the Solana network destroys as part of the deflationary model. When transferring money or interacting with smart contracts, users need to pay the handling fee in SOL. SOL holders can also become network validators. Like Ethereum, Solana supports developers to build smart contracts and create projects based on blockchain.

Solana is a blockchain platform designed to provide enterprises and developers with a fast, secure, and low-cost solution to build and scale decentralized applications (DApps). The platform is based on the Solana protocol and adopts advanced consensus algorithms, supporting more than 65,000 transactions processing per second, which is much higher than other blockchain platforms such as Bitcoin and Ethereum. The main advantages of Solana are its fast processing speed, safe and reliable characteristics, and relatively low transaction fees. These advantages make Solana one of the preferred platforms for blockchain application developers and businesses.

SOL uses the SPL protocol; SPL is the token standard for Solana blockchain, similar to ERC20 in Ethereum. There are two main use cases for SOL tokens:

•  1. Pay for transaction fees incurred when using the network or smart contract.

•  As part of the proof-of-stake consensus mechanism, it acts as a pledged token.

Decentralized applications (DApps) built on Solana create new use cases for SOL and other tokens built using the SPL standard.

 How does Solana work?

The Solana platform combines multiple technical features to enable efficient transaction processing. With the ProofofHistory (PoH) protocol as the core, transactions on the blockchain platform are recorded into a chain through a slicing-like method. At the same time, Solana also uses the GulfStream consensus algorithm to divide transactions into multiple steps and use different nodes to verify and confirm, thus ensuring the efficient and stable network.

In addition, Solana also uses two efficient data structures, namely TowerBFT and Turbine real-time communication mechanisms. TowerBFT adopts multi-threading technology to implement parallel processing of protocol verification and transaction processing, thereby speeding up processing. Turbine allows Solana network to use the UDP protocol for real-time communication, speeding up data transmission and transaction confirmation processes. In short, Solana is an efficient, secure and low-cost blockchain platform. Its fast processing speed and reliability can provide strong support for enterprises and developers, ensuring the reliability and integrity of blockchain applications. At the same time, SOL tokens, as a digital token within the Solana platform, can also provide users with better value.

 Solana Ecosystem

Since the launch of the mainnet beta version in 2020, the Solana ecosystem has developed tremendously. As of January 2024, there were more than 2,500 developers participating in the Solana project, and there were more than 1 million active wallets on the Solana network.

Traditional economic giants have announced their entry into Solana. These include Discord (the user's personal homepage can link to Solana wallet) and ASICS (the user can use the Solana Pay payment system to purchase limited edition shoe designs).


Solana has become the preferred network for multiple Web3 use cases with fast transactions and high throughput.

• Decentralized Physical Infrastructure Network (DePIN): Real-world networks that adopt token reward mechanisms, such as the decentralized mapping protocol Hivemapper, are made possible because they can process transactions at extremely fast speeds.

• Next Generation NFT: The Solana ecosystem launches a new non-fungible generation token system to make full use of the scalability of the network to create new use cases. Executable NFT (xNFT) from Coral is an NFT of startup programs that implements a network and application stack that exists entirely in the wallet. Compressed NFTs (cNFTs) use Merkel trees to significantly reduce the cost of storing data on chains, reducing the cost of minting one million NFTs from millions to hundreds of dollars.

• Payment System: The Solana Pay protocol powers a smooth, license-free payment structure ecosystem where businesses can complete payments in seconds.

• Games and Entertainment: Handle massive transactions with the shortest lag time to open up Web3 use cases for gaming, entertainment and metaverse functions.

• DeFi: Solana's high throughput and low handling fees have become a feasible basis for building automated market makers and decentralized trading platforms.

 How will Solana develop in the future?

The Solana Foundation Breakpoint 2023 conference introduces some of the upcoming projects to be carried out in the coming months and years, including:

• Firedancer: Jump Crypto is developing new Solana core open source software, including a second validator client. As of November, the client had a TPS of 1.2 million transactions in the test environment. This move will further expand Solana's throughput.

• Token expansion: A new token program launched in 2024. With the program, developers can add new features such as confidential transfers and whitelisting of licensed payees, without additional code writing.

 Solana Coin Price Forecast

Let's take a look at some of the Solana price forecasts made as of October 9, 2023.

Remember that price predictions, especially when it comes to something potentially volatile like cryptocurrencies, often end up being wrong. Furthermore, many long-term cryptocurrency price predictions are made using algorithms, meaning they can be changed at any time.

CoinCodex has a pretty optimistic short-term price forecast for Solana.

The website said its price will reach $23.45 on October 14 and $25.95 on November 8. Given its initial optimism (perhaps surprising), the website’s technical analysis is bearish, with 15 indicators sending frustrating signals and 13 indicators sending bullish signals.

2023 Solana Price Forecast

On other sites, DigitalCoinPrice expects Solana to have an average price of $47.28 this year. Captain’s Alternative Token says SOL will drop to $14.90 in December. Meanwhile, http://CryptoPredictions.com expects it to climb to $22.68 by the end of 2023.

2025 Solana Price Forecast

Next, DigitalCoinPrice says SOL may trade around $80.20 by 2025. CaptainAltCoin predicts that its trading price will reach an astonishing $138 that year.

On the other hand, http://CryptoPredictions.com is more cautious, but still optimistic, saying that the closing price this year is about $38.71.

2030 Solana Price Forecast

For the longer-term Solana price forecast, DigitalCoinPrice claims it will reach $220.90 by the beginning of the next decade. CaptainAltCoin changed its strategy, saying that SOL would lose all its value by then and become a de facto dead coin. Price forecasting network is more optimistic. Its SOL price forecast says the token will trade at $331.89 at the beginning of the next decade.

 Conclusion

After appearing in the blockchain field in 2020, Solana has gradually grown into a strong and sustainable ecosystem, which has now become a popular choice for projects and users and is expected to develop further.