Solana (SOL) is an open-source project focused on facilitating decentralized app or DApp creation. It makes use of the permissionless nature of blockchains to provide decentralized finance or DeFi solutions.
Benzinga asked Raj Gokal, Solana’s co-founder and chief operating officer on how the project and its token are positioned in comparison with others.
Solana’s Coming Of Age: Solana launched on Mainnet Beta in March 2020, but the project’s whitepaper dates back to 2017. The project’s SOL token is already traded on Binance, FTX, Bitfinex, and Huobi Global among others, and it is on the cusp of being listed on Coinbase Global Inc’s (NASDAQ:COIN) platform as well. The listing has been temporarily delayed though due to technical reasons, as per the exchange’s Twitter handle.
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“The listing validates all of the hard work that the community has put into building out the hundreds of dApps and platforms that make up an ever-growing ecosystem,” said Gokal.
The token currently enjoys a market capitalization of $7.3 billion. SOL traded 14.6% lower at $26.99 at press time over a 24-hour period. It touched an all-time high of $58.30 on May 18.
In terms of year-to-date gains, SOL has appreciated 1406%, while the apex cryptocurrency, Bitcoin (BTC), has managed 18.8% gains in the same period. BTC traded 6.1% lower at $34,475 at press time.
Solana Sets Itself Apart: In the recent past, several projects focussed on DApps and DeFi have basked into the limelight. Some names that have gained prominence due to the trend include Ethereum (ETH), Polkadot (DOT), and DFINITY Foundation’s Internet Computer (ICP). Benzinga asked Gokal what sets Solana apart from this pack.
“Solana is different from other scaling implementations like Ethereum 2.0, Polkadot, etc. in that it scales as one global state, rather than relying on fragmented layer 2 systems or sharding to increase throughput,” said the executive.
Gokal said that a clear distinguishing feature was a timestamp they call “Proof-of-History (PoH).” The concept was explained in the 2017 whitepaper authored by Solana founder Anatoly Yakovenko.
As per Yakovenko, “Proof of History is a sequence of computation that can provide a way to cryptographically verify passage of time between two events.”
According to Gokal, PoH “ essentially provides a chronicle of previous events on the blockchain, ensuring that there’s a common record of what happened and when for permanent reference.”
The Solana co-founder lists other innovations that set the project apart from others including a transaction parallelization technology called “Sealevel.” The technology allows Solana to scale across graphics processing units or GPUs and solid-state drives or SSDs, which according to Gokal “should help the platform scale to meet demands.”
Finally, Gokal said Solana “completely nixes the mempool system” used by other platforms. Instead, the project’s strategy is to forward transactions to validators even before the previous batch of transactions is finalized.
“This helps to maximize confirmation speed and boost the number of transactions that can be handled both concurrently and in parallel.”
To Shard Or Not To Shard: Sharding, a database partitioning technique under consideration by some projects like Ethereum, to solve the so-called blockchain trilemma — the choice between scalability, decentralization, and security — is not a road that Solana has taken.
Ethereum co-founder Vitalik Buterin wrote a blog in April titled “Why sharding is great: demystifying the technical properties” in which he expounds on how sharding can solve the blockchain trilemma of ensuring scalability, decentralization, and security.
As per Buterin, sharding is secure because “an attacker can’t target a small part of the system with a small amount of resources; they can only try to dominate and attack the whole thing.”
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Solana’s website states, “Never deal with sharding or layer 2.” Instead, the project emphasizes a single global state. So why this opposition to sharding?
“Sharding technology flips security. If one shard gets taken over by hackers, it could trigger a domino effect that would impact token price and lead to a mass exodus of users and nodes,” explained Gokal.
The executive maintains that sharding allows hackers to “bring down an otherwise thriving ecosystem” through a “divide and rule strategy.”
Another reason why Solana has not taken the sharding approach is that, they say, it breaks the composability of smart contracts, which, as per Gokal, gives developers the ability to integrate and easily build on the work of others.
“On Solana, each validator can continue producing blocks regardless of what information they are receiving from the outside, allowing Solana validators to produce and validate blocks as fast as their GPU chips will process the transactions,” added Gokal.
Solana’s Killer Instincts: Solana is sometimes dubbed as an “Ethereum killer.” However, Ethereum is in the process of adopting proof-of-stake technology and thus addressing some of the issues like high transaction or gas fees and network congestion that currently ail it.
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Recently, Cardano (ADA) founder Charles Hoskinson was asked in an interview if this transition would present a threat to Cardano. Hoskinson noted that Ethereum 2.0 will kill 1.0 instead.
Gokal says Solana is “enthusiastic about Ethereum’s transition to a proof of stake system.”
“It would be devastating for the entire industry if Ethereum wasn’t able to pull off its transition to proof of stake given its mindshare and its roughly $500 billion market cap,” remarked the executive.
Proof of stake is not enough though, Gokal cautions. He said there has been “a lot of research and development on sharding to scale the system over time.”
The Energy Debate: While Ethereum has been in the news for its upcoming transition, Bitcoin has gathered attention due to its energy use. Tesla Inc (NASDAQ:TSLA) CEO Elon Musk cited environmental concerns for the automaker’s decision to stop accepting payments in the cryptocurrency, which led to the most recent cryptocurrency meltdown. A large amount of energy is required for Bitcoin’s underlying technology called Proof of Work or PoW. Solana however utilizes a less energy-intense proof-of-stake model.
See Also: Proof of Stake vs Proof of Work
“Prior to recent headlines, being energy efficient has been a key focus for Solana. For example, Solana’s efficiency, measured as energy cost per transaction, decreases every year as the network’s capacity grows with Moore’s Law,” noted Gokal.
He said that without any additional sustainability initiatives, the carbon cost-per-transaction would fall by half every 18 months.
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