Solana's ($SOL) Crypto: Fast, Functional, and Flexible

Overview: Solana was designed to support the creation of Decentralized Application (DApp) creations. Solana is able to improve on scalability and attempts to solve the scalability issue that is currently plaguing many cryptocurrencies. Solana aims to solve this through their Proof of History (POH) and Proof of Stake (POS) consensuses. One of Solana’s biggest selling points is their lightning quick transaction speeds. History: Solana was founded in late 2017 by Anatoly Yakovenko when he published a white paper for a new timekeeping system called “Proof of History” (POH). Anatoly believed that his system could automate the transaction ordering process, which would enable crypto networks to scale beyond their current capabilities. In February 2018, Anatoly teamed up with Greg Fitzgerald (former Qualcomm colleague) to build a single blockchain network that used Anatoly’s POH system as it’s “internal clock”. Later, Stephen Akrige (another Qualcomm colleague) suggested that they offload the verification processes to graphics processors to increase throughput (scalability). After this, Anatoly recruited Fitzgerald and Akridge (among others) to found Solana (formerly “loom”). “Loom” was later changed to “Solana Labs” in order to avoid confusion with the already existing “Loom Network”. Solana launched on Mainnet Beta in March of 2020 after raising money (via token auction) which featured transaction capabilities, and smart contract compatibility. In late 2020, Solana introduced the ability to stake their cryptocurrency. The ability to stake was the last main thing that Solana needed to add to their crypto to make it “production ready”. On March 3rd, 2021, Solana launched their full mainnet version. Token Economics: Token Usage: Solana’s native token is called “sols” (SOL). SOL’s have two primary use cases within the Solana network. Staking: Users are able to stake their SOL tokens. Users who stake their SOL tokens are rewarded through Solana’s inflation awards. Transaction Fees: SOL tokens can be used to pay for transaction and/or smart contract fees. Launch and Initial Token Distribution: Solana underwent 5 different funding rounds (4 of which were private sales) raising a total of $20 million. As a result of the multiple rounds of funding, Solana’s token distribution is quite odd and lengthy, their token distribution is as follows: 86% to Seed Round Investors 63% to Founding Investors 07% to Validator Sale Investors 84% to Strategic Sale Investors 6% to Public Auction Sale Investors 5% to the Solana team 5% to the Solana Foundation (funds development of the token and helps to balance validator voting power) 38% to the Community Reserve Fund (to fund community initiatives and development) Solana has an initial supply of 500M tokens, which were split as described above. Overall, the token distribution can be split up into 3 sections: Founders/Project (25%), Investors (37%), Community via rewards and airdrops (38%). This distribution is healthy and has no indication of a potential “rug pull” scenario, which is due to the low percentage of supply owned by the founders. Furthermore, this distribution allows Solana’s price to run as there is not one person/wallet that can dump a ton of shares whenever SOL runs. Vesting Schedule: The tokens from Solana’s pre-launch sales, came with a lock-up period that expired earlier this year, and January 7th (2021). Additionally, the shares for the founders came with a 9 month lock up period as well, however, the founding shares are vested monthly from Jan 2021 to Jan 2023. Every month for the next 2 years the founders have the option to sell these shares, which could have an impact on the overall price. Ongoing Emissions: Solana’s coins are being inflated by 0.1%/year. This is unusual for cryptocurrencies; however, this inflation is far less than what is normal for stocks. Inflation is caused by the minting of new coins, which Solana mints every year to give to their validators and stakers. Solana recently released their Proposed Inflation Schedule which predicts that the long-term annual inflation rate will be 1.5%. This is substantially higher than the current rate of inflation and might scare off some potential crypto investors. Technology: Solana has built their blockchain in a unique manner and have incorporated the following 8 innovations to their blockchain technology: Proof of History: Solana’s Proof of History (POH) creates a cryptographically secure sources of time across their network. This enables nodes to create blocks quicker as the POH acts as a trusted timestamp. Tower BFT: Solana’s BFT Tower leverages their trusted timestamps generated from their POH system, to achieve consensus. This helps Solana when it comes to their voting process and lock out periods. Turbine: Solana’s Turbine uses BitTorrent to stream their blocks. Gulfstream: Solana’s Gulfstream pushes transaction caching/forwarding to the edge of their network. This allows validators to execute transactions ahead of time and reduce memory pressure on the validators. This helps Solana to have fast transaction speeds (faster transaction speed than almost all other cryptocurrencies, and even Visa). Sealevel: Solana’s Sealevel allows them to support parallel transaction execution in a single shard. Sealevel is then able to find the non-overlapping transactions and execute them in parallel. Pipelining: Solana’s Pipelining processes input data in a sequence of steps (requiring different hardware(s) (TPU, GPU, and CPU). Cloudbreak: Solana’s Cloudbreak allows their nodes to execute transactions before the block is even built, which helps to increase their transaction speeds. Archivers: Solana offloads their data storage from validators to a network of nodes which they call “archivers”. Solana’s archivers store data and are able to prove that they are storing the data that they are supposed to be storing. Exciting News: Lollapalooza Sponsorship: Solana sponsored Lollapalooza this year, and their network was advertised throughout the festival. More importantly, Solana was the provider for all of Lallapalooza’s NFT’s. This helped bring a whole new crowd to both the NFT space, and to Solana’s network. It is good to see cryptocurrencies like Solana “branching-off” and taking a new approach to marketing/building their platform. This campaign was successful for Solana, as their cryptocurrency was up 7% during the first day of Lollapalooza. This is good news due to the fact that the overall crypto market was only up around 1% that day (July 29th), which means that their campaign was actually successful, rather than their success being attributed to the whole crypto market performing well. Tokenized Stocks: On June 24th 2021, it was published that over 50 tokenized stocks were launched and could be traded on platforms that were built on Solana. Digital Assets AG, a Swiss-based company launched tokenized stocks on Solana’s blockchain. Some of these “stocks” included Facebook, Google, Nvidia, PayPal, Square, Tesla and more. Digital Assets says that these stocks can bridge the traditional finance and Decentralized Finance (DeFi) markets. Unlike many other tokenized stocks that have failed, Digital Assets allows both centralized and decentralized exchanges to add these tokens to their platform and be able to withdraw them. I personally do not think that this will work, and I think it will be years and/or decades until we are able to fully tokenize stocks and move the stock market over to the DeFi market. Theoretically, if this was to be achieved, stock could trade 24/7. However, I think Solana’s involvement in this early stage is good, and there is a big opportunity if people continue to build these platforms on Solana. Problems: Solana uses their own language (Rust): Solana uses and has developed their coding language, which they call “Rust”. I consider this a potential problem due to the fact that a healthy majority of blockchain developers already use and are familiar with Solidity. If Solana was able to scale into a massive project like Ethereum or Bitcoin, these developers would need to learn a new language (Rust) in order to develop on Solana’s platform. This is quite the inconvenience to many developers and could deter future developers from using/developing on Solana’s platform/network.

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CryptoCranium

Aug 6, 2021

257.44%

Change % Since Posting

39.64

Price When Posted

102.05

Change Since Posting

SOL

solana

141.69

5.41
3.97%
Current Price

Solana's ($SOL) Crypto: Fast, Functional, and Flexible

bullish

Overview:

Solana was designed to support the creation of Decentralized Application (DApp) creations. Solana is able to improve on scalability and attempts to solve the scalability issue that is currently plaguing many cryptocurrencies. Solana aims to solve this through their Proof of History (POH) and Proof of Stake (POS) consensuses.

One of Solana’s biggest selling points is their lightning quick transaction speeds.

History:

Solana was founded in late 2017 by Anatoly Yakovenko when he published a white paper for a new timekeeping system called “Proof of History” (POH). Anatoly believed that his system could automate the transaction ordering process, which would enable crypto networks to scale beyond their current capabilities.

In February 2018, Anatoly teamed up with Greg Fitzgerald (former Qualcomm colleague) to build a single blockchain network that used Anatoly’s POH system as it’s “internal clock”. Later, Stephen Akrige (another Qualcomm colleague) suggested that they offload the verification processes to graphics processors to increase throughput (scalability).

After this, Anatoly recruited Fitzgerald and Akridge (among others) to found Solana (formerly “loom”). “Loom” was later changed to “Solana Labs” in order to avoid confusion with the already existing “Loom Network”.

Solana launched on Mainnet Beta in March of 2020 after raising money (via token auction) which featured transaction capabilities, and smart contract compatibility.

In late 2020, Solana introduced the ability to stake their cryptocurrency. The ability to stake was the last main thing that Solana needed to add to their crypto to make it “production ready”.

On March 3rd, 2021, Solana launched their full mainnet version.

Token Economics:

Token Usage:

Solana’s native token is called “sols” (SOL). SOL’s have two primary use cases within the Solana network.

  • Staking: Users are able to stake their SOL tokens. Users who stake their SOL tokens are rewarded through Solana’s inflation awards.
  • Transaction Fees: SOL tokens can be used to pay for transaction and/or smart contract fees.

Launch and Initial Token Distribution:

Solana underwent 5 different funding rounds (4 of which were private sales) raising a total of $20 million. As a result of the multiple rounds of funding, Solana’s token distribution is quite odd and lengthy, their token distribution is as follows:

  • 86% to Seed Round Investors
  • 63% to Founding Investors
  • 07% to Validator Sale Investors
  • 84% to Strategic Sale Investors
  • 6% to Public Auction Sale Investors
  • 5% to the Solana team
  • 5% to the Solana Foundation (funds development of the token and helps to balance validator voting power)
  • 38% to the Community Reserve Fund (to fund community initiatives and development)

Solana has an initial supply of 500M tokens, which were split as described above. Overall, the token distribution can be split up into 3 sections: Founders/Project (25%), Investors (37%), Community via rewards and airdrops (38%).

This distribution is healthy and has no indication of a potential “rug pull” scenario, which is due to the low percentage of supply owned by the founders. Furthermore, this distribution allows Solana’s price to run as there is not one person/wallet that can dump a ton of shares whenever SOL runs.

Vesting Schedule:

The tokens from Solana’s pre-launch sales, came with a lock-up period that expired earlier this year, and January 7th (2021). Additionally, the shares for the founders came with a 9 month lock up period as well, however, the founding shares are vested monthly from Jan 2021 to Jan 2023. Every month for the next 2 years the founders have the option to sell these shares, which could have an impact on the overall price.

Ongoing Emissions:

Solana’s coins are being inflated by 0.1%/year. This is unusual for cryptocurrencies; however, this inflation is far less than what is normal for stocks. Inflation is caused by the minting of new coins, which Solana mints every year to give to their validators and stakers.

Solana recently released their Proposed Inflation Schedule which predicts that the long-term annual inflation rate will be 1.5%. This is substantially higher than the current rate of inflation and might scare off some potential crypto investors.

Technology:

Solana has built their blockchain in a unique manner and have incorporated the following 8 innovations to their blockchain technology:

  1. Proof of History: Solana’s Proof of History (POH) creates a cryptographically secure sources of time across their network. This enables nodes to create blocks quicker as the POH acts as a trusted timestamp.
  2. Tower BFT: Solana’s BFT Tower leverages their trusted timestamps generated from their POH system, to achieve consensus. This helps Solana when it comes to their voting process and lock out periods.
  3. Turbine: Solana’s Turbine uses BitTorrent to stream their blocks.
  4. Gulfstream: Solana’s Gulfstream pushes transaction caching/forwarding to the edge of their network. This allows validators to execute transactions ahead of time and reduce memory pressure on the validators. This helps Solana to have fast transaction speeds (faster transaction speed than almost all other cryptocurrencies, and even Visa).
  5. Sealevel: Solana’s Sealevel allows them to support parallel transaction execution in a single shard. Sealevel is then able to find the non-overlapping transactions and execute them in parallel.
  6. Pipelining: Solana’s Pipelining processes input data in a sequence of steps (requiring different hardware(s) (TPU, GPU, and CPU).
  7. Cloudbreak: Solana’s Cloudbreak allows their nodes to execute transactions before the block is even built, which helps to increase their transaction speeds.
  8. Archivers: Solana offloads their data storage from validators to a network of nodes which they call “archivers”. Solana’s archivers store data and are able to prove that they are storing the data that they are supposed to be storing.

Exciting News:

Lollapalooza Sponsorship:

Solana sponsored Lollapalooza this year, and their network was advertised throughout the festival. More importantly, Solana was the provider for all of Lallapalooza’s NFT’s. This helped bring a whole new crowd to both the NFT space, and to Solana’s network. It is good to see cryptocurrencies like Solana “branching-off” and taking a new approach to marketing/building their platform.

This campaign was successful for Solana, as their cryptocurrency was up 7% during the first day of Lollapalooza. This is good news due to the fact that the overall crypto market was only up around 1% that day (July 29th), which means that their campaign was actually successful, rather than their success being attributed to the whole crypto market performing well.

Tokenized Stocks:

On June 24th 2021, it was published that over 50 tokenized stocks were launched and could be traded on platforms that were built on Solana.

Digital Assets AG, a Swiss-based company launched tokenized stocks on Solana’s blockchain. Some of these “stocks” included Facebook, Google, Nvidia, PayPal, Square, Tesla and more. Digital Assets says that these stocks can bridge the traditional finance and Decentralized Finance (DeFi) markets.

Unlike many other tokenized stocks that have failed, Digital Assets allows both centralized and decentralized exchanges to add these tokens to their platform and be able to withdraw them.

I personally do not think that this will work, and I think it will be years and/or decades until we are able to fully tokenize stocks and move the stock market over to the DeFi market. Theoretically, if this was to be achieved, stock could trade 24/7. However, I think Solana’s involvement in this early stage is good, and there is a big opportunity if people continue to build these platforms on Solana.

Problems:

Solana uses their own language (Rust):

Solana uses and has developed their coding language, which they call “Rust”. I consider this a potential problem due to the fact that a healthy majority of blockchain developers already use and are familiar with Solidity.

If Solana was able to scale into a massive project like Ethereum or Bitcoin, these developers would need to learn a new language (Rust) in order to develop on Solana’s platform. This is quite the inconvenience to many developers and could deter future developers from using/developing on Solana’s platform/network.

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6 min

75.00

Target Price

9/ 10

Confidence

6-12 Months

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