What is Solana? And Will it Be the Ethereum Killer?
Solana (SOL) is a Smart Contracts platform which is the quickest on the market when it comes to transactions per second (TPS). Solana can currently process 50,000 TPS, which is very impressive. The gold standard of TPS is Visa, which can currently process 66,000. The market leader for a Smart Contract platform is currently Ethereum, which can only process 13 TPS. There are other similar Smart Contract platforms looking to take Ethereum's crown such as Polkadot founded by Ethereum co-founder Gavin Wood.
There is no denying the all round use cases of the concept of Smart Contracts. They can be used in all spheres of life to bind agreements between 2 parties, in a much more accurate way than how legal contracts today work. Ethereum had the first mover advantage but protocols like Solana are offering faster, cheaper solutions. Is it possible for Solana to overtake Ethereum? Let's take a look...
Overview
The Solana blockchain was founded by Anatoly Yakavenko, a very experienced software engineer. He worked at Qualcomm for nearly a decade, later moving to Dropbox, before founding Solana Labs with his former Qualcomm colleague Greg Fitzgerald. Solana is named after the Solana beach in California. The unique selling point of Solana is that it is fast and cheap, two issues that have troubled blockchain over the past decade. Another major unique point of Solana is its consensus mechanism. Most blockchains use Proof of Work (PoW) or Proof of Stake (PoS), however Solana uses Proof of History. This approach is similar to Proof of Stake but adds time, which allows fast sequencing validation.
Solana has been the recipient of major investment, raising over $335m over six funding rounds. The price of each coin has grown parabolically. The Initial Coin Offering (ICO) price was 22c and in 2021, it's all time high was $191. The current market cap (October 2021) is $42bn being 1/9th the size of its competitor Ethereum.
As Solana is a Smart Contracts platform, there are many decentralized apps (dApps) built on it in a variety of fields. From decentralized finance (DeFi) to Non Fungible Tokens (NFTs), Solana has become very attractive for developers to build their dApps because of its speed and cost. One example of a popular dApp is High Stake Rollers. It mixes NFTs and casinos and has some great prizes. This suits very well if you are in South Africa as the country is a little bit of a crypto enthusiast. It’s actually true that you can play on bitcoin casinos in SA, and there are also sites that compare these online casinos with comprehensive reviews, compare the best welcome bonuses and give valuable information on all the best casino software.
Ecosystem
As previously mentioned, the Solana ecosystem is extensive. Offering a platform that is fast and cheap is the key to Solana’s success and perhaps it may one day eclipse Ethereum. Let's delve further into the projects that are building on Solana.
The biggest space currently on Solana is DeFi and there are countless dApps built on top specializing in market making, decentralised exchanges, yield farming as well as a host of other services. DeFi brings finance to the people, banking the unbanked and offering saving and lending using the Solana blockchain. Solana is written in Rust, a programming language developed by Solana Labs. The Rust language has a higher performance than that of C++ because of its safety standards.
Another booming ecosystem within Solana is that of NFTs. The NFT market came to prominence in 2021, with many artworks being sold for eye watering prices. The Solana NFT space has many interesting projects. Take SWANLANA, which is a decentralized exchange and NFT marketplace. Its two main products; firstly the NFT Marketplace allows users to buy and sell NFTs using Solana. Secondly there is SWANDex which is a decentralized exchange (DEX), allowing users to buy and sell other cryptos.
Decentralized exchanges are the future of crypto, with Binance launching Pancake swap, which provides peer-to-peer transactions, without the high fees on centralized exchanges. There are many projects on Solana building DEX apps. It is an ideal platform as it is fast, meaning trades can be executed quickly and accurately, which current Ethereum DEX’s struggle with.
Conclusion
There is still a long way to go in the blockchain space, which will grow exponentially in the next decade. Ethereum of course has the first mover advantage, but in tech, this is not always the most ideal position. Take Google for example, which was launched after the first mover Yahoo in search engines and is now the most powerful company in the world. We will have to wait and see who will become the standard of Smart Contracts going forward, but Solana and even Polkadot could eclipse Ethereum just because of speed and cost.
Solana has a solution to the age old problem in blockchain; scalability. This is why there is so much hype. There is little point in having a great technology if it cannot be scaled, but Solana is the first that could realistically bring Smart Contracts to the mainstream. There is plenty of work to be done, but Solana has major investment, a great product and an well qualified team.
With the cost for each transaction less than 1c, Solana blows its competition out of the water. Ethereum gas fees are now getting exceptionally high as well as Bitcoins fees and processing times. If they are to become the fastest and cheapest blockchain, Solana is positioning itself mecuriously, and in five years time, who knows where Solana will be.
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