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Solana
Scalable Blockchain Infrastructure
“Solana is a fast, secure, and censorship resistant blockchain providing the open infrastructure required for global adoption. Solana’s blazing speed and low fees scale as the ecosystem grows without sacrificing censorship resistance or security.” - The Solana Foundation
Brief:
In this addition of MAJR Coins, we’ve broken one of fastest blockchains and more exciting projects in crypto, Solana. We cover the technology and its purpose and the team and its investors. We detail the pros and cons and provide a token rating score based on the project’s fundamentals, pumpamentals and market sentiment. The token information can be found at the end.
Brevin White
@BrevinWhite
A Solution for Scalability.
Despite the numerous benefits of blockchain technology, there are still some challenges to face. Don’t freak out. This makes sense. Blockchain is a relatively new technology but is constantly getting improved and more productive. However, one of the biggest obstacles that needs to be addressed is the issue of scalability. Think of blockchain scalability simply as a system that is able to achieve high TPS (transactions per second) and transaction throughput. All this means is a scalable blockchain is more efficient comparatively to other existing protocols at verifying and executing transactions. The primary method to try and improve a network’s scalability is to modify their consensus framework or block size. Bitcoin, Ethereum, and a number of other projects have experienced complications with the speed of throughput as these networks have continued to grow. But there is a solution in the works.
The cryptocurrency industry has attracted some of the brightest and most innovative talent. In 2017, Anatoly Yakovenko, who previously worked at Qualcomm and Dropbox as a software engineer, founded a platform called Solana. Yakovenko and his team saw an opportunity to advance blockchain technology and develop a solution for the industry to move past the limitations of scalability.
What is Solana?
Solana is a web-scale blockchain that provides fast, secure, scalable decentralized applications and marketplaces. It accomplishes this by employing a new method of ordering transactions to increase the speed of the network. Solana currently supports over 65,000 transactions per second, and at the time of writing, the total transaction number on its network exceeded 18.6 billion. The main objective for Solana is to prove it is possible to create a blockchain using a specific set of algorithm combinations. What would this mean for blockchain? This would make it possible for proportional, simultaneous scale of transaction throughput and network bandwidth to occur. Key properties of blockchain in general include decentralization, security, and scalability. Solana makes this happen.
How Does the Consensus Mechanism Work?
Consensus is a huge component to any blockchain. It is difficult yet important that the participants, or nodes, can all align and reach agreement in real time. As mentioned, one of the ways to attempt to develop a scalable network is to create a more dynamic and capable consensus mechanism. Different than Bitcoin which uses a ‘Proof of Work’ (PoW), Solana uses a ‘Proof of History’ (PoH) algorithm to generate more rapid results in verifying and organizing transactions. Proof of Work contain substantial blocks of various, unordered events. Bitcoin miners also have to add the time and data to mine a block according to their local clock which can vary from others. This would require further communication, extend the time of the transaction throughput, and complicate the process. Proof of History essentially allows for records to be made that provide credibility to a transaction occurring during a specific point in time. This is how the algorithm functions.
When a transactions is made, it is evaluated by the participating nodes. It is given a particular hash and count relative to the event which in turn can be publicly verified. So what do this mean? The count functions like a time-stamp. It tracks when each transaction occurred whereas the hash serves as the way to identify the given transaction. The Proof of History ultimately acts as a cryptographic clock that exists in all nodes on this blockchain, allows them to promptly communicate with each other, and have proof of time and ordering of events because of how the network is structured. This process is displayed below.
The ‘Big 8’ Features
Here are the 8 core innovations according to Solana:
Proof of History (PoH) — A consensus algorithm to drive a higher throughput rate. It enables the system to properly track and order transactions by keeping a historical record of events.
Tower BFT (Byzantine Fault Tolerance) — The Tower BFT utilizes the PoH to reach consensus and decrease processing power.
Turbine — A protocol that simplifies the transmittance of data by reducing its size to help problems with space and bandwidth.
Gulf Stream — A “forwarding” network that assists transaction processing and then sends it to the end of the protocol.
Sealevel — System used to scale horizontally with GPUs but obtain a quicker run-time.
Pipelining — Allows for transactions data to be rapidly verified and sent across all nodes.
Cloudbreak — Database used for scalability on the Solana network itself.
Archivers — A distributed ledger storage for the data of the protocol.
Solana Overview
A brilliant system like Solana may be difficult to wrap your head. Here is a quick, easy diagram and breakdown into how it works that may help.
Transaction data gets input and sent to the Leader
The Leader will arrange and order the data efficiently so that it can be processed by other nodes
The Leader then executes the transactions on the current state that stores in the RAM
The transactions are published and require signature of the final state Verifiers, or nodes, in the diagram
The nodes then execute the same transactions on their copies of the state and publish their signatures of the state if it receives confirmation
Published confirmations serve as votes for the consensus algorithm
The SOL Token
Yes! There is a native cryptocurrency for the Solana network, SOL. Just like Bitcoin, Solana has a deflationary monetary policy and issuance schedule which caps at 489 million SOL. This is a good thing. It is currently trading at $34.20, and the current circulating supply is roughly 272 million. There a few main use cases and reasons as to why you would hold the token:
Users on the network need it to pay for transaction fee incurred when using the protocol or smart contracts
Staking tokens as part of the Proof of Stake (PoS) consensus strategy
A blockchain investment
Just like Ethereum uses its standard ERC-20 token, Solana’s currency uses its own technical standard version in the SPL protocol. There are new use cases manifesting themselves as the network is seeing the construction of new projects and dApps on it. It has partnerships with some of the hottest names in the crypto industry: Serum, FTX, Terra, Raydium, Chainlink, Tether, Audius, CoinDCX, and plenty more. These partnerships will only continue to grow as Solana matures.
Where to get SOL?
SOL is available to be traded on a number of exchanges.
Binance US (recommended)
FTX US (recommended)
Solana YTD chart
Comparison to Similar Chains in Market Cap
Solana currently ranks 17th in overall market cap of all cryptocurrencies. It could be a hidden gem hiding in plain sight.
Wrap Up
Solana was created to solve a problem, and it has done that up until this point. It has capitalized on the need for a platform that allows for increased transaction speed and scalability in blockchain. The new consensus structure Solana brought to the table offers a very efficient algorithm that many could benefit from. Aside from its technology, its token has seen solid performance correspondingly with the heightened popularity of Solana and its partnerships. SOL is creeping its way into the eyes of investors and rightfully so. There is still a long way to go in terms of adoption and usage as it not even five years old, but the network is definitely on its way. The true test will come as more and more people use the platform to determine if the speed can hold. If it does, it could make a difference in the realm of cryptocurrency. Solana is developing itself, but it’s also helping the whole world of blockchain develop.
Keep an eye out.
Sentiment Data
There’s been more attention on the network. Lots of press and social data looks like it’s curling upward as we pull out of this bear market slump.
Pros
Market Cap - a hided large cap gem hovering around ~$10 billion.
Speed - truly fast blockchain with awesome performance.
Efficient - average fee per transaction is $0.00025 compared with Ethereum which can be much more expensive.
Growing ecosystem - just raised $300 million fund to bring development to the network.
Momentum - there’s a lot of attention shifting to the network due to performance. Sam Bankman-Fried and his company’s FTX and Alameda Research have invested and are working closely with the network. Their DEX Serum has a Solana focus.
Cons
Security - A young network protocol that has yet to be tested at true scale.
Competition - lots of layer 1 blockchains launching soon - Polkadot, Near and Cardano. Each attracting devs, liquidity and capital.
Developers / Tools - while the blockchain shows a lot of promise there’s still not many projects or developers activity on the network.
Untested - while it’s live, it’s yet to be seen how performance and security shake out once more projects and users are running applications.
MAJR Rating: 64.5 / 70
Narrative: 9.5
Community: 9.1
Team: 9.8
Tech: 9.2
Liquidity: 8.7
Tokenomics: 8.7
Potential for Growth: 9.5
MAJR’s Top Projects:
Bitcoin, Ethereum, Polkadot, Kusama, Chainlink, Solana, Decentraland, Uniswap, Aave, Enjin, Maker, Filecoin, Terra, Litecoin
MAJR’s Simple Investment Strategies:
100% BTC - Min. Risk
80% BTC / 20% ETH - Min. Risk
50% BTC / 50% ETH - Med. Risk
50% BTC / 25% ETH / 25% [insert coin above] - High Risk
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THIS IS NOT FINANCIAL ADVICE. IT’S IMPORTANT TO DO YOUR OWN RESEARCH. INVESTING IN CRYPTOCURRENCY OR ANYTHING FOR THAT MATTER COMES WITH RISK. THE INFORMATION PRESENTED IN THIS NEWSLETTER IS FOR INFORMATION AND ENTERTAINMENT PURPOSES ONLY.