• Thu. Jun 13th, 2024

What Is Solana (SOL) and How Does It Work?

What Is Solana?

Solana is a decentralized Layer 1 network that utilizes the Proof-of-History consensus mechanism which promises high performance by processing large amounts of transactions quickly at a fraction of the cost.  Users can perform transactions and interact with a vast ecosystem of decentralized applications built on Solana using its native token, SOL, to pay for transactions.


Key Takeaways

  • Solana is a high-performance Layer 1 network that combines their innovative Proof-of-History consensus algorithm with Delegated Proof-of-Stake to handle large amounts of transactions quickly and cheaply.

  • Besides Proof-of-History, Solana utilizes other key technologies, such as Turbine, Gulf Stream, and Sealevel, to smoothly handle the network’s high transaction throughput.

  • Solana is a monolithic blockchain similar to Bitcoin but is able to scale efficiently and maintain its stability through optimized high-performance hardware.

  • Solana’s native token, SOL, is used to pay gas fees and is staked by validators to process transactions and secure the network.

  • Solana supports an ever-growing ecosystem of applications that leverage the network’s fast, low-cost transactions across different categories, such as DeFi, NFTs, and DePIN.


Introduction to Solana

Launched in March 2020, Solana is an open-source Layer 1 blockchain that allows users to perform transactions, and launch decentralized applications permissionlessly for others to interact with. Often touted as an ‘Ethereum Killer,’ Solana was designed to be a smart contract platform similar to Ethereum but with faster transactions and lower costs. As a high-performance blockchain, Solana has historically achieved a peak of over 1,500 transactions per second, with each transaction costing less than a cent.

This is accomplished by combining the conventional Delegated Proof-of-Stake (DPoS) consensus mechanism with their own innovative Proof-of-History (PoH) consensus mechanism. Unlike conventional Proof-of-Stake mechanisms, Solana’s Proof-of-History contains several novel features, such as ordering, continuous streaming of transactions, and parallel processing. These features work in conjunction to improve both transaction execution speed, as well as verification efficiency by other validators on the network.

Solana’s high transaction throughput and low fees have made it an attractive environment for users and developers to experiment with new apps within DeFi, NFTs, and GameFi, such as Jupiter and Metaplex, that are only possible through Solana’s speed and low fees. Furthermore, the listing of SOL and other Solana-based assets on major exchanges, as well as the integration of cross-chain infrastructure and bridging protocols, such as Wormhole and Circle’s Cross-chain Transfer Protocol (CCTP), has allowed users to easily and securely bridge funds to and from Solana. As a result, Solana has grown into a fully-fledged ecosystem of interoperable applications that offer a smooth and cheap experience for crypto veterans and newcomers alike. 

SOL is Solana’s native token, which is used to pay transaction fees on the network. Part of these transaction fees are then paid to validators, who also earn inflationary SOL rewards for processing new blocks. Users can set up their own validator nodes by staking SOL or delegating their staked SOL to other validators. By helping to secure the Solana network by verifying new blocks of transactions, validators can earn more SOL through block rewards. Moreover, with the growth of the Solana network, the established value of SOL has allowed for further use cases across various protocols, both within its ecosystem and beyond.

But how exactly did the idea of Solana come about, and within just four years, was able to grow into such a large ecosystem today? Let’s dig in.

What Makes Solana Unique?

While it may seem that every Layer 1 or even Layer 2 network serves the same purpose, how they prioritize and balance the blockchain trilemma of performance, security, and decentralization can vary significantly. At its core, Solana has prioritized network performance through its unique Proof-of-History (PoH) consensus mechanism, Rust integration, as well as requirements for more high-performance validator hardware, which helps the network process and confirm transactions faster at a much lower cost.

Proof-of-History

In a nutshell, PoH allows for the creation of a continuous on-chain record of transactions in chronological order. As opposed to other networks, where nodes operate and verify transactions independently based on their own data and internal clock, PoH operates as the global block that all other nodes refer to for checking whether transactions are properly ordered. Without the need for re-checking with their peers, all validators can quickly and easily validate the correct sequence of transactions based on the output from PoH.

PoH allows nodes to easily prove the order in which events have happened based on the network’s own historical record. Using PoH, nodes do not have to coordinate with one another to establish a common timeframe. Instead, all other nodes simply have to verify whether the PoH sequence generated by the leader node is accurate and contains valid transactions. This method allows consensus to be achieved more quickly, speeding up the time for transactions to be finalized and added to the blockchain.


Source: Solana

Additionally, PoH uses the Verifiable Delay Function (VDF) to verify the passage of time on the network. Even though VDFs are computationally more expensive, validators are required to solve them continuously as time passes. This consistent stream of unique outputs helps to establish a clear timeline of events, allowing validators to more efficiently verify the proper transaction order based on elapsed time.

Through the DPoS consensus mechanism, selected nodes create the PoH sequences by adding a timestamp to each transaction received. The transactions are then ordered using PoH to create a block, which will then be distributed to all other nodes on Solana. Once other nodes receive the block, they can independently check whether the created block is ordered properly based on PoH and that the transactions themselves are valid without incurring additional latency from having to re-verify with other nodes. Hence, verification for both conditions requires less computation, allowing for faster processing and less time to achieve transaction finality.

Usage of Rust

Unlike Ethereum and other EVM-based contracts, which utilize Solidity and Vyper as the primary programming languages for implementing smart contracts, programs on Solana are mainly written in Rust, a robust language that further enhances the network’s efficiency. With Rust, each block on Solana can be processed concurrently and independently while maintaining the security of the network. With minimal runtime and execution speeds that are on par with programs written in C or C++, Rust helps to provide the high level of performance that has been crucial to Solana’s success.

The Rust developer community, which goes beyond crypto and blockchain, is also far bigger than the Solidity developer ecosystem, with over 3.5M active developers, making it easier for them to make the jump to crypto without having to learn a new language. Furthermore, Rust can be easily integrated with other programming languages, allowing for seamless implementations with other blockchain programs and libraries. In fact, the significance of Rust in the Solana ecosystem’s growth has resulted in the development of Move, a Rust-based programming language utilized on newer blockchains today, such as Aptos and Sui.

High-Performance Validator Hardware

Another unique part of Solana’s architecture that underpins its performance is the usage of high-performance hardware by validators. The recommended hardware for a validator on Solana is much higher than the requirements for hosting an Ethereum validator, which can run on more general devices such as a laptop. For comparison, the minimum requirements to run a Solana validator include a 12-core CPU, 256GB of RAM, and over 1TB of available disk space, while Ethereum validators can be spun up using a 2-core CPU, 8GB of RAM and 2TB of storage.

By leveraging specialized hardware with greater capabilities, the network could theoretically perform more smoothly and handle higher throughput, though it comes with the trade-off of decentralization. Solana’s high technological requirements essentially raise the barrier to validator participation, increasing the network’s reliance on existing nodes to handle transactions. As a result, more power ends up being centralized among a limited group of validators. There are also different validator clients available that node operators can run to optimize their node performance. Further efforts to improve validator client software, such as the upcoming Firedancer client, are also being made to further boost the efficiency of Solana nodes with lesser hardware.

Regular Network Upgrades

Finally, as it is still technically considered to be in its ‘mainnet beta,’ Solana is constantly being improved by the core team through the introduction of regular network upgrades, including the implementation of local fee markets. In a nutshell, local fee markets help combat high gas fees and degraded performance by localizing the effects of congestion on certain activities rather than the entire network. When there is a surge in interactions for certain protocols, demand is increased for limited blockspace from those protocols. This is where local fee markets come in, where transaction fees for interacting with those protocols are driven up while unrelated transactions are unaffected.

History of Solana

The concept of Proof-of-History was first proposed in a whitepaper published by Anatoly Yakovenko, the co-founder and CEO of Solana, in November 2017. In it, he details a new method of timekeeping that allows blockchains to automate transaction sequencing for faster execution and settlement times. Anatoly’s idea was backed by his impressive background and years of technical experience – he founded a VOIP (Voice Over Internet Protocol) startup named Alescere. He had also previously worked at Qualcomm for over ten years, with a focus on compression techniques and distributed systems.

Source: Solana

Anatoly began working on the first iteration of his Proof-of-History blockchain privately in C before switching over to Rust for additional safety and better performance. This decision would turn out to be extremely beneficial in attracting Rust developers to Solana, which helped to pave the way for Solana to become the first large Rust-based chain. Teaming up with his former colleague at Qualcomm, Greg Fitzgerald, the duo released the project’s whitepaper and first internal testnet in February 2018, which was able to process 10,000 transactions in half a second. After their initial success, Anatoly soon recruited Raj Gokal and another Qualcomm ex-colleague, Stephen Akridge, to form a company to develop the project, which was then known as Loom. At the time, the existence of an Ethereum-based project known as Loom Network caused the team to rebrand the project to Solana, after a similarly named beach in California, to avoid confusion.


Source: CoinDesk

Solana began to see increased interest and adoption among crypto users looking to escape high gas fees on Ethereum in 2021. However, it’s undeniable that much of Solana’s early success was due to the involvement of the former CEO of FTX and Alameda Research, Sam Bankman-Fried. As early investors and proponents of the Solana blockchain, Sam and his affiliated entities were essentially the main backers behind the first few major projects on the network, most notably Serum, the on-chain orderbook protocol that underpinned much of Solana’s early decentralized exchanges, as well as Bonfida, the Solana Name Service. There were other less successful projects as well, such as Oxygen and Maps, both of which had their tokens launched and promoted heavily through the FTX exchange.

In the early days after its inception, Solana was notorious for having periodic network outages, resulting in long downtimes where users were unable to perform transactions. However, the ecosystem still grew as projects and users coalesced on the network. Yet, in 2022, the ecosystem suffered an existential crisis when FTX collapsed. In the aftermath of FTX’s collapse, the price of SOL plummeted by 74% from $36.72 to a low of $9.60, breaking several dApps in the process and causing most of its users to leave the ecosystem. Many viewed this as the ‘death of Solana,’ but this would not be the end as in the next section, we will dive deeper into how Solana managed to bounce back after the collapse of FTX.

Solana After the FTX Collapse

Despite many deeming FTX’s fall would cripple Solana beyond repair, the project team, alongside developers who chose to stay on the network, persevered throughout the immediate aftermath by releasing new updates and products on Solana. Despite the collapse, the surviving members of the community rallied around the project and built an even more robust and resilient ecosystem.

In the aftermath of the collapse, the OPOS tagline, an acronym for ‘Only Possible on Solana,’ was popularized by key projects and builders across the ecosystem, such as Mert from Helius, Armani Ferrante from Backpack, as well as the Jupiter team. While many consider it to be just a catchy phrase, the tagline refers to exclusive features and unique technologies that enable projects to be built only on Solana. The OPOS movement served as a rallying cry for the Solana community, sparking a wave of renewed hope and support for the Solana ecosystem as the network started to attract users back to the network towards the end of 2023. The price of the coin staged a strong recovery, surging from a low of $10 to $101 at the start of January 2024.

While its price may not have recovered to its all-time highs, on-chain user and activity metrics surpassed their previous peaks in 2021. In fact, Solana recorded higher trading volumes than Ethereum for the first time in December 2023 without suffering any outages, a feat achieved through constant improvement on the network’s underlying infrastructure.

While network performance has improved, the Solana team continues to iterate and upgrade the network. Some of these upgrades include Firedancer, a new validator client meant to enhance the network’s performance, and Runtime V2, an improved blockchain runtime focusing on faster execution and simpler APIs for developers. Similar to EVM, new chains are also being built on top of the Solana Virtual Machine (SVM), including Layer 2s such as Nitro and Eclipse Layer 2s, as well as Special Permissioned Environments (SPEs), which are customized SVM instances built for enterprises. The Solana team is also preparing to launch the second iteration of their mobile phone, the Solana Saga 2.

How Does Solana Work?

At this point, it’s evident that each blockchain functions uniquely, and Solana is no different. We have already discussed Proof-of-History earlier, but here are several other innovations within the network’s architecture that, in combination, contribute to its speed and security.

Tower Byzantine Fault Tolerance

Modified from the Practical Byzantine Fault Tolerance (PBFT) mechanism used in other DPoS networks, Tower BFT helps to improve Solana’s responsiveness by utilizing PoH as a synchronized clock before consensus is reached to avoid incurring additional costs and delays. In Tower BFT, validators vote on PoH hashes that represent the state of the network’s ledger. For each vote, there is a built-in time-out mechanism for the validator if it intends to roll back and change its particular vote, and the time-out increases exponentially as more votes pass. This means that if a validator casts their vote for the non-majority fork, it risks being locked out of the network for the duration of the time-out, thereby incentivizing validators to achieve consensus. 

When multiple forks exist, validators are able to compute the effective stake-weighted timeout of every fork. Validator rewards are also generated only for the votes that reach the 2³² timeout, so validators are always incentivized to vote on the fork with the heaviest time-out. Once two-thirds of validators have voted on a particular PoH hash, that hash is canonicalized and can no longer be rolled back. As Tower BFT works on the concept of increasing time-out weights until a block hash is canonicalized, it can continuously stream new blocks without stalling the ledger. Tower BFT also speeds up the transaction validation process by recording previously voted blocks and allowing validators to reference these blocks rather than having to go through their previous chain of transactions.

Turbine 

With PoH, consensus on Solana can be achieved without depending on peer-to-peer communication between validator nodes. Subsequently, the block data can be simplified and sent to all other nodes in a more optimized way. Solana utilizes the Turbine protocol as its block propagation mechanism to distribute blocks in a more structured approach, minimizing overcommunication and the load on individual nodes.

With Turbine, blocks are divided into smaller packets of data and distributed to various validators. Each validator then retransmits the data to a different group of nodes. In other words, each individual node will only need to contact a few nodes rather than the entire network. The smaller packets allow data to be distributed more efficiently across Solana, resulting in the network’s increased bandwidth and greater capacity to handle and process transactions quickly.

Gulf Stream 

Some networks, such as Bitcoin and Ethereum, house unconfirmed transactions in a waiting area called the mempool before they are processed into a block and added to the blockchain. Solana utilizes a different design, forwarding transactions received by validators directly to leader nodes using the Gulf Stream protocol, removing the need for a mempool.

Simply put, since every validator knows the upcoming arrangement of expected leader nodes, they can forward the transactions to the expected leader ahead of time. This enables validators to execute transactions before the next block is created, which reduces confirmation times and the memory load of unconfirmed transactions on individual validators. Hence, Gulf Stream plays an integral part in supporting Solana’s high throughput of over 50,000 transactions per second.

Sealevel 

Most EVM blockchains today are single-threaded, meaning that the state of the blockchain is modified by one smart contract at a time. Sealevel enables multi-threaded performance on Solana by allowing thousands of contracts to be processed simultaneously based on the amount of resources available to validators. This is possible due to the very nature of Solana transactions themselves.

On Solana, each transaction describes all the states that will be read or modified when it is executed. As such, non-overlapping transactions and transactions that read data from the same state can be executed in parallel. Moreover, the high-performance hardware utilized by validators ensures that there is sufficient computing power for these transactions to be executed concurrently.

Pipelining 

In order to validate large blocks of transactions and distribute them quickly across the network, Solana utilizes a common CPU optimization technique known as pipelining. Pipelining is the process of assigning input data to different hardware that is responsible for certain types of data based on their specifications. The input data is processed sequentially, where each stage of the process is performed by separate units.

The pipeline mechanism on Solana, known as the Transaction Processing Unit (TPU), handles transaction data through four different stages. As the data progresses through each stage, the next series of transactions are received by the TPU and are similarly processed, with subsequent batches taking their place in the previous stage. This allows for a constant stream of transaction data to be efficiently processed and verified by the lead validator node and then distributed to all other nodes.

Cloudbreak 

Solana isn’t just about using hardware to scale the computing of transactions on the network. As the network grows, it requires greater memory to store account data without sacrificing size and access speed. Hence, Solana utilizes Cloudbreak, a horizontally-scaled accounts database that allows data to be simultaneously read and written across the network.

Cloudbreak provides Solana with the necessary scalability by appending account data onto available hard drives across the network, enabling read and write operations to be distributed across the network for concurrent transactions. Cloudbreak also helps free up Solana’s memory by clearing it of old invalid accounts.

Archivers 

Without external layers or networks to rely on, Solana employs a network of nodes known as Archivers to maintain a distributed ledger storage that contains the network’s data. Archivers received their assigned data based on the storage available for each node. The assigned Archiver nodes will then download their respective pieces of data from the network’s validators. 

Archivers are regularly tasked with providing Proof-of-Replication to ensure that these nodes are storing the correct data. They will then earn rewards based on the number of successful proofs submitted. Unlike the custom rigs and heavy-duty hardware required by Solana validators, Archiver nodes can run on laptops and PCs.

Solana Outages

Despite launching over four years ago and hosting an impressive ecosystem of applications, the Solana network is no longer in its infancy but is still far from being completed. In fact, the network has never officially exited its beta phase and is still being considered to be in mainnet beta. Unlike Bitcoin and Ethereum, which many consider to be robust, long-standing networks with an impeccable uptime record, Solana has had an unfortunate history of network outages since its launch in 2020.

Solana encountered its first series of outages in September 2021, including a major outage on September 14th due to the launch of the Grape Protocol IDO on the Raydium platform. The massive surge in transactions triggered a memory overflow, causing several validators to crash. As a result, the network’s performance slowed down and eventually went offline for 17 hours as the remaining validators failed to agree to the state of the blockchain, thus preventing new blocks from being confirmed.

Soon after, Solana suffered its worst period of downtimes so far in January 2022, with partial outages occurring over the course of two weeks. Over several days, the network suffered long downtimes, including a 30-hour interruption caused by an influx of bot transactions. During this time, Solana suffered severe congestion issues and degraded performance, forcing developers to update the blockchain to version 1.8.14 in an effort to improve the stability of the network.

After a string of separate outages from April 2022 to February 2023, Solana remained relatively stable, with 100% uptime for close to a year before its most recent outage on February 6, 2024. The network was unable to produce blocks for approximately 5 hours after the mechanism used to upgrade and execute programs, known as the BFP loader, had failed due to an unfixed bug. Engineers from the ecosystem then released a validator software upgrade to patch the issue.

In total, the network has suffered eight major outages and ten partial outages throughout its lifetime. These outages and their respective incident reports can be tracked on status.solana.com. Additionally, users can stay informed by subscribing to new updates on Solana’s status.

It’s important to acknowledge that these outages don’t just fix itself. Solana’s core team has consistently led coordinated efforts to restart the network and developed various software updates to fix and prevent further outages. Some of the upgrades that have been implemented on the network include QUIC and stake-weighted Quality-of-Service (QoS).  

QUIC is a protocol meant to mitigate the effects of spam and other harmful transactions by providing validators and RPC providers with some control over the flow of network traffic. On the other hand, stake-weighted QoS is an implementation that allows leader nodes to prioritize transactions based on the validator’s stake to prevent Sybil attacks. Users with larger stakes would be able to transmit more packets of data to the leader nodes, preventing the chance of smaller stakers, which are considered lower-quality nodes, from flooding the network with transactions and crowding out actual transactions from larger stakers.

Solana vs. Ethereum vs. Bitcoin

As we dive deeper into the Solana ecosystem and how it works, it’s clear that the network is not similar to Ethereum or Bitcoin—not just from the types of applications being built on each chain but also from the technology and philosophy behind these respective networks. However, in what aspects does Solana differ from these other two blockchains, and why does it matter? In this section, we will compare some of the statistics, strengths, and limitations of Solana, Ethereum, and Bitcoin.

 

Bitcoin

Ethereum

Solana

Year launched

2009

2015

2020

Native token

BTC

ETH

SOL

Maximum token supply

21M

Blockchain architecture

Monolithic

Modular

Monolithic

Consensus Algorithm

Proof-of-Work

Proof-of-Stake

Proof-of-History +
Delegated Proof-of-Stake

Transactions per second

~7

~13

~2,500*

Number of dApps

>270

>4,600

>700

*Includes vote transactions

Bitcoin and Ethereum have solidified themselves as two of the most enduring networks, having stood the test of multiple crypto cycles. While Solana is still the new kid on the block, it has quickly risen through the ranks to become the third-largest network in terms of activity.

In terms of how these blockchains are architectured, Solana is similar to Bitcoin in that it adopts a monolithic structure, where all key functions of the network are carried out on a single layer. On the other hand, Ethereum is shifting to a modular design, where various blockchain operations are assigned to different layers to improve scalability. While monolithic structures are simpler to implement and well-suited for Bitcoin’s simple peer-to-peer transfers, they are difficult to upgrade and scale as more transactions are performed, leading to higher fees and longer transaction times.

Although Solana has embraced a monolithic design, the network is able to scale natively by relying on optimized hardware, software, and other upgrades to ensure it can handle increased transactions while remaining stable. This allows the network to theoretically support a higher throughput of over 65,000 TPS.

As the most popular ecosystem for deploying smart contracts and decentralized applications, Ethereum currently hosts over 4,600 different dApps in various categories, such as DeFi, GameFi, and NFTs. Yet, Solana is steadily catching up with over 700 native protocols. Most of these applications consist of DeFi protocols, such as spot and perpetual DEXs, that leverage Solana’s cheap and fast transactions to offer a better trading experience for users.

Given the Bitcoin network’s original purpose of supporting decentralized peer-to-peer transfers, it’s no surprise that the deployment of native applications on Bitcoin is still further behind Ethereum and Solana. However, the Bitcoin ecosystem has grown exponentially since the rise of the Ordinals protocol, with over 270 applications currently building on Bitcoin, including Bitcoin Layer 2s

What is the Solana Coin (SOL), and Why Does It Have Value?

Like Bitcoin (BTC) and Ether (ETH), which are the native currencies of their respective blockchains, Solana is powered by its native SOL token. Much of SOL’s value is derived from its usage in paying transaction fees on the Solana network, but the token also has several other use cases both within the Solana ecosystem and beyond. For example, it can be used for peer-to-peer payments and as collateral for lending and borrowing transactions on other networks.

As mentioned previously, SOL also plays an integral role in maintaining Solana’s security. Users can choose to become validators by staking their SOL and earning scheduled inflationary rewards based on the amount of SOL staked. If the validator happens to be the current leader node producing a new block, it will also earn 50% of the block’s transaction fees while the remainder is burnt. Otherwise, users can delegate their SOL tokens to other validator nodes, who then take a commission on the rewards earned from the delegated tokens. With the recent approval of the Solana Improvement Document (SIMD)-0096, 100% of the fees are now received by validators.

Beyond passively staking SOL, validators must also actively spend SOL to vote on new blocks to be added to the network. On average, they will spend up to 1.1 SOL a day on voting transactions, amounting to just over 2,000 SOL a day based on the number of validators currently on Solana. As such, SOL is also in demand by validators due to its necessity in securing the network, which allows them to earn block rewards and fees in the process. 

It’s important to note that there is increased concern regarding the overreliance on SOL’s inflationary rewards to subsidize validators. Solana’s initial inflation rate of 8% is programmed to decrease by 15% each year until it reaches an inflation rate of 1.5%. However, in addition to the cost of SOL required to vote on new blocks, the expenses related to acquiring and maintaining the necessary hardware for block validation are much higher compared to other networks. As such, Solana’s high inflation is currently considered necessary in maintaining the network’s security, as transaction fees are currently not sustainable enough to incentivize long-term validator participation. In time, as more transactions are performed on the network, validators should be able to reliably generate revenue from fees without relying on Solana’s token incentives.

How to Invest In Solana

Where to Buy

Similar to many other cryptocurrencies, users can invest in Solana by purchasing SOL tokens through various platforms, including centralized exchanges such as Binance and Bybit or decentralized exchanges and aggregators such as Orca and Jupiter. 

On these exchanges, users can purchase SOL using other cryptocurrencies, while some even allow you to use your credit or debit card to purchase directly using fiat. After purchasing SOL, users may choose to store them on centralized exchanges or in self-custodial crypto wallets specially built to support Solana.

Solana Wallets

Whether you invest in Bitcoin, Solana, or other cryptocurrencies, you need a platform to store your assets securely. Users may choose to store their SOL on centralized exchanges or in self-custodial crypto wallets specially built to support Solana. Do note that storing your funds on centralized exchanges can be risky, as the popular adage goes, ‘not your keys, not your crypto,’ Although it may be less of a hassle to let exchanges hold your crypto assets for you, it may impact your ability to access your funds if they are exploited or becomes insolvent.

Therefore, using a self-custodial hardware or software wallet is often the best way to store your SOL and interact with applications on the Solana network. While wallets such as Rabby and MetaMask do not support Solana-based assets, other popular alternatives to consider include Solflare and the Phantom wallet, which also allows users to view their NFTs and airdrops and perform in-app swaps. For more passive investors choosing to hold long-term, hardware wallets from Trezor and Ledger are also capable of storing SOL and are generally more secure.

How to Track Transactions With Solscan

If you plan on transferring your funds or interacting with the Solana network, how do you know whether your transaction has been completed or not? Much like other blockchains, you can view the state of current and historical transactions on the Solana network through block explorers like Solscan.

To view the status of a specific transaction, simply paste the transaction hash provided by your wallet into the search box. You can also enter your own wallet address or any other Solana network address to view their account balances and what tokens the address contains. SolScan also lets users view token contract addresses, which displays recent transactions related to the token, current holders, and other useful information. For more detailed information on how to use Solscan, you can check our guide here.

It’s important to note that Solscan is not the only block explorer for Solana. Beyond providing users with the same accessibility to transparent blockchain data, other block explorers, such as SolanaFM and Solana Beach, also offer advanced analytics on the Solana network, such as upcoming leader nodes, amount of SOL staked by validators, and newly deployed tokens.

Top Solana Protocols

Thanks to Solana’s high-speed transactions and low gas costs, the network has become a hotbed for various protocols across different categories. The network’s revival in late 2023 has ushered in a new wave of applications being built on the Solana network, while some of the older protocols have grown into the largest applications in crypto today. 

While most of these new dApps are still gaining traction within the Solana community, the ecosystem has clearly expanded beyond DeFi and NFTs into DePIN, liquid staking, and much more. Let’s take a deeper dive at some of the significant and exciting protocols currently on Solana.

DEXs: Raydium, Jupiter, Drift

As one of the key protocols that utilize Solana’s speed and low fees, DEXs like Raydium allow users to swap between different assets quickly and cheaply. Additionally, users can provide liquidity for different crypto assets to earn trading fees. Jupiter features a DEX aggregator that helps users combine liquidity from supported DEXs to get the best price offer for their assets, while perpetual DEXs such as Drift allow for leveraged trades of up to 20x.

Lending: Solend, Kamino

Users with idle capital on Solana can choose to lend their assets to borrowers on Solend and Kamino to earn interest. They can also choose to retain their exposure to specific assets by using them as collateral and borrowing other assets without needing to swap between them. Although Solend and Kamino largely accept similar blue-chip assets, these platforms may also accept more long-tail assets as collateral, such as memecoins. These lending protocols will also have different lending and borrowing rates, as well as different collateral ratios that need to be maintained to avoid liquidation.

Liquid Staking: Marinade, Jito

If you’re holding SOL instead and are not keen on lending protocols, liquid staking protocols such as Marinade and Jito present another option for earning yield on your idle assets and helping to secure the network at the same time. Users deposit their assets into liquid staking platforms in exchange for liquid staking tokens, which represent their share of assets. The underlying assets are then delegated to validators, where users will then earn a portion of the rewards they generate from processing transactions. 

Some protocols, like Jito, provide higher yields than other liquid staking tokens through MEV rewards. As its name implies, a key aspect of liquid staking tokens is that they can be utilized on other applications in the Solana ecosystem, allowing stakers to maximize capital efficiency by earning yield from multiple sources simultaneously.

NFTs: Mad Lads, Claynosaurz

Much like Ethereum NFTs, Solana NFTs have also garnered significant attention and have formed their own communities within the ecosystem. Each NFT within these collections is unique and carries specific traits, such as different backgrounds and accessories. Even though the vast majority of NFT collections on Solana are purely aesthetic and can be used as profile pictures, some of them have several use cases across different platforms on Solana.

For example, Mad Lads NFTs are actually xNFTs, which carry a script that can be executed by interacting with specific applications such as the Backpack wallet. The programable nature of Mad Lads allows owners to interact with protocols directly from the xNFT instead of third-party platforms. On the other hand, Claynosaurz holders received exclusive Claymakers and Clay, which can be used to craft new NFT items to upgrade their existing Claynosaurz.

DePIN: Helium, Render Network

With its integrated infrastructure of high-performance hardware, Solana has steadily become the native home for DePIN projects such as Helium and Render Network. These platforms leverage blockchain technology and token incentives to decentralize physical infrastructure resources such as wireless connectivity and data storage. Helium, which originally started on its own chain, migrated to Solana early last year in an effort to scale its wireless network infrastructure. In a nutshell, Helium allows users to set up their own mobile hotspots to provide internet and cellular coverage in exchange for token rewards. Meanwhile, Render Network allows node operators to rent out their GPU resources to others who need additional processing power for rendering graphics and training AI models and earn tokens from doing so.

Payments: Transak, Helio

Solana’s high transaction throughput also makes it highly suitable for accepting crypto payments and setting up new payment rails without the need for intermediaries. With additional payment tools developed by the core team, platforms such as Helio and Tiplink enable creators and Web2 firms to seamlessly integrate and accept crypto payments.

Helio provides plugins that allow users to buy tokens and NFTs directly using fiat or their debit cards in a single click, along with airdrops in the form of discounts and loyalty points. On the other hand, Tiplink is a lightweight wallet that can be in the form of a link or QR code that allows users to easily send crypto payments to others, even if they don’t have a wallet. Since the link itself is the wallet, users can transfer or use the funds once they are received.

Memecoins: Bonk Inu, dogwifhat, Book of Meme 

As one of the main drivers behind Solana’s resurgence, memecoins like Bonk Inu, dogwifhat have attracted like-minded enthusiasts from all over crypto. With Solana’s low fees, memecoins could be distributed fairly across Solana’s wide user base, and the average user can participate without dealing with periods of high transaction fees that are all too common with memecoins on Ethereum.

Shortly after FTX collapsed, 50% of the Bonk Inu supply was airdropped to different groups of Solana users. Almost a year later, in November 2023, dogwifhat, a memecoin depicting a Shiba Inu wearing a knitted cap, was launched as the activity of Solana started to pick up again. Although both of these memecoins were launched at different times with small communities, there’s no doubt that the crypto community’s unrequited love for dog-based memecoins has propelled them into some of the largest memecoins on Solana, both over $2B in market cap, respectively.

Solana reached the pinnacle of memecoin mania in March 2024 with the launch of ‘Book of Meme’, a memecoin launched by the creator of the infamous Pepe. In just over 2 days, the memecoin’s market cap grew exponentially to over $1B. A day later, the token was listed on the largest crypto exchange, Binance. Suffice it to say, Book of Meme accomplished what most memecoins would have dreamed of in years, in just under a week.

For a more in-depth look into some of these protocols, check out our article on the top Solana projects to watch for in 2024.

Final Thoughts

Since the idea of Solana was conceived, it’s been a long and arduous road in building up the network into what it is today. Despite the numerous setbacks, Solana has endured and continues to improve through constant developments from its solid community of engineers. While the network has had its fair share of problems in the past, it has only gotten better and better due to their effort.

Thankfully, their work has not gone unnoticed. More crypto natives have begun to appreciate Solana’s smoother performance, attracting more new users who can experience smooth and cheap interactions with a variety of DeFi and NFT applications. The influx of new and returning capital into the ecosystem has opened the door to a wider range of protocols looking to build on the network, offering products and features that promote greater composability. These projects have since woven an interconnected network of mutual partnerships and integrations, further strengthening Solana’s community.

With more projects looking to create their own appchains and, similarly, more platforms offering Rollups-as-a-Service, it may seem like we are increasingly heading to a future where multi-layer and multi-chain ecosystems become the norm. However, that doesn’t mean that monolithic blockchains like Solana would become obsolete. In fact, there is an argument to be made that having many different apps on a single chain, thereby avoiding the risks and friction of bridging, make it more likely that a monolithic network like Solana will gain greater adoption among the general populace.