Solana Price (SOL)

About Solana (SOL)

Solana is a blockchain platform designed to improve scalability for users. Solana is a blockchain platform dedicated to accelerating transaction settlement and achieving more resilient infrastructure to improve scalability for users. The SOL cryptocurrency plays a vital role in maintaining and operating the SOLANA ecosystem, such as executing smart contracts, sending transactions, and rewarding supporters of the SOLANA network.

The Solana ecosystem uses SOL as its base token, which users can use to make payments, settle related fees, and participate in the blockchain staking economy. The digital currency is also Solana's governance currency. Essentially, SOL holders can vote on proposals and decide the types of changes and upgrades adopted by the Solana ecosystem.

Like most blockchains, Solana relies on consensus algorithms. Such algorithms ensure that the blockchain does not require intermediary entities like Visa or PayPal to execute and verify transactions. However, instead of choosing the energy-intensive and slow Proof-of-Work (PoW) consensus protocol on Bitcoin, Solana has adopted a more dynamic alternative that makes room for highly scalable and eco-friendly operations.

Specifically, the Solana dynamic consensus system combines an in-house designed Proof of History protocol with the common Proof of Stake (PoS) consensus mechanism. With these two consensus mechanisms, Solana can process up to 50,000 transactions per second, which is why it is often called the "Visa of the crypto world". Considering that Ethereum, the most popular blockchain for distributed applications, has a maximum speed of 15 TPS, Solana has achieved a remarkable achievement.

Solana also provides a flexible development toolkit that supports three popular programming languages: Rust, C, and C++. Solana supporters believe that the possibility of writing smart contract code in multiple programming languages ​​will help developers build a more familiar and flexible development environment, which is different from the native smart contract language used on the blockchain.

Solana is an independent L1 blockchain that has an underlying smart contract protocol that is fast and efficient. Since its launch in 2020, the Solana network has been seen as a competitor to Ethereum, and people even jokingly call it the "Ethereum killer".

The Solana network is highly scalable, has low fees, and is fast, making it the preferred choice for many non-fungible token (NFT) decentralized applications (DApps), decentralized finance (DeFi), and digital blockchain payment ecosystems.

The Solana network uses Proof of History (PoH) technology, focusing on improving transaction throughput and processing speed. Solana claims to be able to process approximately 65,000 transactions per second, which is the industry's leading transaction speed.

The Solana blockchain hashes transactions linearly to create a verifiable order of all network activity, allowing for fast transactions. Therefore, it does not need to rely on timestamps from block creators, and network validators do not need to check whether transactions are in the correct order.

The Solana network was co-founded in 2017 by Anatoly Yakovenko, a systems engineer and computer programmer, and Raj Gokal, the current COO of Solana. The Solana network runs on the PoH timing mechanism, which is deployed before the consensus layer that currently uses the Proof of Stake algorithm.

Solana’s native token, SOL, is primarily used for staking to support the validation process and can also be used to pay for peer-to-peer (C2C) transaction fees. Solana maximizes these features with an unlimited token supply. However, to maintain its year-on-year inflation rate, Solana burns 50% of SOL from each transaction fee.

The remaining 50% of transaction fees are rewarded to transaction validators. As long as they hold enough SOL, anyone can become a network validator or validator delegator to support the consensus process required to run this independent blockchain. Under this mechanism, users who stake SOL to support the Solana blockchain can earn rewards. Solana prices are updated in real time on Binance.

SOL’s price and economic model

The Solana team raised five rounds of funding between 2018 and 2022. The first round was a $3.17 million seed round, followed by three private rounds, and finally a $20 million Series A round. The Solana team raised an additional $1.76 million in a public auction conducted in conjunction with CoinList in March 2022.

The initial supply of SOL was 500,000 SOL tokens, from which the Solana team distributed tokens to early investors in all five rounds. Here is the breakdown of the distribution of the initial supply of SOL:

-15.86% was used for the Seed round.

-9.54% was allocated to the Series A round.

-1.6% was sold publicly to investors.

-12.5% ​​was allocated to founding team members.

-12.5% ​​went to the Solana Foundation, a non-profit entity responsible for promoting and funding support for the Solana initiative.

-38% as a community reserve fund, managed by the Solana Foundation.

What are the advantages of Solana leading the way?

Digital currencies that are not pegged to traditional currencies are inherently unstable. The same is true for SOL, and the price of SOL tokens will fluctuate due to various factors. SOL was launched in March 2020 and sold to investors at a price of $0.22 through a public auction, raising $1.76 million. In the first three months of trading, the price of SOL fluctuated between $0.50 and $1.5 until a rebound that saw Solana's price peak at $4.735 in August 2020. However, according to Solana's market trend, this rebound was short-lived, and at the end of 2020, the price of SOL returned to around $1.655.

It is worth noting that 2021 proved to be a breakthrough year for the Solana ecosystem and its native digital currency. In the first quarter alone, the price of the SOL token rose by more than 2,500%, making it one of the best performing digital currencies at the time. However, this impressive performance was mainly due to the bull market in the entire market. After a record-breaking first quarter, SOL had a lackluster few months before experiencing another price surge, peaking at $253 in November 2021.

Solana’s price growth paved the way for Solana Labs to conduct a $314 million private sale in June 2021. Solana Labs said the funds raised from the private token sale would be used to develop and promote the expanded DeFi ecosystem on the Solana blockchain.

While this was related to the bull run in the overall cryptocurrency market, other factors including growing enterprise interest, increased DeFi developer activity, and the outbreak of the Solana-based non-cryptocurrency market all played a key role. However, after a record-breaking November, Solana gradually succumbed to downward pressure, with the SOL price falling by more than 30% by the end of the year.

While the 2021 cryptocurrency bull run had a positive impact on the SOL price, the 2022 bear market had the opposite effect. For most of 2022, SOL has been trading below the $100 mark, largely due to bearish market sentiment and recurring network outages.

SOL Founder Team

Software engineer Anatoly Yakovenko first mentioned Solana in 2017 when he published a white paper proposing the concept of proof of history and how it can optimize the throughput of blockchains. Before entering the blockchain ecosystem, Yakovenko worked as a software engineer at Qualcomm and Dropbox.

After introducing the Solana project, Yakovenko teamed up with his former Qualcomm colleague Greg Fitzgerald to co-found Solana Labs, a software development company responsible for building and maintaining a POH-based blockchain network. In the process, Yakovenko and Fitzgerald recruited more former Qualcomm colleagues.