What is Solana (SOL)?

Introduction Solana (SOL)

Solana is a digital asset project designed to address the scalability issues of decentralized networks. One of the major challenges with networks such as Bitcoin and Ethereum is their limited ability to process transactions per second (TPS). For blockchain networks to achieve widespread adoption, they must be capable of handling a large volume of transactions efficiently, without long processing times or high costs.

Legacy networks like Ethereum and Bitcoin, built on older technology, currently process only 7 and 15 TPS, respectively. This results in slow transaction finality and fluctuating transaction costs, leading to a suboptimal user experience for users and decentralized applications (dApps). Solana aims to solve this by offering a decentralized smart contract platform with fast transaction finality and low costs, making it a more scalable solution for the future of blockchain
 

Solona Technology

The Solana blockchain is maintained by over 1,381 validators who execute and verify incoming transactions and 5,400 nodes that monitor the network. Due to Solana’s unique network, it can manage over 3,600 transactions per second. The Solana network's scalability and cheap transaction costs are due to the Proof of History protocol, among other things. This means no direct confirmation is needed on the network because transactions can be approved afterward.

All transactions are provided with an extra time hash so that a chronological order of transactions is determined. Figure 1 shows how transactions are processed on the Solana blockchain.

High speed, Low cost

The leader’s task is to organize all transactions so that they can be verified efficiently. With high-spec computers, such an operation is easy and quick to perform. Once the leader has ordered the transactions, he sends the transactions to the verifiers. The verifiers then check whether the transactions are correct and separately provide confirmation that they are.

Once enough verifiers have given the same confirmation the state of the blockchain is fixed. In this way, a lot of calculations can be done in parallel, and Solana makes fast and cheap transactions possible.

Solana Use Cases

Smart contract network

Solana is an open-source smart contract platform designed for the dApps and Decentralized Finance (DeFi) markets. As such, it competes with other smart contract platforms like Ethereum, Avalanche, BNB Chain, and more. Solana’s primary goal is to enhance the scalability of its network, allowing decentralized apps to function more efficiently. On networks like Ethereum, scalability can be a challenge, as every interaction with a smart contract must be recorded and verified on the blockchain, causing costs to escalate rapidly. In contrast, Solana offers high transaction finality and low costs, enabling users to interact more freely with dApps while allowing these apps to operate faster and cost-efficiently compared to other networks.

Universal purpose

Beyond DeFi, Solana is a universal network that hosts a wide range of services. Its vision is to create an ecosystem where users and their capital remain within the network. As a result, Solana supports a variety of use cases, including the creation of NFTs, tokenization, and more.

Solana Staking

The Solana network allows users to earn passive income through staking, where they delegate their tokens to validators to help secure the network. By participating in staking, users can earn between 6-7% in additional Solana tokens, making it more appealing compared to Ethereum, which offers rewards of only 3-4%.

Solana’s Ecosystem

Since its inception, Solana has rapidly grown into one of the most popular smart contract platforms, attracting hundreds of thousands of users and dApps. Its strong presence in the industry has fostered an ecosystem that includes various entities, such as exchanges, projects, and more. Due to Solana's low transaction costs and fast finality, it continues to draw new users, projects, and capital. As a result, some market participants now view it as a serious competitor to Ethereum, which has been the dominant smart contract platform since 2015. 

Solana News
 

Increasing network activity

On September 10th, Solana's daily active addresses reached 5.4 million, marking a new all-time high (ATH). While Solana's price is still 93% below its previous ATH, the rising activity on the network highlights its growing popularity and health, as the increase is driven by organic usage. It is expected that this activity will rise further, particularly when retail investors regain interest in the sector, as Solana offers a strong user experience through its network, which could lead to a positive price impact.

Solana ETF?

Following the successful launch of Bitcoin and Ethereum spot ETFs, various market participants anticipate that Solana could be the third digital asset to enter traditional financial markets. This expectation is driven by the applications for a Solana spot ETF submitted by two U.S. asset managers, VanEck and 21Shares. Both issuers filed in 2024, and there is speculation that, if approved by the Securities and Exchange Commission, the ETF could be introduced to financial markets as early as 2026.
 

Solana Price

Solana has shown incredible growth over the past year and a half, with notable increases in network usage and price appreciation. Following a substantial run-up, Solana is now in an accumulation phase, consolidating near key Fibonacci retracement levels. The price currently holds around the 0.786 Fibonacci level, acting as a support zone.

If Solana continues its bullish trend and successfully breaks the key resistance level of $267, which marks its all-time high, we could see a rapid price increase. The next potential target based on Fibonacci extensions would be the 1.272 level, around $698.74. Given the strong fundamentals driving the network and the current technical setup, a breakout above the all-time high could lead to significant price acceleration, with the Fibonacci target offering a clear upside potential for traders and investors.

Where to buy Solana?

Due to its incredible presence and popularity in the industry, the Solana token is widely available across different centralized and decentralized exchanges, and brokers. You could say that it’s almost a sin not to offer Solana on your platform. So, you can buy the Solana token at almost every small and big buying and selling platform. Important to note, always do your research and this is not financial advice. 

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