What is Solana?

Solana was founded in 2017 by Anatoly Yakovenko, a former engineer at Qualcomm. His vision was to create a new algorithm that could help solve some of the problems, like scalability and high transaction fees, faced by Proof of Stake and Proof of Work blockchains. From this vision, the Proof of History (PoH) algorithm was developed. PoH increases scalability and transaction speeds without compromising on security. 

This open-source, decentralised blockchain was created to enable a network that would support the development of decentralised applications (dApps). It is also one of the few blockchains not requiring off-chains or secondary levels to power its vast range of applications. 

SOL is the native token on Solana’s blockchain, its primary use is to pay and stake transaction fees. This token was designed to be inflationary, with the total supply being decreased annually by 1.5%.

Proof of History

Proof of History allows the decentralised blockchain to work securely and fast. It differs from PoW and PoS because it gives each event and transaction a hash number and count, effectively time stamping them. This allows you to determine which event happened in what order. Each node on the network is given a cryptographic clock that helps confirm the time and order of each event without having to wait for other nodes to verify it. This algorithm helps improve the speed of the transactions while keeping them secure.

Fast and cheap

Solana boasts one of the fastest transaction speeds of 65,000 transactions per second with an estimated block time of one block per 400 milliseconds. Additionally, Solana offers very low transaction fees, which are on average 0.000005 SOL. This is all achieved through their PoH algorithm.

Centralisation

There is one drawback that Solana is facing, which is due to its impressive speed. This drawback is that the nodes require high computational power, which is expensive to build, operate and maintain. This has resulted in a small number of validators, which in turn can enable a more centralised system.