Chain dissection. Solana

Is it still running on a schedule?

Solana conceptually diverges from other blockchains in many ways by claiming that: everything should be built on one monolithic layer, fees should always be cheap, scalability is achieved through improvement of the hardware, etc. In this dissection, we are going to analyze this.

You will learn about:

– Distinctive characteristics of Solana

– SOL tokenomics

– Solana’s killer features

Structure and specifics

Solana can be described as a monolithic Layer 1 blockchain, using a modified version of PoS consensus algorithm, called Proof-of-History. In order too validate transactions, Solana timestamps them, eliminating the ability to re-order transactions to a validator’s advantage.

Firedancer is a new Solana validator client from JumpCrypto, aiming to improve sustainability, diversity and performance gains. It makes Solana the second chain after Ethereum with multiple clients. Having multiple clients that can “run” the chain from scratch decreases the probability that a bug can cause significant damage to the network.

SOL tokenomics

• Standard: SPL
• Circulating supply: ~ 400 million
• Total supply: ~ 551 billion
• Current Market Cap: ~ $8 billion
• Current price: ~ $20
• Current inflation rate: 6.017%
• Inflation structure: While the initial inflation rate was 8%, it decreases annually by 15% aiming to reach 1.5% final inflation rate.

Interesting Fact: Currently, 86.7% of total SOL supply is staked, 12.0% of total staked is still locked, and 74.8% of locked stake (9.0% of total staked) which is 42,871,243 SOL are owned by Alameda’s wallets. Given they are subject to bankruptcy, it is unlikely this stake will immediately move once unlocked, until the liquidation process is completed. Similar cases have taken as much as ten years to complete.

Going hardware

DePIN (Decentralized Physical Infrastructure) is an emerging crypto trend that aims to build and operate decentralized real-world physical infrastructure and hardware networks which are incentivized by tokens. Instead of having large centralized companies like Apple, Google, etc. building infrastructure, you incentivize individuals to do so with tokens.

Solana use cases:

– Decentralized cellular network. Helium develops the Hotspot device for users to provide wireless network coverage for low power or cellular devices and earn $HLT tokens. Helium migrated to Solana from their own appchain because maintaining their own L1 took up a lot of time from the core devs, leaving them with less resources to work on their actual product.

– Decentralized Mapping. Hivemapper launched on Solana is creating a decentralized map. Users buy dashcams for ~$300 and earn $HONEY tokens for mapping. To date, ~15k users have mapped more 2.6 million kilometers, mostly in the US and Western Europe.

– Rendering. Render allows you to rent GPUs and monetize their compute power. While Render did not start on Solana, the community recently voted for and approved a migration from Polygon to Solana.

A smartphone to leverage these use cases. Solana Labs announced the Saga smartphone in the summer of 2022, and it went on sale in the summer of 2023. The smartphone allows you to store digital assets, sign transactions, and pay for purchases via Solana Pay. The device comes pre-installed with the Solana Mobile Stack (SMS) toolkit, which enables the creation and use of Solana-based apps.

Although the team announced in August that the price of the smartphone had been reduced from $1,000 to $600, which clearly is an indicator of sales problems, the mere appearance of the crypto smartphone is a big step for the crypto community.

Output

Solana, more than any other chain, can be described as an engineering focused chain. It was designed by the team that was developing Qualcomm processors and is now evolving accordingly, virtually ignoring the academic-like approach to blockchain evolution.

Solana has had its ups and downs, while the project and its community have experienced the strongest hit after the scam of the main investor and apologist, Sam Bankman-Fried. Surprisingly, this hit was not fatal, but on the contrary revitalized the project. Most blockchains on the market have not passed such a stress test, and are unlikely to pass it. Solana has proved that it is here to stay for long.