Solana (SOL)

Solana is a layer-1 blockchain network making waves in 2021. It is open-source and decentralized, with consensus achieved using Proof of Stake. Solana boasts transactions speeds of 50,000 transactions per second (tps) with its native coin, SOL.

Solana has become a true contender to Ethereum as it achieves to solve the trilemma in crypto; Solana offers decentralization, security, but it shines in scalability.

Solana Blockchain

The main proponent that separates Solana from other Proof of Stake blockchains is their Proof of History (PoH) protocol. Other blockchains require validators to talk to one another in order to agree that time has passed, and relies on a sequential production of blocks. This method suffers from delays waiting for confirmation across the network before moving forward.

Solana requires all validators to maintain its own verifiable delay function, allowing the network to ignore local clocks and accommodate all potential network delays as the data structure is delivered and re-assembled. Solana is able to achieve 400ms block times and achieve a throughput greater than 50,000 tps with transactions costing fractions of a penny.

Tokenomics

• Solana, as of this writing, has 296.7million coins in circulation out of a total supply of 504.1million.
• There is no cap on the max supply of Solana coin meaning SOL is inflationary.
• Solana follows an inflation schedule, with initial inflation at 8% in 2020 and decreases at a 15% rate until it reaches a long term inflation rate set at 1.5%.
• New coins are divided to stake-holders based on the amount staked.

Concluding Thoughts

The Solana blockchain has had strong growth so far in 2021, predominantly through highly anticipated NFT and DeFi projects, faster transaction speeds, and lower fees than Ethereum. The initial inflation at 8% will help drive adoption as the higher staking rewards help entice investors to join the ecosystem. Decreasing the inflation rate by 15% per year also helps maintain the value as adoption grows.

I believe we will continue to see Solana perform well, as many developers and users will choose the Solana network over Ethereum, mainly due to the minimal transaction fees and speeds.