How Does Solana Work?
Solana works on a combination of proof-of-history and delegated proof-of-stake protocols.
The reason for this combination of protocols, Bryan Routledge, associate professor of finance at Tepper School of Business at Carnegie Mellon University, says Solana is trying to “process lots of transactions quickly.”
Routledge points out that trying to process transactions quickly usually requires centralization. For example, Visa uses a huge network of computers to keep its processing speed on track. Bitcoin, on the other hand, Routledge says, “processes transactions very slowly” to remain decentralized.
Since the entire point of blockchain technology is to provide decentralized systems, Solana attempts to process transactions at speeds akin to a large, centralized company like Visa while maintaining the decentralization of Bitcoin. This speed allows for increased scalability since the environmental and monetary costs of Solana’s systems are lower.
The speed at which blocks are added to Solana’s blockchain requires additional levels of security for the blockchain. This is where Solana’s proof of history algorithm comes into play. This algorithm timestamps each block in such a way that maintains the system’s security.
Solana’s SOL tokens are then staked and used as collateral to process transactions on the network. These transactions include everything from validating smart contracts to using Solana as a non-fungible token (NFT) marketplace.
In August 2021 came one of Solana’s big breaks and more than a year later Solana launched when Degenerate Ape Academy became the first crucial NFT project on the Solana NFT marketplace. During the first three weeks of that month, Solana’s price jumped from around INR 2,496 to INR 6,241 in value.$SOL
Solana’s all-time high was in November 2021, when it peaked at nearly $260 during the height of the crypto bull run
Like most of the world’s major cryptocurrencies, SOL tokens can be traded on any number of platforms. This includes centralized exchanges like Binance
