{"id":24542,"date":"2022-09-30T12:29:26","date_gmt":"2022-09-30T16:29:26","guid":{"rendered":"https:\/\/coincentral.com\/?p=24542"},"modified":"2022-09-30T12:29:26","modified_gmt":"2022-09-30T16:29:26","slug":"what-is-solana-sol-explaining-one-of-the-fastest-layer-1s","status":"publish","type":"post","link":"https:\/\/coincentral.com\/what-is-solana-sol-explaining-one-of-the-fastest-layer-1s\/","title":{"rendered":"What is Solana (SOL)? Explaining one of the Fastest Layer-1s"},"content":{"rendered":"

Solana is a permissionless and smart contract-capable blockchain platform designed with the goal of optimal performance, high transaction throughput, and fast transaction speed; powered by its native taken SOL, Solana rivals layer-1s such as Ethereum (ETH) and Avalanche (AVAX).\u00a0<\/span><\/p>\n

In this Solana basics guide, you’ll learn how the protocol works by reviewing its main components and other important aspects, such as the largest DApps on the ecosystem, tokenomics, and how it compares to Ethereum.<\/span><\/p>\n

What is Solana?<\/span><\/h2>\n

Solana is a layer-1 blockchain, meaning it is the base layer infrastructure, as opposed to layer-2s and sidechains, which are parallel chains connected to layer-1.\u00a0<\/span><\/p>\n

Solana uses two consensus algorithms: <\/b>Proof-of-Stake and Proof-of-History.<\/span><\/p>\n

Proof of History (PoH) is Solana’s backbone\u2014<\/span>it timestamps all transactions on the blockchain to prove they took place at a given time. <\/b>It’s essentially a cryptographic clock that confirms those transactions in sequential order. PoH maintains the safety of the Solana network by proving the legitimacy of all transactions taking place in real time.\u00a0<\/span><\/p>\n

In Proof-of-Stake (PoS), network participants must stake a certain amount of SOL tokens to become validators and verify transactions. The PoS algorithm <\/span>brings a network of validators to verify the timestamps and confirm the transactions.<\/b><\/p>\n

How to Stake Solana (SOL): Become a Solana Validator<\/span><\/h2>\n

Users who want to run a validator node must meet the <\/span>computational requirements<\/span><\/a> (CPU with 12 cores, 2.8GHz, and RAM 128GM, for instance) and stake SOL. There isn’t a minimum amount of SOL to become a validator, but participating in consensus requires a “Vote Account,” which has a rent-exempt reserve of approximately 0.026 SOL.\u00a0<\/span><\/p>\n

Validators must vote on each block they receive; <\/span>the voting cost is 1.1 SOL per day.<\/b> This means a validator must stake enough SOL to make profits and not drain their wallets on voting fees. The other option is to attract enough users to stake on your validator node.\u00a0\u00a0<\/span><\/p>\n

Users can stake SOL to earn rewards and help secure the network, which can be allocated to one or multiple validators.\u00a0<\/span><\/p>\n

Solana staking rewards <\/span>depend<\/span><\/a> on:<\/span><\/p>\n

    \n
  1. The initial inflation rate, which is 8%<\/b>. This figure is reduced by 15% yearly until it reaches a fixed rate of 1.5% annually.<\/span><\/li>\n
  2. The total number of staked SOL.\u00a0<\/strong><\/li>\n
  3. Validators’ uptime and commissions.<\/strong><\/li>\n<\/ol>\n

    Solana: History & Founder<\/span><\/h2>\n

    Anatoly Yakovenko, a former engineer at multinational Qualcomm, founded Solana in 2017, publishing the whitepaper the same year. His goal was to create an infrastructure that could overtake proof-of-work and proof-stake networks.<\/span><\/p>\n

    Greg Fitzgerald and Eric Williams joined Yakovenko in developing the Solana testnet and creating Solana Labs, headquartered in San Francisco, California. Yakovenko <\/span>announced<\/span><\/a> the creation of the Solana Foundation in 2020, a Swiss nonprofit that supports and promotes Solana’s growth.<\/span><\/p>\n

    The SOL Token: Tokenomics and Where to Buy<\/span><\/h2>\n

    SOL is Solana’s utility token used to pay fees for running smart contracts on transactions on the network. The other use case is staking and voting on government proposals.<\/span><\/p>\n

    Think of it as Ethereum\u2019s ETH.\u00a0<\/span><\/p>\n

    SOL’s total supply is capped at 511,616,946 tokens. As of September 1st, 2022, there are 349,510,121 SOL tokens in circulation, roughly 66.2%. The distribution phase started in 2019 through an Initial Coin Offering, divided into five funding rounds, of which four were private sales.\u00a0<\/span><\/p>\n

    The initial distribution is as follows:<\/span><\/p>\n