P A R T 1
Solana is an open blockchain founded in Geneva, Switzerland that focuses on
decentralized permissionless networking and token solutions.
- What is Solana?
- Using the Solana Blockchain
- Token Supply and Price Metrics
- Buying and Selling the Solana Token
- Minting a Token on Solana
- Solanax: The Solana DEX
- The Future of Solana
Hello!
and welcome to Solana
Solana is an open blockchain founded in Geneva, Switzerland that focuses on decentralized permissionless networking and token solutions. Started in 2017, the project officially began in March 2020 when Solana launched the SOL token. Solana operates using a proof of history algorithm that confirms historical transactions using the SHA256 algorithm, which is similar to Bitcoin.
This model uses a timestamp mechanism to order and passage of time between events in order to construct a multi-linear transaction timeline. Furthermore, the proof of history model then deploys alongside the proof of stake and proof of work algorithms to result in sub-second finality times. This allows for lightning speed transactions across the network. Furthermore, the Solana blockchain allows for token development as well as NFT development, which makes it attractive to artists and investors who want to get a piece of the pie.
What is Solana?
Solana is an open blockchain founded in Geneva, Switzerland that focuses on decentralized permissionless networking and token solutions. Started in 2017, the project officially began in March 2020 when Solana launched the SOL token. Solana operates using a proof of history algorithm that confirms historical transactions using the SHA256 algorithm, which is similar to Bitcoin.
This model uses a timestamp mechanism to order and passage of time between events in order to construct a multi-linear transaction timeline. Furthermore, the proof of history model then deploys alongside the proof of stake and proof of work algorithms to result in sub-second finality times. This allows for lightning speed transactions across the network. Furthermore, the Solana blockchain allows for token development as well as NFT development, which makes it attractive to artists and investors who want to get a piece of the pie.
Using the Solana Blockchain
The Solana blockchain operates behind the scenes using a series of technical protocols that enable a front-end system of token deployment, token sending and receiving, and includes a blockchain explorer for checking transactions. The interface is easy enough to use and offers users a straightforward experience for transacting payments, sending, and receiving, and developing on. So the backend of the system relies on a few different components to function including a “Leader” which is a (Proof of History Generator) that delivers and receives state information before and after the verification sequence:
Each transaction goes through a multi-series verification sequence following from the Leader and moving to the verifiers and then continues through a time series using the SHA256 algorithm. Each time the leaders and verifiers update the transaction a hash is produced, and the count field is updated. This allows for consistent message delivery across the blockchain, as well as encryption of transaction processing. Each unit operates within a node framework and using a trustless system, the material is written through state confirmations to update the transaction hashes and volume counts.
The states are configured to continuously update through the replicator nodes which in turn feed state information through a series of cores to ensure that updates are transacting hashes quickly and seamlessly. While all this is happening behind the scenes, on the front-end users are able to send and receive payments through a mobile app and platforms that contain the blockchain wallet. This is a simple interface that everyone is used to and is as easy as selecting the amount to send and clicking a few buttons. Some of the wallets you can use are the exchange wallet like those on Binance, Huobi, or FTX, or on the DEX wallets like SolanaX or Serum, or on mobile wallets like Trust Wallet or the Ledger Live Wallet.
Token Supply and Price Metrics
There is a total supply of 503,479,292 tokens available on the Sol blockchain. The circulating supply is 291,398,821.62 SOL with an average price of $138 USD on September 06, 2021. The price of SOL has seen tremendous value increases during the month of August with billions of dollars in volume being traded. Some of the top exchanges for SOL include Binance, Coinbase, FTX, and Huobi. Some of the main reasons for the increase in volume during August is because of large investors seeing the value of the fast transaction speeds and token options available on Solana. The price went from around $40 in June and July to a whopping $140 in August, nearly netting 4x gains for holders who bought in June and July. In the chart you can see the price moving from the $40 range up to the high of $142.65 on September 03, making Solana one of the highest earning projects in August and September. No one knows how far this bull run will go or if it will continue, but the volume of trades is significant, with over $8,000,000,000 in trading volume on September 03, the depth of the liquidity is vast, allowing for major upswings or downswings in the market. If this trend continues there is no telling how high the price could go. Other reasons for the price gain are due to the introduction of new tokens on the SOL blockchain as well as the introduction of SolanaX, a DEX marketplace for blockchain based trading, which we introduce later in the article.
Buying and Selling the Solana Token
As mentioned earlier, you can buy and sell the Solana token using a variety of options, but most of the trade volume is done on major exchanges like Binance, Coinbase, FTX, and Huobi. These centralized exchanges offer users the opportunity to register an account, which needs to be verified through KYC, then users can begin trading. Trading is as simple as using a credit card to buy a certain amount or Bitcoin or Ethereum then trading it for Sol. Exchanges like Coinbase offer users direct transfer from their bank as well as other purchasing options. Once you have some funds in your account, you can select the SOL token on the market and select the type of order you want to perform as well as the price you want to buy the token at. Once you have set the parameters of the order, you can click on the buy button and then you will have your SOL token. Since the price of SOL has skyrocketed in the past month, you can also buy smaller “fractional” amounts of the token if you don’t have enough money to buy whole amounts. For example, you can buy .01 SOL in case you don’t have enough to buy a whole 1 SOL. Fractional buying and selling is a relatively new concept that was created with the advent of cryptocurrencies.
Minting a Token on Solana
Minting a token on Solana requires some knowledge of the Rust programming
language, which governs the token minting process. Users must have a small
amount of SOL to mint the token, and then run through a series of code like this:
Users are free to create as many tokens as they want to create their supply metrics based on the tokenomics they decide. In this case, 100 tokens were minted, but developers simply need to add the number they want and sign the message to create the tokens. There are lots of Youtube videos on how to create your own custom token if you search “How To Create Solana Tokens” for more information.
Solanax: The Solana DEX
Since we have covered the options for buying and selling tokens on the centralized exchanges, it is now time to cover the decentralized exchanges, or DEXs. These types of exchange do not require a formal KYC registration process and are designed to maintain anonymity in the trading process by using wallet as identifiers rather than official names or vanity addresses. Transactions are performed and then can be audited using the blockchain explorer at https://solanascan.io/. Tokens can be added to SolanaX through private deals or listed through the listing process. SolanaX writes, “Solanax is a Solana blockchain-based automated market maker (AMM) that uses the decentralized exchange’s central order book to facilitate lightning-fast trades, pooled liquidity, and additional features for earning income. To enable low-cost and high-speed transactions, Solana was chosen as the underlying blockchain. It is a permissionless, high-performance blockchain based on Proof of History (PoH).” The Solana exchange offers a variety of solutions to high gas fees and costs associated with DEXs that are present on other blockchains like Ethereum. It helps promote the significance of Solana, provide DEX liquidity, and makes a bridge to Ethereum using an SPI token.
The Future of Solana
Solana appears to have a bright future given the considerations of major buy-in, fast transaction fees, and an open-source development protocol, as well as major centralized exchange offerings. Housed in Geneva, Switzerland, which supports decentralized finance initiatives, it has a very bright future, and may be a major competitor against behemoths like Bitcoin and Ethereum that are currently dominating the industry. We hope you learned a little bit about Solana and how it works, and some of the initiatives behind the project that allow it to be innovative and popular among investors and project developers who continue to support the growth of this project.
The content of this article, analysis, report or webpage is not investment advice and does ot constitute any offer or solicitation or recommendation of any investment product. This content is for general purposes only and does not take into account your individual needs, investment objectives and specific financial circumstances. The author may hold digital assets mentioned in this report.
Authored by Robert Chernish for Solanews