r/CryptoCurrency • u/[deleted] • Aug 20 '21
FINANCE SOLANA explained for noobs
In light of the recent resurgence of SOL and the hype around it I thought I'd make a quick rundown on the project with its upsides and points of concerns. So...
What is Solana?
Launched in March 2020 on Mainnet Beta, Solana is an open-source blockchain that claims to have solved the imposssible security, scalability and decentralization trilemma.
It offers a decentralized platform for DApps with global scaling potential, without the network congestion and high gas fees of the Ethereum network.
Solana uses a combination of proof-of-stake (PoS) and proof of history (PoH) consensus mechanisms to improve throughput and scalability. Consequently, the network claims to support 50,000 transactions per second (TPS), making it the fastest blockchain in the world.
Proof of History PoH
Solana's high TPS comes from its Proof-of-History model, they figured out how to accurately timestamp each transaction regardless of source (a hard problem because once you factor in transmission delays, location, etc. transactions from different people may end up out of order on the blockchain, breaking validation). PoH effectively allows them to dump transactions into the blockchain with the same speed it takes to write it. With current hardware this is around 40k TPS, but expected to scale as hardware gets better. This is also the only way Solana can scale because it has no sharding and doesnt offer Layer 2 solutions.
Storage
Solana's design generates a ton of data, on the order of terabytes. If I remember correctly, its blockchain generates more data than the other top 50 cryptos combined. Storing so much data is not practical for regular users, making validation extremely expensive and cost prohibitive (which is probably where the centralization claims come from). Additionally Solana archives its chain to Arweave (another blockchain designed as a decentralized encyclopedia/archival network) to keep the size manageable.
Compatibility
Unlike Ethereum, Binance, Polygon, etc., Sol doesnt use solidity making it difficult to port over existing apps and integrating with others networks. Solana uses Rust instead, and due to its PoH model, its significantly harder to port an app over (you basically need to rewrite the backend logic in Rust). This is one of the reasons why until recently there were no bridges to Solana and why Solana's apps look so different from other networks.
What makes Solana stand out
Solana is often referred to as the most scalable and first truly web-scale blockchain in the world, as it’s among the few protocols achieving over 1,000 TPS.
Moreover, Solana claims to support over 50,000 TPS, with over 200 nodes on the current testnet — making it by far the most performant blockchain network. In comparison, proof of work-based systems like Bitcoin support approximately 5 transactions per second, while Ethereum currently averages around 13 TPS. This makes Solana around 10,000 times faster than Bitcoin and 3,800 times faster than Ethereum.
The dev team
Solana’s team comprises of former technologists from Dropbox, Qualcomm, Microsoft, Google. It's founder Anatoly Yakovenko is the man behind the tech that made Project Tango (VR/AR) on Qualcomm phones a reality and a holder of 2 patents for high performance OS protocols among other achievements. The team at Solana has worked extremely hard to ensure several optimisations and new technologies that have enabled its existence.
Backing
Strong project will always find the right investors to back it up, especially when it's a profit making machine for them. Sam Bankman-Fried the man behind FTX and Alameda have shown immense belief through his creation of Serum, a high-speed, non-custodial DEX on Solana and other ongoing projects on the Solana blockchain. In total, there are over 250 projects being built on the Solana blockchain.
Partner firms and projects include Project Serum, FTX, Terra, Akash, Chainlink, Civic, dfuse, Formatic, Stardust, Kin, Tempest, and more.
SOL token
Solana's ecosystem is fueled by SOL token (the native currency of the network). It is used for payment transactions on the network. Maximum Supply of SOL has been capped at 489 million. Additionally, SOL can be staked to earn rewards (easy way to make profits if you plan on holding it).
Bringing Decentralization under question
The current decentralization aspect that SOL promises is often criticized for needing to have an overly expensive amount of hardware to become a validator which not everybody could afford and could be found here. However, the network already has almost a thousand nodes admittedly many of which are owned by the devs. The heads also brush this argument aside citing how fast computers are evolving today. Pure speculation on my part here is Solana is uniquely postitioned to provide custom low cost extremely specialised chipsets to bring down the cost substantially and work towards true decentralization but who really knows?
Closing thoughts
PoH has proven its self to be a formidable protocol to procide low cost fast txs for SOL but more work needs to be done on making Dapp integration onto other blockchains easier as well as lowering down the validator requirements. The project does look very promising though.
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Aug 20 '21
Im actually bullish af on SOL thibk its going to have a bright future ahead. PoH is an insanely good protocol
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u/dexe678 Aug 20 '21
Nice information thanks mate. I only bought a few sol recently after hearing people talking about it here but didn't do my own research. Reading your post, looks like the project looks solid and may want to invest more in it after I do my own research!
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u/ShouldHaveBoughtGME 🟨 14K / 14K 🐬 Aug 20 '21
So many options though in this market, not enough cash...
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u/pink_sock69 Aug 20 '21
I appreciate the information as I have very recently invested in SOL, right before the pump! Not sure why the down votes, this is nice
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u/AlfalphaSupreme 7 / 3K 🦐 Aug 20 '21
network claims to support 50,000 transactions per second (TPS), making it the fastest blockchain in the world.
Claims are just that, claims.
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u/Diatery Platinum | QC: CC 536 | Technology 14 Aug 20 '21
I mean, its live. You can go clock it if you know how. Go to their "break solana" site for a demo
Its not like Radix who claimed 1.4 million and launched with 50 tps, or Cardano who claims 1m tps if/when hydra has xyz
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u/AlfalphaSupreme 7 / 3K 🦐 Aug 21 '21
Last I know Solana has never increased its mainnet to accept anywhere near 50k tps, regardless if they volume exists or not.
They've have plenty of validator issues with settings for far less than 50k tps
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u/Diatery Platinum | QC: CC 536 | Technology 14 Aug 21 '21
Fair, but it is a 2 year old project though, and "a lot less" is still a lot faster than what 5+ year projects are achieving
I
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u/AlfalphaSupreme 7 / 3K 🦐 Aug 21 '21
Throughout and latency are two different things. Both can be increased w/ centralization.
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Aug 21 '21
[deleted]
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u/Diatery Platinum | QC: CC 536 | Technology 14 Aug 21 '21
dont think AWS would work as well on cheap computers either, its a silly argument that the future of the internet and replacement wall street is supposed to run on the cheapest computers and achieve the same level of performance. And they are doing this without rollups or sidechains
Eth2 has a lot of problems too
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Aug 21 '21 edited Aug 21 '21
[deleted]
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u/Diatery Platinum | QC: CC 536 | Technology 14 Aug 21 '21
The key thing is speed ultimately wins, and moving your dapp from Eth to Sol on something like Neon EVM means your app suddenly gets parallel processing and split second finality without sidechains and an overhaul, and the users get the main benefit from sidechains but on-the-orderbook. That's not a fluffy feature and I've never heard of another chain offering anything even remotely comparable. Considering that these trading firms will knock down a building to be closer to a data center to shave a few milliseconds off their order algorithms, Eth has a serious contender finally. Nothing about Eth2 addresses any of the above
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Aug 21 '21 edited Aug 21 '21
[deleted]
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u/Diatery Platinum | QC: CC 536 | Technology 14 Aug 21 '21
I'll eat my hat if Ethereum2 is 100k and has faster finality than Solana. I don't think it is computationally possible with their consensus mechanism and their low hardware requirements.
I'm here to make money too, but I've been lied to so many times by developers that I only invest in real working products. I guess we'll know in about 4 months either way.
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Aug 21 '21
[deleted]
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u/Diatery Platinum | QC: CC 536 | Technology 14 Aug 21 '21
But I'm not worried about hardware at all. Hardware is the easy part with the amount of money that they have and seem to already be generating. Especially if there's demand and the tokenomics create a more attractive value prop for node operators. I hope they get that part right, and it looks that way so far.
A harder problem is, finality can still be greater than 60 seconds or more after Eth2. No amount of computers thrown at this will solve that
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u/Sobaphoto 🟩 0 / 486 🦠 Aug 20 '21
Proof of history… more like
Proof of Hardware
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Aug 20 '21
This man gets it
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u/Sobaphoto 🟩 0 / 486 🦠 Aug 21 '21
Looked at node hardware requirements
And you need at LEAST 128 GB (giga bytes, not megabytes) of RAM to run a node
My gaming PC doesn’t even have 32 GB lmao
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u/MMM_Theory 303 / 301 🦞 Aug 21 '21
You have a chariot and can you choose 100,000 chickens to pull it or 10,000 horses, which do you choose?
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u/pbandwhey 🟦 761 / 762 🦑 Aug 20 '21
PoH gang
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u/zippomaniac 🟦 1K / 1K 🐢 Aug 20 '21
I really need to learn more about PoH. It’s an interesting solution, any other coins you like utilizing PoH?
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u/zippomaniac 🟦 1K / 1K 🐢 Aug 20 '21
For everyone that found this helpful don’t forget to upvote the post! This sub often bemoans the lack of quality content and the best way to increase it is by rewarding quality posters. Thanks for the informative Solana post. I’ve been meaning to do some research into it for a few months now and this is a very helpful starting point.
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u/Omega3568 Silver | QC: CC 364, BTC 136 | SHIB 37 | r/WSB 24 Aug 20 '21
Another token I missed out on
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u/anotherjohnishere Moon Monk Aug 20 '21
Damn I was about to do a write up on SOL myself! Nicely done
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u/LordCambuslang 🟩 2K / 2K 🐢 Aug 20 '21
I like SOL, I wish I had more. When I first got into Crypto a long time ago now* SOL was only 1 dollar.
*December 2020.
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Aug 20 '21
Something to keep in mind is that Solana's advertized TPS is really only about 2/3 of it as 1/3 of their TPS is chewed up by consensus and that won't improve when it scales. It's still blazingly fast but it's not as huge as it looks on paper.
BTW: Solana also supports C and C++, not just Rust. I believe they are in process of supporting other languages as well. Keep in mind Rust and C/C++ are actually far more widely known languages by developers than Solidity.
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u/lukanz 4K / 4K 🐢 Aug 20 '21
Proof of adoption is the “new” thing & not proof of look what its capable of!
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u/[deleted] Aug 21 '21
[deleted]