Solana is a fast, decentralized, and programmable blockchain. It supports transfers of its native SOL coin, along with digital assets such as non-fungible tokens (NFTs) and SPL tokens. The project was founded by Anatoly Yakovenko in 2017, with the goal of improving the scalability of a cryptocurrency blockchain while maintaining decentralization and security.

What are SOL key features and how does it work?

Solana’s biggest standout is its relatively high transaction throughput. The network can handle up to 50,000 transactions per second without sharding. It reaches this performance using proof of stake combined with timestamped transactions, called Proof of History. In practice, this creates a verifiable historical trail showing that an event, such as a transaction, took place at a particular time. Solana is the first network to attempt this Proof of History approach.

Proof of History is structured to reduce the need for constant communication between computers on a decentralized network when it comes to keeping time. Transaction records are stored in an open ledger that every block on the network can access. This improves efficiency by enabling faster processing and supports greater scalability. As a result, Solana can stay secure, scalable, and decentralized without relying on layer 2 approaches such as Ethereum’s rollups and sidechains, or Bitcoin’s lightning network.

Proof of History is paired with Proof of Stake, which is meant to validate the current transaction ordering coming from the PoH generator quickly. The entities that process transactions and secure the network are known as validators. Users can stake their own SOL to become validators, or delegate tokens to validators, with the opportunity to earn more SOL and receive a share of transaction fees.

Solana’s consensus design has sparked debate within the crypto community, with some questioning how its mechanics work. In a Proof of Work setup, slowing transitions helps prevent two blocks from being validated simultaneously, and the algorithm effectively serves as a clock. In Proof of Stake, there is no dependable internal timing source, making it harder to determine the order in which blocks arrive. Proof of History changes that by letting the network order transactions as they enter, referred to as entries, rather than ordering them by block like on conventional blockchains. This addresses the challenge of synchronizing time while still providing near-instant finality for the high volume of transactions the chain receives each second.

SOL also functions as a governance token. That means holders can vote on upcoming upgrades and governance proposals put forward by the Solana community.

What can Solana be used for?

Like Ethereum, Solana is a programmable environment that can run smart contracts. Smart contracts enable many kinds of applications, ranging from DeFi and NFT platforms to decentralized lotteries and games. 

Solana, unlike Ethereum and other EVM-compatible networks that use Solidity for smart contracts, relies on Rust. Rust is still relatively new, yet when it comes to developer tooling it is described as being far ahead of Solidity. It is suited to building fast, lightweight, cross-platform solutions, and the language includes many characteristics that can make Rust code more comfortable to write and easier to work with than Solidity.

As of August 2021, some of the most popular Solana applications include DEXs and lending platforms, and Solana’s overall app ecosystem supports billions of dollars in TVL (Total Value Locked). One reason users may prefer a Solana-based application over a comparable Ethereum one is that higher speeds and lower congestion typically lead to notably reduced fees.

Serum is one example of a high-performance, non-custodial DEX on Solana, built by the Serum Foundation (created by FTX, Alameda Research, and a consortium of other partners). The DEX uses a fully on-chain central limit order book. The platform aims to address DeFi issues such as expensive gas, slow transactions, and centralization.

Where can you buy SOL?

SOL tokens can be found on all of the CEXs and DEXs included in the market tab.

One widely used option is Binance, which features the highest SOL/USDT trading volume. OKEx and other well-known exchanges also support SOL.