What is Solana (SOL): exploring the high-speed Layer-1 blockchain

With speed, scalability, and low fees, Solana has gained a loyal following in the crypto space. Solana’s token, SOL, fuels the network by enabling transactions and staking. The token has been on a rollercoaster of its own, reaching impressive highs and experiencing sharp declines — but it remains crucial to the network's smooth running.

What makes Solana unique is Proof of History (PoH), a cryptographic method that helps to verify a sequence of transactions at impressive speed. Many consider the feature fundamental to Solana's performance, but there's much more powering the Layer-1 blockchain.

In this article, we'll take a closer look at what Solana is, the part PoH plays in the network, compare Solana vs Ethereum, and much more.

TL;DR

• Solana is a high-speed blockchain for DApps, DeFi, and NFTs.

• It processes up to 65,000 transactions per second (TPS) with minimal fees.

• The SOL token powers the network. It's used for fees and staking, and has seen significant price fluctuations.

• Proof of History (PoH) is Solana’s unique technology that quickly validates transactions through timestamping.

• Solana aims to balance scalability, security, and decentralization without sacrificing performance.

What is Solana

Solana is a Layer-1 blockchain designed to provide fast, scalable, and secure infrastructure for decentralized applications (DApps), DeFi platforms, and NFTs. Solana’s goal is to overcome the challenges of high fee surges and slow transaction speed that other blockchains face with its architecture and consensus mechanisms.

Created by Anatoly Yakovenko in 2017, Solana was built with one main focus: overcoming the blockchain trilemma. If you've ever used Ethereum, you may have encountered times when the blockchain was congested, which led to slower transactions and higher costs. Solana handles this differently by enabling thousands of transactions per second (TPS) — up to 65,000 — with minimal fees. This high throughput makes Solana one of the fastest blockchains currently in existence.

How does the network achieve this speed? Solana uses a mix of advanced technologies, including Proof of History (PoH) and Tower Byzantine Fault Tolerance (Tower BFT). These features allow the network to process and confirm transactions quickly without compromising security.

PoH acts as a cryptographic clock for the network, which helps transactions flow efficiently, while Tower BFT makes sure the network can reach consensus quickly. This high performance has helped Solana attract users to its protocols, such as Solana Actions and Blinks, and made the network a popular choice for memecoin development. Solana's strengths have also helped attract developers and participants who want a smooth, low-cost experience.

How does Proof of History improve Solana’s speed?

We now know that PoH is a key technology underpinning Solana's performance, but what is it exactly and how does PoH support Solana's impressive speed?

What is Proof of History (PoH)?

Solana PoH isn’t just a consensus mechanism but more like a timekeeper for the network. In simpler terms, it’s a way of proving that time has passed between events on the blockchain.

Most blockchains, like Ethereum, rely on validators to confirm and agree on the order of transactions through consensus mechanisms like Proof of Stake (PoS). However, this process can slow down transaction speeds, as validators must communicate to agree on the sequence of events.

Solana’s PoH sidesteps this bottleneck. By cryptographically timestamping each transaction, PoH allows validators to know the exact order of transactions without needing to talk to each other frequently. This reduces the time and effort required to validate blocks, resulting in a faster process.

The outcome? Solana processes transactions in mere seconds, while Ethereum’s PoS, although much improved after “The Merge,” can face delays.

PoH vs PoS

To understand the advantage of PoH over PoS, consider the different approaches:

• PoS focuses on validators taking turns to confirm blocks based on the amount of tokens they've staked and a certain level of consensus among them. This is energy-efficient compared to Proof of Work (PoW), but can be slower when the network is congested.

• PoH removes the need for constant back-and-forth between validators to determine the sequence. With each event timestamped, transactions are validated in quick succession, leading to significantly higher throughput and lower latency.

Solana's PoH isn’t just a technical concept but the backbone of the network’s ability to outperform others in speed and efficiency. PoH helps keep Solana fast and efficient by recording events and simplifying validation.

Solana vs Ethereum: what's the difference?

When it comes to blockchain debates about speed, scalability, and usability, you can bet Solana and Ethereum will be in the mix. They’re similar platforms for DApps and smart contracts, but differ in their design, transaction speed, and user experience.

Let’s break down the differences to help better understand the Solana vs Ethereum debate.

Transaction throughput

One of the main distinctions between these blockchains is their transaction capacity. As mentioned, Solana boasts a high throughput of up to 65,000 TPS, thanks in part to the network's unique PoH consensus. This allows transactions to be processed quickly without waiting for the network to agree on the order of events.

On the other hand, Ethereum currently processes around 30 TPS on its mainnet. While the shift from PoW to PoS with “The Merge” has improved efficiency and reduced energy consumption, it hasn’t drastically changed Ethereum’s transaction throughput. However, Ethereum Layer-2 solutions like Optimism and Arbitrum are helping to bring transaction processing off the main chain, allowing for faster processing and lower fees.

Solana vs Ethereum performance

• Solana: Prioritizes high-speed transactions, enabling real-time applications like DeFi platforms and NFT marketplaces to thrive with minimal delays.

• Ethereum: Despite lower throughput, its robust network security and developer-friendly environment have made it the go-to for building DApps.

Transaction fees

Solana transaction fees are notably low, often just a fraction of a cent. This cost effectiveness has been a major draw for developers and users alike, who can perform multiple transactions without worrying about high costs. Low fees also make Solana attractive for high-frequency trading, gaming, and other applications requiring frequent microtransactions.

Ethereum is known for its relatively high gas fees, particularly during periods of network congestion. Gas fees are often a barrier, especially for small transactions. Layer-2 solutions and Ethereum’s roadmap aim to lower fees over time.

Ecosystem growth and developer community

• Solana: Solana’s ecosystem is growing rapidly, with a surge in DApps, DeFi protocols, and NFT platforms. Fast transactions and low costs have attracted projects that need a quick, scalable environment.

• Ethereum: Despite Solana’s growth, Ethereum remains the most widely adopted platform for DApps. The network's developer community, extensive documentation, and established tools like Truffle and Remix make it a favorite for developers building DApps.

Solana vs Ethereum 2024: which is better?

Choosing between Solana and Ethereum depends on your needs.

• If you need speed and low transaction fees, Solana might be the better choice, particularly for applications needing fast processing.

• If you’re looking for a mature ecosystem with established developer support and don’t mind higher fees for security and decentralization, Ethereum remains a solid option.

How does Solana handle cross-chain compatibility and interoperability?

One of the main goals of blockchain technology is to create decentralized platforms, but these platforms can sometimes operate like silos. Solana’s interoperability with other blockchains is crucial for the growth and connectivity of the crypto space.

Imagine transferring tokens or using assets from one blockchain to another without leaving your wallet or DApp — that’s what interoperability allows. It enables the fluid movement of digital assets, data, and functionality across different networks, making the entire crypto space more efficient and user-friendly.

Solana Wormhole bridge

Another key solution driving Solana’s cross-chain compatibility is the Wormhole bridge. The Wormhole bridge is a bi-directional communication protocol that connects Solana to a variety of other blockchains, such as Ethereum, Base, and Uniswap.

• Asset transfer: You can transfer tokens, NFTs, or other digital assets between Solana and other networks in a quick and efficient manner.

• Smart contract interaction: Developers can build DApps on Solana that can communicate with smart contracts on other chains, expanding the capabilities of DeFi and other applications.

With Wormhole, Solana taps into liquidity and individuals from other networks, becoming a powerful tool for multiple blockchains.

Why does this matter for DeFi and DApps?

Cross-chain functionality opens up huge possibilities:

• Expanded DeFi applications: You can seamlessly trade assets, provide liquidity, and participate in yield farming across different blockchains without leaving the Solana ecosystem.

• Better user experience: With multi-chain solutions, you don’t need to use many wallets or exchanges to move assets across blockchains. You can do it all through one bridge like Wormhole.

What’s the goal with multi-chain?

The goal is to boost connectivity across the crypto space. Solana’s Wormhole bridge has made progress, and the team is exploring new ways to make Solana work with other blockchains. This will make Solana easier to use, improve the mobility of your digital assets, and allow access to more DApps.

What's the latest from Solana for 2024?

Solana has been making strides in 2024 to strengthen its network, aiming to improve scalability, reliability, and decentralization. With a growing community and an expanding ecosystem, the focus has been on improving performance without losing the main qualities that make Solana unique.

Improved network stability

One of the biggest goals of Solana's network upgrades in 2024 has been to maintain stability. While the network has boasted impressive transaction speeds, there have been occasional hiccups, like network congestion and brief outages.

The Solana development team has been proactive in addressing these issues through a series of improvements. This includes validator nodes, which are important in processing and confirming transactions. They're being upgraded with better software to make them more reliable.

New communication protocols

New communication protocols are being tested and applied to make interactions between nodes easier. The goal here is to reduce delays and bottlenecks. The IBC protocol enables users to perform cross-chain transactions between Solana and other IBC-enabled chains. This allows for seamless and efficient interoperability across different blockchain networks.

SOLMail is Solana’s first blockchain-based email service, allowing you to send and receive emails using your wallet address. It provides a secure and decentralized way to say it without relying on traditional email providers.

SolChat is a DApp built on the Solana blockchain, offering a secure, censorship-resistant, and user-owned alternative to traditional social media platforms. The platform provides the following:

• End-to-end encryption for secure messaging

• Community-driven content moderation to empower users

• Immutable storage of all communication history on the Solana blockchain

• Secure audio and video calls for private conversations

• Whiteboards for real-time collaboration, enabling seamless teamwork

Solana Action: faster and more secure transactions

Solana Action is designed to optimize transaction processing. By allowing more efficient transaction batching and validation, Solana Action improves the speed and security of transactions on the network.

This means quicker finality for transactions — a crucial factor for DApps, especially those handling large volumes like DeFi protocols and NFT marketplaces.

Scalability and validator performance

As Solana grows, scalability becomes even more crucial. To address this, the team has implemented upgrades that allow the network to scale more effectively without losing its speed or decentralization:

• Efficient validator management: Validators are the backbone of any blockchain, and Solana validator performance has been a focal point for improvement. The introduction of better reward mechanisms has encouraged more and more validators. This not only makes the network safer, but also makes it easier to handle more transactions.

• Solana Blinks: Another development is Solana Blinks, which reduces network latency and improves transaction throughput for faster transaction processing.

The final word

Solana has established itself as a leading blockchain network for its speed and scalability, largely thanks to its Proof of History (PoH) system. PoH enables quick validation and low fees by cryptographically timestamping transactions, setting Solana apart from other blockchains. As a result, the network is a popular choice for DeFi, NFTs, and other apps needing quick and affordable transaction processing.

With developments to the network continuing, it's likely Solana will continue to grow and evolve to underpin new DApps and use cases. Interested in learning more about what's possible on Solana? Check out our guide to Raydium, a Solana-based DEX and Sanctum, which aims to improve liquid staking on the network.