Due to price increases in successive weeks, Solana has been a popular altcoin. Solana was trading at $207 at the time of writing. This is an 11.400% increase from just two dollars in January. According to Cointelegraph markets, Solana is currently worth $60 billion.
Funding from investors led By Andreessen Horowitz in June is one of the most likely catalysts for this bullish momentum. Solana has secured $314 million to help further its technology in decentralized finance (DeFi). The investment was made via SOL coin purchases, rather than traditional equity shares.
Another reason Solana’s prices have soared is the announcement of its fourth hackathon, which will take place Oct. 8. Hackathons are open to developers who submit their projects for the chance of winning cash prizes or seed funding. Solana saw this as a positive step as it could encourage wider adoption of its technology.
Solana is making progress, and pundits cannot help but to compare it with an Ethereum-based programmable blockchain. Many believe Solana could be the killer Ethereum, competing with Avalanche and Polkadot.
What is Solana?
Solana, a layer-one network of blockchain networks that can implement smart contract technology, is called. Anatoly Yakovenko (a former Qualcomm Senior engineer manager) founded Solana in 2017. It is billed as the solution for scaling problems of Bitcoin (BTC), and Ethereum (ETH). Solana raised $20 million in Series A funding from Multicoin Capital two years after its foundation.
Although Bitcoin is widely accepted as a peer to peer form of money, Ethereum is the platform that can turn almost anything peer-to peer. With its smart contract capabilities, layer-one infrastructure and other features, Solana is right up there with Ethereum. But it also offers many other advantages.
Although Ethereum remains the best choice for decentralized applications (DApps), and smart contracts deployment, it is not without its legacy problems that it strives to improve. Users sometimes pay notoriously high gas costs due to the lack of scaling. While the transition to proof of stake (PoS) is underway, which is expected to lower such fees by increasing transaction throughput through shard chain applications, it will not be completed merged to Ethereum’s mainnet before late 2021 or early 2022. This is because the Beacon network that coordinates all the shards has been in testing since December last year.
However, Solana already uses a PoS structure as its consensus mechanism. The key innovation lies in the proof-of-history protocol. Validators may have difficulty finding the chronological order of the transactions in an incoming block under a PoS system. PoH has a way to get around this problem by creating a historical record that cryptographically verifies time between two events.
Each validator of Solana has its own clock that verifies the order and hashes time. It creates a series of hashes that are all accomplished through a verifiable delay (VDF). It was described by Yakovenko in 2018 as “a method to encode time as data.”
Solana processes transactions immediately, rather than waiting for a block of transactions to be completed, which can take a long time. Solana is more flexible and can process more transactions than other blockchains.
Turbine is a block propagation protocol that breaks down important data into bits. It can then be sent to nodes faster and with less bandwidth. Tower BFT is also implemented by Solana. This is an advanced version the practical Byzantine fault tolerant system (pBFT), in other delegated Proof-of-stake blockchains. Tower BFT is also a complement to PoS, as it acts as the network’s gatekeeper.
Is there an Ethereum killer?
Although Ethereum is the superior network, with 7,000 nodes, 90,000 validators, compared to Solana’s 600 Nodes and 1,000 validators. Solana is still considered an “Ethereum Killer.” This is because of its innovative solutions that address weaknesses in Ethereum.
With validators keeping their own clocks, transaction verification can be cut down by the PoH. Nodes no longer need to use processing power to verify different timestamps. This speeds up the processing of transactions. Solana claims it can process as many as 60,000 transactions per second. This is far less than what Ethereum, Bitcoin, Visa, and XRP can offer.
Transaction costs are also significantly lower. One of the major drawbacks to Ethereum is that gas fees are unpredictable and can be extremely high. To process a transaction, users could pay as high as $65 One user paid $9,500 to trade $120 on Uniswap last year. Solana fees are a fraction of what Ethereum charges. They can fluctuate as low as $0.00025 per transaction.
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Join the NFT trend
Nonfungible tokens (NFTs), which are used to store and transfer nonfungible tokens, have become a fad as celebrities, investors, traders, traders, and collectors have all started to get involved in this blockchain-based movement. Most NFTs can still be transacted on the Ethereum network. Solana is trying to capture a piece of this emerging market.
The new NFT project Degenerate Ape Academy proved its viability by selling out the entire collection of 10,000 apes in eight minutes. The SOL price soared to $53.70 on August 15, after trading at $44.11 a day earlier.
Solana NFT marketplace Solanart tracks the sales of listed NFT collections. It shows that the Degenerate Ape Academy NFTs are the dominant force in Solana NFT sale. This collection already has 765,000 SOL tokens. That would be about $122 million at the current price.
People who used to transact on the Ethereum network may be tempted by this change of heart. Hinge’s former chief marketing officer Nathan Ross said that Solana is better for NFT use cases than Ethereum because it is quicker, cheaper, and easier to use than Ethereum.
There was also an integration with FTX Sept. 6, when the popular crypto derivatives platform launched its NFT marketplace.
Is Ethereum able to compete with Solana long-term?
Now the question is, can Solana beat the top two altcoins in this space? Ethereum 2.0 won’t be available until next year as phase 2 of the upgrade’s timeline doesn’t start until late 2021 or early 222. Proponents of the upgrade believe transactions on Ethereum will be cheaper and could reach 100,000 per second or more.
Despite this, Solana’s design architecture is able to keep up with Moore’s Law because it is theoretically scaled to scale. Solana will become more efficient as computers get faster. Solana is effectively future-proofing its own scaling capabilities. If this is the case, then will Solana be the one to take an axe to Ethereum?
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