Solana (SOL) is a groundbreaking new crypto coin named after a coastal Californian city built on the Ethereum mainnet. Conceived and constructed by Anatoly Yakovenko, SOL aims to revolutionise blockchain technology and take it to new heights.
Understanding Solana
While built on the Ethereum network, Solana is often regarded as the next step in the evolution of decentralised technology. Its native token, SOL, has garnered global popularity and is traded on leading crypto exchanges. Aside from usual decentralisation and security benefits, the Solana network features a brand-new proof-of-history algorithm for validation.
Currently, the most popular consensus algorithm is proof-of-work (POW), utilised by flagship coins like BTC and LTC. The POW consensus mechanism takes a lot of energy and time to validate transactions, which makes numerous blockchain networks slow, expensive and inconvenient for users. Thus, various blockchain networks have decided to create alternative consensus mechanisms, drastically reducing the power consumption and time needed to verify transactions.
Why Does Solana Stand Out?
Solana has constructed a game-changing algorithm to replace the conventional POW mechanism. SOL’s proof-of-history (POH) and delegated proof-of-stake (DPOS) algorithms were designed to alleviate the current problems with the POW approach to validation transactions.
The POH system avoids utilising miners as the leading players in validating transactions. Instead, the POH approach employs validators that vote on timestamps in the network. With this system, it will no longer be necessary to spend unreasonable amounts of energy and time to validate a single transaction. Moreover, the POH system will allow networks to become even more secure and decentralised due to the decreased role of validators.
How to Stake Solana
Naturally, Solana’s growing popularity has attracted numerous newcomers to the network. Fortunately, this network offers lucrative rewards to become an active participant in the block validation process. In simple terms, users can either become delegators or validators. The delegator role is simpler and more convenient for average users, allowing them to stake specific amounts of crypto assets for validation purposes. Thus, delegators will simply stake their desired crypto assets on the platform and receive passive income or SOL token rewards for their provided funds.
On the other hand, validators will accumulate the delegator asset pools and participate in the validation process directly. Validators must aggregate large amounts of crypto pools to become active participants in the block validation. They can also compete with other validators by offering lower commission charges on earned rewards. Thus, both roles offer lucrative opportunities to reap passive income or engage in the validation process and receive direct rewards from the network.
Core Solana Features
Solana’s fourth-generation blockchain methodology offers several core improvements over the previous systems. Its impressive features include improved speed, cutting-edge scalability, lower costs, and more. Below, we present two of the most essential aspects of the Solana network and how they promise to innovate in the crypto technology space.
- Open Source Code
Solana is entirely open source, which means that any users can access its core protocol and use it for their private purposes or to build decentralised applications. Currently, the network offers the second-best dApp building environment, trailing only behind Ethereum’s robust capabilities.
- Proof of History
While the POH model is still untested, it promises to eradicate the current problems with transaction throughput and gas fees. Conversely, the POH model is a lucrative opportunity for community members to reap passive income without committing high-end computation power to the network.
Should You Invest in SOL?
SOL tokens are available on renowned centralised exchanges such as Binance, Coinbase, and Kraken or via cryptocurrency ATMs in several cities worldwide.
Although Solana possesses numerous benefits and unique features, investors should consider the relevant risks. SOL coin is undergoing considerable price fluctuations in its lifecycle, which is a clear red flag for investors.
However, volatility is a common aspect of the crypto landscape, and investors should consider the upside of SOL instead of only evaluating the price variation. While the short-term price trends leave much to be desired, Solana’s long-term future looks promising due to its focus on innovation, open-source capabilities and simplified block validation technology.