Solana(SOL)

Launched in March 2020 by software engineers Anatoly Yakovenko and Greg Fitzgerald, Solana (SOL) is a third-generation blockchain that aims to solve the blockchain trilemma of accomplishing three crucial objectives - security, scalability and decentralization.

Allowing for the easy creation of efficient DApps, Solana is widely perceived as a direct competitor to Ethereum. While Ethereum’s scalability issues were tackled through Layer-2 blockchains, Solana aimed to overcome its own by creating a much-improved underlying infrastructure, capable of providing cost-effective and faster transactions.

Owing to its unique hybrid consensus model, Solana has gained rapid popularity among individuals as well as big institutional investors/traders.

Solana’s decentralized blockchain supports the development of a wide array of DeFi (Decentralized Finance) solutions, including the creation of user-friendly and scalable smart contracts, and decentralized applications. Some of the well-known projects developed on Solana include Saber (DEX), Hoglympics (P2E Game), Orca (DeFi) and Solsea (NFT Marketplace).

One of the biggest reasons behind Solana's popularity is its affiliation with FTX and its founder Sam Bankman-Fried, who is a vocal supporter of the network.

SOL price

SOL price fluctuated between $0.5 and $4 during 2020. According to our SOL live price chart, the coin proved to be one of the best-performing crypto assets during the bull run of 2021. It began its surge in early February 2021, touching $18.2 by Feb 24, and then closing in on $60 in May. 

SOL coin’s all-time high arrived later in November 2021, when it breached multiple resistance levels and peaked at almost $260 on Nov. 6, 2021. SOL’s fully diluted valuation at the time was over $125 billion.

Many other cryptocurrencies were also registering their own ATHs on the back of bullish market sentiment around this time. However, in SOL’s case, the coin was also receiving market-wide support and forming noteworthy institutional alliances, including with the likes of FTX crypto exchange and Grayscale investments. The price of SOL has lost a fair bit of ground since its 2021 surge, plummeting down to under $40 in Q2, 2022.

How SOL works

Solana employs an innovative hybrid consensus algorithm that combines the conventional Proof-of-Stake (PoS) system with a novel Proof-of-History (PoH) mechanism, thus adding new blocks every 400 milliseconds. An internal scalability test conducted on Solana revealed that it can process over 47,000 transactions per second at peak levels. PoH plays a key role in Solana’s functioning, by serving as its Chain Selection Rule. PoS, on the other hand, is the Solana blockchain’s Sybil Resistance Mechanism. 

Solana’s super-efficient hybrid protocol facilitates significantly reduced validation times for both smart contract execution as well as the processing of transactions. The blockchain has been created to serve the interests of both enterprise users and small customers.

SOL, the native token of Solana, is used to pay transaction fees for running smart contracts (DApp interactions) and processing transactions on its network. The coin is also used for staking purposes. SOL holders can either directly stake their coins, or delegate their SOL holdings to validators, who in turn help secure the network. SOL has an inflation rate of 8% per annum, which will decrease by 15%, year-over-year, thus accomplishing the long-term fixed inflation rate of 1.5% per annum, in the future.

SOL news, updates and highlights

The New York-based crypto asset management firm, Grayscale Investments, added Solana to its list of offerings in October 2021, after SOL witnessed an amazing bull run that year. It included the coin as a part of the Grayscale Digital Large Cap Fund (GDLC) portfolio and allocated over 3% of its investments to SOL. 

In another significant SOL news, Coinbase, the top-most crypto exchange in the United States, added wallet support for SOL coin as well as Solana-based tokens. The company cited growing investor interest in SOL as the main reason behind this development. With Ethereum still facing scalability issues owing to its high fees and low transaction throughput, investors are looking for low-cost alternatives, and as per Coinbase, Solana is just the right fit.

Frequently asked questions about SOL

• Can you mine or stake SOL?

No, you cannot mine SOL. However, it’s possible to stake your SOL coins and earn inflation rewards. Learn more here.

• What are some of the best SOL wallets?

Some of the best SOL wallets as recommended by Solana's official website are Phantom, StrikeX, Trust Wallet, Trustee Wallet, Solareum Wallet, Atomic and Exodus.  

• What can you do with SOL coins?

You can use your SOL coins to pay transaction fees on the Solana network. You may even stake your tokens to secure the Solana blockchain and earn staking rewards in return.

• How to buy SOL?

Check SOL trading pairs with coins like BTC, ETH, USDT, XRP, MATIC, etc. on established crypto exchanges, to buy SOL cryptocurrency.