In this exploration, we delve into the technological prowess that has fueled Solana’s remarkable resurgence, positioning it as one of the most efficient blockchains in the crypto space. Solana stands out for its native scalability, impressive throughput, rapid transaction speed, and minimal transaction fees. We will analyze how these factors and other milestones of the past year, such as the sold-out Saga phone, the BONK token airdrop, and the major players who have joined this network, have contributed to Solana’s rise as the new fifth-largest cryptocurrency.
Why Solana is so efficient
Solana’s efficiency is a result of its design and technical architecture. The platform leverages several key technical features to provide high throughput and low transaction costs.
One of the most important aspects of Solana’s architecture is its Proof of History (PoH), a decentralized clock that timestamps transactions and allows the platform to achieve high throughput without relying on external timestamps or validators to order transactions.
In addition, Solana uses the Tower Byzantine Fault Tolerance (BFT) consensus algorithm, which is a customized version of the Practical Byzantine Fault Tolerance (PBFT) model. Tower BFT uses the PoH as a cryptographic clock, allowing validators to vote on the state of the network with minimal communication overhead. This efficient consensus mechanism allows Solana to process thousands of transactions per second.
Saga Phone and BONK Token Airdrop
The Saga phone, which was initially considered a “failure” by its creators, experienced a resurgence in sales thanks to the BONK token airdrop. The phone first went on sale early last year, and in August its price was slashed from $1,000 to $599. Despite the price cut, sales remained sluggish for a while.
However, the BONK token airdrop seems to have revived sales of the Saga phone. Arbitrage traders chased the 30 million BONK token airdrop available to every Saga phone owner. At the time, BONK was worth nearly $700 for a phone that costs $599. This caused Saga sales to skyrocket quickly, with Solana co-founder Raj Gokal tweeting that sales had increased 10x in just 48 hours, and the phone sold out before the New Year. The surge was so pronounced that they had to raise the price.
Big players choose Solana
Last year, many established companies from both the traditional and decentralized financial world began to see all the advantages of operating on Solana’s network for deploying their projects on it, as was the case of:
- Visa, which has one of its goals to increase the speed of cross-border payments, extended its stablecoin settlement capabilities with Circle’s USDC stablecoin to the Solana blockchain.
- Shopify has connected Solana Pay, a payment protocol built on top of this network, to allow users to pay in USD Coin (USDC).
- Circle, the stablecoin issuer, made its euro-backed stablecoin EURC live on Solana.
- Threshold, the company that brings BTC to the Ethereum network in the form of tBTC, started offering the same service for the Solana network.
- Ondo, the tokenized real-world asset (RWA) platform, extended its US Treasury-backed tokens to the Solana blockchain and decentralized finance (DeFi) protocols such as Orca and Raydium.
- MakerDAO has also made statements that the platform’s future native blockchain should be built on the codebase that underpins Solana. In a post on the governance forum, co-founder Rune Christensen said that the codebase’s “technical quality,” “resilience through the FTX blow up,” and working examples make Solana “the most promising codebase to explore further.”
- Maple Finance, the first protocol to bring unsecured lending to the Solana ecosystem, returned to Solana with tokenized T-bills.
- Pyth, a high-frequency oracle built on Solana ecosystem technology, began using the Solana Permissioned Environment for its community governance.
- Armada released a suite of highly configurable tools for use by any Solana-based project.
Solana has faced its fair share of struggles and controversies since its launch in 2020. One of the most significant outages occurred in September 2021, when the network experienced a major outage that lasted over 17 hours.
Another big struggle they had to overcome was the FTX collapse. Mainly because they were an early investor and regularly received a significant amount of SOL unlocked according to a planned vesting schedule. They held over $1.16 billion worth of the tokens as of September 2023, as per a court filing. However, Solana has been able to distance itself from FTX.
As Solana continues to assert itself as a leading blockchain platform, understanding its optimization strategies becomes crucial. Let’s delve into the specifics of each one to uncover how they synergistically elevate Solana’s performance in the blockchain landscape.
Gulf Stream is a mempool management protocol that allows validators to execute transactions in advance, increasing throughput and reducing latency.
Turbine is a block propagation protocol that optimizes data transfer across the Solana network. It achieves fast and efficient data propagation by breaking blocks into smaller packets and transmitting them through a hierarchical structure. This reduces the time required for block acknowledgment.
Sealevel enables the platform to process multiple transactions simultaneously. By leveraging parallel processing, Sealevel significantly increases Solana’s overall throughput and efficiency.
The combination of technical merits, its PoH (Proof of History), BFT (Tower Byzantine Fault Tolerance), growing adoption by institutions such as Visa, Circle, developer mindshare with open source projects, and resilience to recover from the FTX collapse has driven Solana’s resurgence as a leading smart contract platform. Its efficiency makes it attractive for building global-scale applications. Solana’s journey is a testament to its commitment to innovation and adaptability in the rapidly evolving crypto landscape.
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