Solana is an efficient smart contract platform that enables developers to build and deploy highly scalable decentralized applications (dApps).
Blockchain projects that intend to scale for mass adoption are better off on Solana given its high transaction throughput, negligible fees, and fast transaction settlements.
In this post, I would be sharing with you everything you need to know about Solana (SOL) so that you can determine for yourself whether to invest in it or not.
Additionally, I would be giving you my SOL coin price predictions for the next few years ahead.
But first, let’s take a quick look at some interesting facts about Solana (SOL).
Solana (SOL) fast facts
- Solana has all the benefits of layer 1 blockchains such as Ethereum and layer 2 blockchains such as Polygon combined but shares none of their weaknesses.
- Solana is optimized for optimum security, decentralization, and scalability. Thus neatly solving the blockchain trilemma problem.
- Solana has a sub 1 second (400 to 900 milliseconds) block time and an average transaction fee of $0.00025.
- Solana can process more than 50,000 transactions per second (TPS) with a theoretical limit of 710,000 TPS.
- Solana has the lowest maximum coin supply (of 500 million SOL) among all similar smart contract platforms.
- More than 80% of the entire SOL supply has been staked to secure the Solana blockchain.
- There are currently over 900 validators (and growing rapidly) on Solana.
- As of the time of writing this line, over 24.4 billion transactions have been executed on the Solana blockchain.
- Solana supports multiple programming languages such as Rust, TypeScript, Shell, SCSS, C, etc., etc.
- Front-running and transaction re-ordering tactics by miners are impossible on Solana.
- Over 300 projects are being built on Solana as of today (August 17, 2021).
- According to CoinGecko, there are currently about 167 contributors to the Solana blockchain codebase.
What is Solana
Solana is a high-performance smart contract blockchain that enables developers to build dApps that can scale to serve billions of users.
The project started in November 2017, but the public mainnet was only launched in March 2020.
Solana neatly solves the infamous blockchain trilemma problem of scalability, security, and decentralization using its novel Proof of History technology paired with the Proof of Stake Solana algorithm.
Ethereum is known for its security and provable decentralization but it lacks scalability, transactions are slow and gas fees are very high.
The Binance Smart Chain (BSC) came to the rescue with its 3-second block times and sub $1 dollar transaction fees but it’s not fully decentralized and thus less secure.
Solana has none of these tradeoffs as it provides developers and users with a fully decentralized, scalable, and fast blockchain network with negligible fees.
The Solana team
The development of the Solana blockchain network is being championed by two separate organisations, The Solana Foundation and Solana Labs.
Solana Labs is a Francisco-based private company and the core contributor to the development of the Solana blockchain.
The Solana Foundation on the other hand is a non-profit organization headquartered in Zug, Switzerland, dedicated to the decentralization, growth, and security of the Solana network.
The Foundation provides the environment for independent validators, developers, and users to participate in securing the Solana network through grants, infrastructure development, etc.
Solana core features
Solana uses eight innovative technologies to achieve its much-touted efficiency.
These all work together to help Solana achieve optimum scalability, decentralisation, and security.
- Proof of History (PoH)
- Tower BFT
- Gulf Stream
1. Proof-of-History (PoH)
Solana’s novel proof-of-history (PoH) mechanism helps it achieve high transaction throughput and faster block times.
It does this by ordering transactions in such a way that enable nodes to agree on the time and order in which transactions occurred without having to wait to hear from other nodes.
Every unique input or transaction Solana produces a hashed output that contains a timestamp of the event/transaction.
This output is then used as the input of the next hash. Thus forming a long chain of hashed transactions.
This way, validators nodes know exactly which transaction comes before the order without waiting for confirmation from other nodes on the network.
Thus reducing the amount of data and communication validators have to deal with to process transactions. And effectively reducing network latency and increasing transaction block time.
2. Tower Byzantine Fault Tolerance (TBFT)
The BFT specifies how nodes on a blockchain network reach consensus and avoid a possible 51% attack.
Solana’s TBFT allows nodes to reach a consensus just by looking at the property of each hash generated by the PoH mechanism.
This helps nodes to avoid wasting computing resources on communications and reduce network latency.
On regular blockchains such as Bitcoin and Ethereum, transactions are bundled together into blocks.
These blocks of transactions are then propagated to all nodes on the network who have to verify the validity or otherwise of every transaction it contains.
Once a sufficient number of nodes agree to its validity, the block would be confirmed and added to previously confirmed blocks.
With Turbine, instead of propagating transactions to nodes in blocks, Solana sends them in small bits called batches.
Each node receiving different batches for verification. The verified transactions are then organised into a chain based on the time in which they occurred as contained in their hash.
Thus allowing Solana to achieve bandwidth usage efficiency and increases its capacity to settle transactions faster.
4. Gulf Stream
Gulf Stream is a mempool management protocol that uses a caching system to ensure transactions are confirmed quickly and ahead of time.
Thus reducing confirmation time and memory pressure on validators from unconfirmed transaction pools.
Sealevel is the protocol that enables Solana to support parallel transaction execution in a single state ((layer 1) blockchain.
The protocol finds all non-overlapping transactions or events in a block and executes them concurrently.
This further adds to faster transaction confirmation time which Solana is known for.
Pipelining is the transaction processing unit (TPU) of the Solana blockchain that enables it to achieve the efficiency of a single node.
It works when there’s a stream of input data that needs to be processed by a sequence of steps and there are different hardware responsible for each step.
For example, the pipeline mechanism on Solana progresses through Data Fetching at the kernel level, Signature Verification at the GPU level, Banking at the CPU level, and Writing at the kernel space.
So that by the time the TPU starts to send blocks out to the validators, it has already fetched in the next set of packets, verified their signatures, and begun crediting tokens.
Cloudbreak is a mechanism that’s designed to support the AOT (ahead of time) execution of transactions on the Solana blockchain for efficient memory usage.
For example, as soon as a transaction is observed by a validator, Sealevel can start pre-fetching all the accounts from the disk and preparing the runtime for execution.
At the same time, Validators and block producers can even start executing transactions before they are encoded into a block, which allows Solana to further optimize block time and transaction confirmation latencies.
Archivers are nodes on the Solana blockchain that keeps small parts of the history of the blockchain state.
They are nodes that basically store archives of the blockchain data.
These nodes can be lightweight (ex: laptops) and are subject to regular checks to ensure they’re still storing the data they are supposed to.
The Solana community
Solana has a rapidly growing and hyper-active community of developers, investors, nodes, users, promoters, etc.
The chain has risen to become one of the fastest-growing smart contract platforms in the crypto economy.
Its ecosystem consists of:
- Over 300 different projects are being built on Solana.
- More than 510,000 combined social media followers on Twitter, Telegram, YouTube, Reddit, Discord, etc.
- $2 billion+ in TVL (total value locked).
Furthermore, it’s supported by several high profile institutional investors such as Alameda Research, Andreessen Horowitz, Polychain Capital, Blockchange Ventures, CMS Holdings, etc.
And you know, as the ecosystem matures, and the number of users and projects on the network grows, so would be the demand for the SOL coin and ultimately its price would keep rising.
The Solana (SOL) coin
SOL is the name of the native cryptocurrency that powers the entire Solana ecosystem.
SOL coin tokenomics
SOL initially had a maximum supply of 500 million which was allocated as follows:
- Seed Sale: 16.23% of the supply.
- Founding Sale: 12.92% of the supply.
- Validator Sale: 5.18% of the supply.
- Strategic Sale: 1.88% of the supply.
- CoinList Auction Sale: 1.64% of supply.
- Team: 12.79% of the supply.
- Foundation: 10.46% of the supply.
- Community: 38.89% of the supply.
50% of all transactions paid in SOL is burnt (destroyed forever), thus constantly reducing the maximum supply. While the remaining 50% is used to reward validators on the network.
SOL coin use cases:
- Staking. SOL can be staked to become a validator or leader on the Solana blockchain. It can also be staked by regular users to earn staking rewards.
- Network fees: SOL is used to pay for transaction fees on the Solana blockchain network.
- Governance. SOL is needed to vote on governance proposals on the Solana blockchain.
Solana (SOL) coin price predictions
As the Solana ecosystem grows, the price of the SOL coin would continue to increase, and rapidly too.
As I write this line, SOL is trading at $69.09, up from $40 just a week earlier and 2128.0% in the past year.
This rapid growth is attributed to the increasing number of projects building on Solana.
Solana is also seeing an increasing number of users who are attracted to the chain due to its negligible fees, near-instant transaction confirmation, and interesting dApps sprouting up.
Furthermore, given that Solana has been raising funds from institutional investors to develop and grow its ecosystem, I am confident that this is only the beginning of SOL coin’s rise.
My Solana (SOL) price prediction 2021: $200
$200 is the upper limit for SOL in 2021.
The coin would probably cross the $100 mark in October and make its way to $200 by December before any correction sets in.
Of course, this is subject to global market conditions. If the current bullish sentiment persists throughout the year, $200 SOL by December is almost certain.
My Solana (SOL) price predictions 2022 -2025: $500 to $5000
Several factors would contribute to the continued growth of the SOL coin price.
1. SOL coin burn
As the Solana ecosystem grows, so would be the amount of the coin being burnt.
In just about a year, over 11 million SOL coins have already been destroyed through the fees burn.
And this is during a period when the network is still obscure with very minimal usage.
2. SOL coin inflation rate reduction
SOL coin annual inflation rate would start from about 8% and reduce by 15% every year until it settles at 1.5%.
While more coins are being burnt from transaction fees, far less and less would be injected into the market via staking rewards.
3. Fixed and limited supply
Unlike its competitors with infinite or very large coin supplies, SOL has a very small and fixed maximum supply.
The lower the inflation rate, and the higher the amount of token being burnt with increased network usage, the greater the pressure on the SOL price to go up.
4. High staking
Currently, more than 77% of the entire SOL coin in circulation has been staked. This means, less SOL coins are available for sale in the open market.
And given the increasing network activity and demand for the coin, again, there would be greater pressure on the SOL price to go up.
SOL coin price prediction 2022
Given the above scenario and my expectation of more projects and users coming to Solana, I believe SOL would touch $500 by the end of 2022.
And by 2025 the coin could easily have done a 10x to $5000.
That is assuming the cryptocurrency market does not collapse before then and the Solana blockchain does not break.
If you have come this far, you already know that I a very bullish on Solana and the SOL coin.
Solana is fully optimized for optimum scalability, speed, negligible fees, security, and decentralization.
This is why many believe it is the real Ethereum killer.
You may want to ask yourself, why would I use Ethereum and pay insane fees. Or the quasi centralized alternative chains and complicated layer 2 solutions, when I can use a single layer, fully decentralized, secure, and scalable chain with nearly zero fees?
Solana perfectly caters to the need of everyone and beats the existing competition hands down.
Providing users and developers with the decentralization and security of Ethereum and the low fees ad scalability of layer 2 solutions like Polygon.
The only thing it lacks (for now) is the more developed ecosystem of dApps Ethereum has.
With sufficient dApps built on Solana, and users having a taste of the speed and cost of doing business on the chain, even Ethereum 2.0 would find it a worthy challenger.