In the fast-paced world of cryptocurrency, it is common for tens and even hundreds of new projects to come and go without a trace. But in the midst of these fleeting entities, it is also not unusual for some real success stories to make their presence known.
One such cryptocurrency platform is Solana, which has established itself as the next big project of the industry. With the project’s scalability, speed, and overall capability being touted as some of its selling points, it is not unusual for anyone to take an interest in it.
So exactly what is Solana and what does it do? Fortunately, the answers are not hard to find. To help you hold a firm grasp over this rising star of blockchain, here’s a lowdown on everything about Solana.
What is Solana?
Solana is a blockchain platform that was created in 2017. The network acts as a public blockchain, which means that it is not controlled by a central entity. This makes it decentralized and self-sufficient. The platform’s code is also open-source, which adds to its status as a publicly-developed blockchain network.
Solana has its own eponymous token that is traded with the ticker of SOL. As of mid-October 2021, the token ranks in the Top 10 cryptocurrencies by market cap. This outlines the sought after status of the token, which has surpassed many other cryptocurrencies in just over 2 years of its launch.
The SOL token uses a proof-of-history (PoH) timing mechanism. This timing mechanism keeps a record of transactions, while also facilitating the network’s proof-of-stake (PoS) protocol. This method supports the blockchain’s goals to achieve higher scalability and throughout. This also earns SOL the ability to process more than 50,000 transactions per second.
Now as to what does Solana do: It is a blockchain development platform that allows you to create your very own blockchain solution. In this sense, the Solana platform behaves similarly to Ethereum and holds the ability to have an entirely new ecosystem created on its parent blockchain. But it stands apart from Ethereum in terms of its overall speed and ability to scale with higher usage.
Further cementing its comparison to Ethereum, Solana also uses a smart contracts-based system. This allows you to create your own solutions with a rule-based approach. At the same time, it also paves the way to developing entirely new services altogether. This means that developers who use the blockchain network to create new programs or solutions can also launch their own tokens.
A large portion of the fervor around Solana stems from this very thought of creating new solutions. Having the ability to scale these creations in the face of higher usage is also a big reason why the network has received such a warm reception from developers and users alike.
In many ways, this response stems from the possibility that if given the chance, Solana could solve the scalability and speed problems that Ethereum falls prey to every now and then.
In turn, this makes way for a higher level of interest in Solana and makes it known across various segments of the cryptocurrency industry. Even those who had been asking what is Solana earlier this year have entertained the idea of Solana becoming a permanent part of the cryptocurrency world.
What Does Solana Do?
With it soverall ecosystem, Solana makes way for developers to launch their own cryptocurrency or blockchain solutions with ease. These new platforms can then interact with each other to support the exchanging and swapping of Solana-based tokens within its ecosystem.
With the help of smart contracts, you can set an abundance of conditions to any action or transaction. This also lets you create highly reliable decentralized applications (DApps) that come with the security, safety, and dependability of a fast-functioning blockchain platform. Many of the use cases of Solana relate to financial utilities, but the network also creates favorable conditions for entertainment as well as security-based applications.
When combined with Solana’s proposed speed for scalability and expanded transactions, these qualities act as the unique selling points of the platform. In addition to driving more developers its way, this also provides the solution with more general users who want to benefit from these features.
This describes what is Solana and what purpose it serves to an extent. But the real appeal of the platform lies within its use case in decentralized finance (DeFi). Since DeFi relies on using self-sufficient and decentralized applications to perform financial transactions, Solana’s ecosystem and its promise of fast transactions provides the perfect conditions for DeFi to thrive.
The promise of DeFi holds several benefits in itself. For one, it removes the requirement of third-parties such as underwriters or loan agents. In turn, it reduces the costs that are otherwise involved in financial transactions due to these third-parties. This also leads to faster transactions, more accessible financial instruments, and more transparent and open transactions.
That is why, many DeFi enthusiasts are flocking towards the Solana platform to either develop new DeFi applications or check the capabilities of already-developed solutions. With the rise of DeFi in applications such as lending and trading, this has boosted Solana’s popularity to new heights.
Does Solana Hold Up to Expectations?
While Solana is currently riding out the hype train and receiving user interest left, right, and center, it is too early to tell whether the platform has what it takes to give Ethereum a tough time in the long-run. This has just as much to do with the platform’s age as well as the community that it has amassed for itself during this time.
With that being said, Solana has generated quite some buzz in the cryptocurrency sector. As noted by Bloomberg, the platform is called a “potential long-term rival for Ethereum” by some investor segments. This is directly due to the platform’s ability to use smart contracts as well as its promise to deliver faster transaction speeds.
In terms of value, Solana has surpassed expectations for its investors as well as ambivalent spectators. When SOL started trading on April 10, 2020, it had a price of $0.78. Since then, it has achieved the highest price of $213.47 on September 9, 2021. By mid-October 2021, SOL’s value had been ranging around $160.
All of these factors have put SOL right in the frontline among major cryptocurrencies and platform tokens. If anyone is looking for the answer about what does Solana do before they invest in SOL, there is a dedicated community behind the token that can provide the answer very rapidly.
Solana’s overall speed and the motivation to test it out has also caused an abundance of developers and users to utilize the platform. This has also led to an array of DApps, blockchain tokens, and protocols to emerge from Solana. Many of them have also become operational during the process, while others await widespread usage for their outlined purpose.
For some, Solana has also become a sought after platform to create non-fungible tokens (NFTs). These unique tokens can represent assets such as digital art and help in the transfer of ownership for said items over blockchain. In an era where NFTs rule the conversation, this has also been a notable reason behind the network’s popularity.
As mentioned above, DeFi is yet another and perhaps one of the most important factors behind the rise of Solana as a development platform. Through the use of smart contracts, many developers are executing Solana’s capabilities as a DeFi platform. Some of these applications also allow integrations with other blockchains or at the very least open the possibility for interconnectivity.
The platform has also held up to expectations on the credibility front, where it keeps in touch with the Solana community through different points of contact. This includes email, social media channels, as well as live chat. To add to the platform’s reliability and self-sufficiency, it also operates community channels on Discord and Telegram.
However, the Solana platform has not been operating without its shortcomings. Since it is a relatively new platform, its promise to handle a plethora of transactions does stand on shaky grounds.
Solana Does Not Come Without Its Problems
In September 2021, the cryptocurrency market saw high fluctuations where many cryptocurrencies took a plunge in value. The effect was started by Bitcoin, which was weathering the effects of a glitch in Bolivia’s solution to use Bitcoin as legal tender.
But as Bitcoin dropped by around 10 percent and took many of its peers down with it, SOL stayed tall with a drop of just a couple of percentage points from its previous value. This bolstered the interest and belief of many investors and users alike. However, this increased engagement with the larger cryptocurrency market seemed to have worked against Solana.
After quickly learning what is Solana, many users wanted to check out the platform by themselves. Whereas, others were still content watching from the sidelines. With that being said, those who required a hands-on approach were in for a surprise when the network went down after processing 400,000 transactions within a second.
This was an understandable error. But it still held out the Solana platform from doing anything. As a result, the platform was out of service for a few good hours. While it came fully back online the next day, that incident had marred its reputation a little due to the previous claims of it giving a difficult time to Ethereum.
In the next few days, Solana not only maintained its value, but also climbed a little further. This event showed that even though Solana might not be perfect, it has the potential to sustain such PR nightmares and come out stronger from them.
The Platform Already Has Its First Offerings Ready to Go
Since Solana is very directly competing with Ethereum, you may want to know what does Solana do when put in the same shoes as the famed network itself. To give you a quick demonstration, let’s take a look at some of Solana’s ecosystem platforms.
GenesysGo (Infrastructure Development Platform)
GenesysGo is an infrastructure platform within Solana. Essentially, the platform makes it even easier for new users to use blockchain technology through Solana. This makes the platform a promising player in the Solana ecosystem.
SolaVerse (NFT Marketplace)
SolaVerse is a digital art and non-fungible token (NFT) marketplace that operates on the Solana platform. Banking on the popularity of NFTs, the platform makes it easy for creators to sell their digital art through blockchain.
SolDate (Dating Platform)
SolDate prides itself on being the first decentralized dating service that is also built on blockchain technology. The platform provides an innovative use case of decentralized apps by relying on the security that is offered by blockchain technology.
SolanaFM (Data Indexer)
SolanaFM is an indexing engine that allows you to find different sets of data through simple queries. The platform makes it easier to use Solana by keeping all relevant information a few keystrokes away.
Space Hamster (Collectible NFTs)
Space Hamster is a collectible NFT exchange and marketplace that sells unique tokens in the form of cartoon hamster likenesses. The project can be directly compared to the CryptoKitties platform on Ethereum, even though Space Hamster has a long way to go.
There are several other platforms on the Solana blockchain that are either already active or remain in the development process. Not all of these blockchains and respective apps may have the potential to go the distance. However, nearly all of them highlight different use cases of what is Solana offering to its users.
DeFi is the Prime Offering by Solana
It is also important to note that even though all use cases have something to highlight about the platform, it is DeFi that sees the most interest. For instance, out of the current 423 applications currently listed on Solana’s website, 112 belong to DeFi. With that being said, it’s important to note this number is bound to change due to how rapidly applications are debuting on the platform.
These offerings include but are not limited to the following.
8Pay is a DApp that allows you to orchestrate and execute on-demand payments through blockchain technology. This makes it the equivalent to many digital wallets that let you receive payments through invoices or requests. The app can be integrated with wallets such as MetaMask and Ledger Wallet and works with exchanges such as Bithumb Global and Uniswap.
Serum is a decentralized exchange (DEX) that is powered by FTX as well as other developers. In order to support its operations, the platform uses an on-chain central limit order book (CLOB). This makes it different from many other DEX that have to operate a part of their system off-chain.
Bonfida highlights what does Solana do for its users. Built on top of Serum, the app serves the purpose of delivering data-driven analytics to the user. This adds more transparency to Serum’s operations while also helping you through the advantages of data visualization.
Waves uses Gravity’s cross-chain and blockchain-agnostic system to connect its exchange with Solana. This allows users to perform data transfers between other participants of the Gravity network that include names such as Tron and Binance Smart Chain.
Credit Risk Lending Protocol
The Solana CRLP is a proof of concept to outline how Solana’s smart contracts can be used for DeFi lending using under-collateralized loans without any know your customer (KYC) protocols.
As mentioned above, there are many other DeFi apps that are built on Solana. Since the network is currently in its fast growth phase, this list of apps can continue to grow in the next few months.
Who Are the People Behind Solana?
In the cryptocurrency industry, false projects often make their presence known with much glitz and glamor behind them. That is why, while you are learning about what is Solana promising to its users, you may want to know about the team that is bringing these commitments to life.
While Solana has been a public and decentralized blockchain, its team has been transparent about its identity from the get go. This includes Solana’s cofounder and Solana Labs CEO Anatoly Yakovenko, who has been quite a prominent figure in promoting and presenting Solana to the public. Yakovenko has a tech background and formerly worked for Qualcomm and Dropbox.
The Solana Foundation currently operates out of Geneva, Switzerland. The independent board behind the foundation makes it a point to tell people what does Solana do. The foundation also fulfills the responsibility to increase Solana’s popularity and improve its overall usage to new heights.
This makes Solana different from Bitcoin, which doesn’t have a public name to its founder. But it also makes it similar to many other projects such as Ethereum and Litecoin, where the founders of these projects are not only publicly known, but also make regular appearances in association with their creation.
This gives Solana a certain sense of reliability, which further adds to its public profile that is maintained through community channels and social media platforms alike.
Where Can I Buy Solana?
You can purchase Solana through a variety of cryptocurrency exchanges.
Some of the most popular exchanges where you can buy and sell Solana include but are not limited to the following.
- Huobi Global
- FTX US
If a platform allows you to buy and sell Solana, there is a high possibility that you can also find a cryptocurrency trading bot to facilitate your activities on it. This allows you to trade Solana in a way that lets you keep up with rapid fluctuations and changing market conditions.
Now that you know what is Solana and where to trade it, it’s important to remember that the funds you use for buying and selling do not comprise your entire savings or livelihood. Since cryptocurrency is a volatile market, it’s important you trade responsibly and with funds that you can afford to lose. This allows you to see profits without taking an unthinkable risk.
As long as you keep this in mind, you can make the most out of trading Solana as it makes its journey to become a highly popular offering.