In one line: In the most bullish scenario, Solana’s potential could propel it to replacing the NASDAQ (or a parallel of that magnitude) and becoming one of the world’s most prolific platforms for transaction processing.
Symbol: SOL
Price: $202
Market Cap: $61 Billion
Consensus Mechanism: Proof of Stake
Staking/Earning Link & Rate:https://solflare.com/access (~8% APY)
Token Cap: 504.2MM
Nakamoto Coefficient (Measure of Decentralization): 19
EVM Compatible: Yes
Easiest Place to Purchase: Coinbase or Voyager
Founder/Noteworthy Contributors: Anatoly Yokaovenko & Raj Gokal
Developer Metrics & Rank (see CryptoMiso): 4,231 Website: https://solana.com/#
The Solana Blockchain:
- Leading alternative/supplemental blockchain to Ethereum that prioritizes high speed & low tx fees
- Layer 1 protocol
- “Bonded Proof of Stake” (BPoS) consensus mechanism – anyone who holds SOL can delegate their votes to any validator + share in rewards/penalties
- Operates on a single shard achieved through “Proof of History” – it’s a way to keep time between computers that don’t trust each other by using cryptographic timestamps to sequentially order each tx that occurs; this provides verifiable ordering without requiring all nodes to agree simultaneously
- Transaction capacity as of 4/29/21:
Potential Value Accrual:
- Store of Value – tokens locked up as collateral for Defi tx (constricts liquid supply)
- Consumable Asset – every time there’s a tx on Solana, a little bit of SOL is burned
- Capital Asset – owning SOL represents a share of the network (like a stock) + staking rewards – become a validator or delegator collecting fees from the network
- SOL value increase through staking and MEV (which goes to validators)
The Technicals:
- Proof of History – Main benefit of a single node is that it only needs to agree with itself; recursive verifiable delay function (SHA-256 – sequential hashing) to hash incoming events and tx; each one has unique hash and count as a function of real time; this is a quick explainer on PoH: https://youtu.be/rywOYfGu4EA;
- The validators use info on the ledger itself to determine if tx is valid or invalid rather than waiting for other validators;
- “Leader rotation” – prescheduled turns for each validator, meaning only the leader can produce a ledger entry at a given time based on an algo-generated random order weighted by each validators stake size
- SOL makes money through Miner/Max Extractable Value (MEV; users paying more to move up in the block order; similar to “Pay for Order Flow”)
- Building compatibility w/ ETH to behave like a L2 but have functionality of a L1 (including ability to deposit USD direct at miniscule fees)
- Requires more advanced hardware to maximize networks capabilities; SOL less decentralized than ETH or BTC (Nakamoto Coefficient of BTC is ~ 4; ETH is 3-4; SOL is 19 – track live: solanabeach.io/validators)
- Uses Rust programming language; Anchor created an open source framework for SOL sealevel that reduced the code you need to write by 90%; this makes building apps more like programming in Soliditiy (ETH’s programming language)
Extra Credit:
- One of goals is to match the performance of a single centralized node (like the NASDAQ) with a decentralized network of nodes, eliminating NASDAQ as the intermediary taking a cut, ultimately accruing more value for both parties on each side of every tx
- It is possible for protocols/projects to run on both Ethereum & Solana (or other blockchains)
- SABER is a cross-chain exchange built on top of SOL
- Raydium (Decentralized exchange for trading tokens) is the largest protocol build on SOL
- Star Atlas is first “play-to-earn” game on SOL; ATLAS (in game currency) + POLIS (governance)
- The value built on top of the chain needs to be less than the value staked in the network; The more value there is at stake, theoretically, the more secure the network is because validators are more incentivized to act benevolently
- MEV = miners setting the order of tx to go on the next block from the mempool, usually based on gas prices (gas = base fee + tip, with people who need their tx verified faster putting in higher tips to move up the block); problem being miners can front run trades to extract value which can also result in higher tx cost or slippage
- Since launching in March 2020, there have been 25 billion tx on SOL; there have been 1.25B on ETH entire history and 665M on BTC entire history; equivalent of SOL doing all tx ever done on ETH entire history every week; sidebar it includes consensus messages which some would argue are not actual tx (+/- 50% of the total)
- Solana’s max output is up to 700,000 tx/per second; the NASDAQ is 500,000/per second today
SOURCES:
https://www.notboring.co/p/solana-summer
https://www.notboring.co/p/own-the-internet
https://docs.solana.com/cluster/overview
This is not investment advice nor is it an endorsement or solicitation of any kind. I do NOT recommend you invest in Solana or buy the SOL token. This is for entertainment and informational purposes ONLY. Investing in cryptoassets is extremely risky, volatile, and may result in significant or permanent loss of capital. Those risks should be evaluated independently or with a professional before taking any action. For the sake of disclosure, you can assume I invest in everything I write about and am not recommending you do the same. The links for Gemini, Voyager, Coinbase, & Crypto.com for “where to buy” also contain referral links of which I receive a “referral fee” contingent on the platform’s terms & conditions. Please do not use this information as a foundation for making investments in Web 3 projects. Do your own research (DYOR)!!
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