Solana is the latest cryptocurrency and blockchain platform which is garnering attention and getting rave reviews for its ability to handle transactions faster and cheaper than existing cryptocurrencies. It achieves this without sacrificing decentralization and does by employing a bundle of novel approaches, including the "proof of history" mechanism. Solana's native cryptocurrency is SOL, which is used for transactions and staking. Owners of SOL have the right to vote in future upgrades.
During the NFT-mania, SOL got a significant boost as it hosts some of the most popular collections. As a result, its price has been one of the best-performing assets since its debut in May 2020 at around $0.90. It recently peaked in mid-August at over $220 before declining to its current price of $133.
The biggest catalyst for these gains was the launch of a primate-themed NFT collectible project - the Degenerate Ape Academy NFTs, the first major NFT project to launch on the Solana blockchain. Another major project on the Solana blockchain is the Serum decentralized exchange. Solana claims that it can process around 50,000 transactions per second, while ethereum can handle around 15 transactions per second which often leads to high gas fees.
Due to this, many hope that Solana can compete with centralized payment processors like Paypal, Visa, or Mastercard. For older coins and blockchains that are reliant on 'proof of work', the consensus mechanism is too time-intensive. Solana uses a different mechanism - 'proof of history'. This is also why Solana has been such a popular platform for decentralized finance (defi) apps and services, because traders want instantaneous closings of trades. In contrast, defi apps on ethereum are often plagued by lags and high fees especially during periods of heightened volatility.
With this system, holders of SOL coins serve as 'validators' and serve a similar function as miners on other blockchain platforms. Validators can mine new coins or earn fees by staking their coins. They also have the right to participate in future governance decisions.
