What is Solana? SOL Explained with Animations

Summary

This video from Whiteboard Crypto dives into Solana, a high-speed cryptocurrency with unique technological features. It explains Solana's rapid block time, impressive transaction throughput, and low fees, attributed to its innovative Proof of History consensus mechanism. The video also touches on Solana's tokenomics, its similarities to Proof of Stake, and its potential for growth, all while highlighting the creator's background and the project's current stage of development.

Takeaways

• 🚀 Solana is a high-performance blockchain platform designed for creating decentralized applications (dApps) and cryptocurrencies.
• 🌊 Named after Solana Beach, Solana's blockchain was created by Anatoly Yakovenko, who has a strong background in technology and worked at Qualcomm for a decade.
• ⏱️ Solana boasts a block time of 400 milliseconds, which is significantly faster than Ethereum's 10 seconds and Bitcoin's 10 minutes.
• 🔥 The network claims to handle up to 710,000 transactions per second, though it has not yet reached this capacity, it demonstrates its potential for high throughput.
• 💸 Solana's transaction fees are extremely low, comparable to the Matic network, making it an attractive platform for users and developers.
• 🔒 Solana uses a unique consensus mechanism called Proof of History, which integrates time into the blockchain data and allows for faster sequencing of validators.
• 🤝 There are no specific requirements to become a validator on Solana, unlike Ethereum 2.0, which requires a significant amount of Ether to stake.
• 🔄 Solana's Sea Level feature allows validators to run smart contract code in parallel, enhancing its ability to process tasks simultaneously.
• 📈 Solana's token, SOL, is used for transaction fees and has both inflationary and deflationary aspects, with a mix of token burning and staking rewards.
• 🛠️ Solana's smart contracts are written in the Rust programming language, which is more powerful but requires more effort to develop compared to Ethereum's Solidity.
• 🔧 Solana is still in the beta stage, which is important for investors and developers to consider when engaging with the platform.

Q & A

What is Solana and why is it significant in the cryptocurrency space?

Solana is a high-performance blockchain platform designed for decentralized applications and cryptocurrencies. It is significant because it offers fast transaction speeds, high throughput, and low fees, which are improvements over other platforms like Ethereum.

Who created Solana and what is their background?

Anatoly Yakovenko created Solana. He is known for his intelligence and has a background in working at Qualcomm for about a decade.

What is unique about Solana's consensus mechanism?

Solana uses a unique consensus mechanism called Proof of History, which is an enhancement of Proof of Stake that incorporates time into the blockchain data, allowing for faster and more efficient block sequencing and validation.

How does Solana's block time compare to Ethereum and Bitcoin?

Solana has a block time of 400 milliseconds, which is significantly faster than Ethereum's block time of 10 seconds and Bitcoin's 10 minutes.

What is Solana's transaction throughput capability?

Solana boasts the ability to handle up to around 710,000 transactions per second, which is approximately 30 times the amount that Visa currently handles.

How does Solana keep transaction fees low?

Solana's transaction fees are low, comparable to the Matic network, with fees around 1/100th of a penny, due to its efficient consensus mechanism and network design.

What is the SEA Level feature of Solana?

SEA Level is a term used to describe Solana's ability to run smart contract code in parallel, allowing multiple tasks to be processed simultaneously, which enhances the network's overall efficiency.

How does Solana's smart contract functionality differ from Ethereum's?

Solana uses the Rust programming language for smart contracts, which is more powerful but requires more work to create. In contrast, Ethereum uses a virtual machine system to run its Solidity code.

What are the tokenomics of Solana's native coin, SOL?

The SOL coin is used for transaction fees and is integral to the blockchain ecosystem. Solana's tokenomics are both inflationary and deflationary, with transaction fees being burned and staking rewards paying out around 8%, which will gradually decrease over time.

What happened during Solana's downtime in December 2020?

Solana experienced a downtime of around six hours in December 2020 due to a network-wide bug. Despite this, the incident did not significantly impact the price or cause panic selling.

What is the current status of Solana's development?

As of the information in the script, Solana is still in the beta stage, which means it is under active development and may not be fully stable for production use.

Outlines

00:00

🚀 Introduction to Solana and Its Unique Features

This paragraph introduces Solana, a cryptocurrency that has gained significant attention for its rapid growth and unique technological advancements. It highlights the lack of comprehensive educational content on Solana and the creator, Anatoly Yakovenko, who has a strong background in technology. The paragraph emphasizes Solana's impressive block time of 400 milliseconds, its ability to handle a high volume of transactions per second, and its low transaction fees. It also introduces the concept of Solana's consensus mechanism, Proof of History, which sets it apart from traditional Proof of Work and Proof of Stake systems.

05:00

🌐 Solana's Consensus Mechanism and Validator Requirements

The second paragraph delves into the specifics of Solana's consensus mechanism, Proof of History, and how it allows for faster and more efficient block validation. It explains that Solana can handle multiple block validations simultaneously, which contributes to its high transaction throughput. The paragraph also discusses the validator requirements for Solana, which are less stringent compared to other blockchains like Ethereum. It touches on the Sea Level feature, which enables parallel processing of smart contracts, and the differences between Solana's smart contracts and Ethereum's, noting that Solana uses the Rust programming language. The paragraph also mentions a temporary network outage in December 2020 and Solana's current beta status.

10:01

💰 Solana's Tokenomics and Community Initiatives

The final paragraph focuses on Solana's tokenomics, including the SOL coin's role in transaction fees and the ecosystem. It explains the dual nature of Solana's inflationary and deflationary mechanisms, the staking rewards, and the initial token distribution. The paragraph also addresses the burning of a large number of SOL tokens held in a single wallet and the various allocations of tokens to founders, the Solana Foundation, and community initiatives. It concludes with a reminder that the content is for educational purposes and does not constitute investment advice, and it invites viewers to explore further resources on the website.

Keywords

💡Solana

Solana is a high-performance blockchain platform designed for decentralized applications and cryptocurrencies. It is known for its fast block time of 400 milliseconds and the ability to handle a high transaction rate, which is significantly faster than Ethereum and Bitcoin. In the video, Solana's speed and efficiency are highlighted as key features that set it apart from other blockchains.

💡Proof of History

Proof of History is a novel concept introduced by Anatoly Yakovenko, the creator of Solana. It is a form of consensus mechanism that integrates time into the blockchain data, allowing for faster sequencing of validators and reducing the need for nodes to communicate back and forth to agree on time. This system enables Solana's network to be more efficient and faster, as explained in the video through the analogy of family members sending letters on specific dates.

💡Transaction Fees

Transaction fees on the Solana network are very low, comparable to the Matic network, with fees around 100th of a penny. This affordability is a significant advantage of Solana, as it makes transactions cost-effective and accessible, which is a key point discussed in the video.

💡Validators

Validators on Solana are nodes that help secure the network and validate transactions. Unlike some other blockchains, Solana does not require a large amount of the native coin to become a validator, making it more accessible. The video mentions that there are no requirements to be a validator, which is a departure from the higher barriers to entry seen in other blockchains like Ethereum 2.0.

💡Sea Level

Sea Level is a term used in the Solana ecosystem to describe the ability of validators to run smart contract code in parallel. This means that multiple tasks can be processed simultaneously, increasing the network's efficiency. The video uses the analogy of a human doing multiple tasks like doing dishes, switching laundry, and sweeping the floor all at once to illustrate this concept.

💡Rust Programming Language

Solana uses the Rust programming language for its smart contracts, which is a low-level language known for its performance and safety. This choice allows for more powerful smart contracts but requires more effort to create compared to Ethereum's Solidity. The video emphasizes that while developers cannot simply copy and paste projects from Ethereum, they have more power with Solana's smart contracts.

💡Tokenomics

Tokenomics refers to the economic structure of a cryptocurrency, including its supply, distribution, and inflation or deflation mechanisms. Solana's token, SOL, is used for transaction fees and is both inflationary and deflationary, with a mix of burned transaction fees and staking rewards. The video provides an overview of Solana's tokenomics, including its initial supply and the distribution among private funding rounds, the ICO, and the foundation.

💡Inflation Schedule

An inflation schedule is a predetermined plan for the issuance of new tokens in a cryptocurrency network. Solana has an inflation schedule that initially offers staking rewards of around 8%, which gradually decreases over time until it reaches 1.5% in 10 years. This mechanism is part of Solana's tokenomics, as explained in the video, and it affects the network's overall supply and the incentives for validators.

💡Decentralized Applications (DApps)

Decentralized Applications, or DApps, are applications that run on a blockchain network, leveraging its decentralized nature for various functionalities. Solana's platform is designed to support DApps, and the video mentions that developers should be aware of Solana's current beta stage when considering developing DApps on the platform.

💡Network Downtime

Network downtime refers to periods when a blockchain network is not operational or experiences issues. Solana experienced a six-hour downtime in December 2020, which is unusual for a decentralized protocol. The video discusses this event, noting that it did not significantly impact the price of the SOL token, but it is a concern for investors and developers.

Highlights

Solana's block time is 400 milliseconds, significantly faster than Ethereum's 10 seconds and Bitcoin's 10 minutes.

Solana claims to handle up to 710,000 transactions per second, 30 times the amount Visa handles.

Transaction fees on Solana are very low, comparable to the Matic network at around 1/100th of a penny.

Solana's consensus mechanism, Proof of History, is a unique system that integrates time into blockchain data.

Proof of History allows for faster sequencing of validators without the need for constant communication to agree on time.

Solana's network can process smart contracts in parallel, a feature not commonly found in other major blockchains.

Solana's smart contracts are written in Rust, a low-level language that offers more power than Ethereum's Solidity.

Solana's token, SOL, is used for transaction fees and is integral to the blockchain ecosystem.

Solana's tokenomics include both inflationary and deflationary aspects, with transaction fees being burned and staking rewards paying out around 8%.

The initial supply of SOL tokens was around 500 million, with 36% sold during private funding rounds and the ICO.

A significant portion of SOL tokens is held by the Solana Foundation and community initiatives.

Solana experienced a six-hour downtime in December 2020, which is unusual for a decentralized protocol.

Solana is still in the beta stage, which is important for investors and developers to consider.

Anatoly Yakovenko, the creator of Solana, has a strong technical background, having worked at Qualcomm for a decade.

Solana's network is not bottlenecked by software or ideas but by hardware, implying significant potential for growth with advancements in technology.

The Solana white paper is highly technical, but the blockchain is named after Solana Beach, a place Yakovenko appreciated.

There are no specific requirements to become a validator on Solana, unlike Ethereum 2.0 which requires a significant amount of Ether.

The SOL token has seen a significant increase in price, from the initial ICO price to the current market value.

Transcripts

holy cow i do not know how we got this

far into creating animated videos of

cryptocurrency topics without hearing of

solana i mean i definitely have heard of

it but wow i am surprised we haven't

covered it yet and probably for good

reasons though if you type in what is

solana and youtube you get 50 price

predictions three videos explaining

proof of history and a bunch of

interviews no good single video that

simply just goes over everything that

solana has to offer welcome to

whiteboard crypto the number one youtube

channel for crypto education and here we

explain topics of the cryptocurrency

world using analogies stories and

examples so that you can easily

understand them in this video we're

going to explain what solana is some of

the crazy unique technological

improvements that they have over

ethereum and then finally we will get

into some tokenomics that you could use

to make a price prediction now before we

get into the technical stuff of solana

let's talk about why it's amazing and

who created it anatoly akavenko is the

man behind the very first white paper

one of the things you need to know about

him is that he's quite smart and worked

at the company qualcomm for like a

decade i tried reading the white paper

and it is quite technical with a few

understandable sentences here and there

but his blockchain is named after the

solana beach that he really appreciated

but let's get into why solana's price

has skyrocketed in the past few months

first of all solana has a block time of

400 milliseconds which means they are

very fast especially when you compare

that to ethereum's block time of 10

seconds or bitcoins 10 minutes also

solana boasts that they can handle up to

around 710 000 transactions per second

which is like 30 times the amount that

visa currently handles although they've

never actually been able to go past 50

000 in the past this doesn't mean they

can't do 710 000 it just means they

haven't tried so the solana network is

fast it's monstrous and it's also cheap

i would say that it's comparable to the

matic network with transaction fees

around 100th of a penny next up let's

get into what makes them so fast and so

cheap the first thing that we must

explain is their consensus mechanism

which is a fancy way of saying how

everyone agrees what the blockchain

should be now they don't use proof of

work and they don't really use proof of

stake anatoly actually described a new

system called proof of history in his

white paper it's basically proof of

stake but it adds in the special

variable of time so you need to know

proof of history is not a consensus

mechanism but it is a way of integrating

time into the blockchain data we use

something called timestamps to place a

specific date and time on the blocks and

we do this so that it allows for a very

fast sequencing of validators basically

so that they know their order to submit

blocks without having to communicate

back and forth one big problem that

other blockchains have is that they have

to agree on time we'll take this for

granted but computers have to constantly

be going what time is it really since

they can't do things like look at their

phone or even the sun to determine it on

other blockchains the nodes which is a

fancy word that means computers on the

network have to chat back and forth back

and forth until they agree on a time and

they have to do this before submitting a

block and in the computer world this

chatter can take up a lot of time solana

fixes this using proof of history to

have everyone timestamp their blocks and

use a cryptographic proof so that they

don't have to wait on everyone to agree

on the time basically we can agree on

the organization of the data in the

blocks after the fact meaning we don't

have to wait for other validators to

check and approve our work let's use one

of the famous whiteboard crypto stories

think about it like this if you want

everyone in your family to send you a

letter and you want them to do it one

day after the other you have to first

send a letter to them and then they have

to send all their letters to you the

time that both of your letters are in

the mail is a long period of time what

if next time you saw them you just said

hey send me a letter at 4pm on january

3rd that way you would know that it's

coming in and you wouldn't have to waste

time or resources asking them to long

story short you could set it up so that

your uncle sends a letter on january 3rd

your aunt on january 4th your cousin on

january 5th and then your grandma on

january 6th we want to read these

letters in order but the issue is that

they each use different mail providers

like you know ups and fedex sometimes

they take different amounts of time and

also your uncle is on a work trip so

he's a few thousand miles away by having

them all send their letters on the days

that they're supposed to they may not

arrive in the exact order but they wrote

the time that they actually sent their

letters in the letter so you can

organize them when you get them

basically proof of history allows nodes

to just keep throwing a bunch of blocks

at us and since some people have faster

internet than others we can assume that

they're telling the truth about their

sending date and then organize them

after we get them then add them to the

blockchain now there's a little bit more

that goes into proof of history but

honestly it deserves its own video so

make sure to hit that subscribe button

if you haven't already oh by the way of

course in this analogy our aunt our

uncle cousin and grandma were actually

all just different people sending in

blocks and we can use math to find out

that our uncle actually wrote his letter

on january 3rd another interesting thing

is that solana has like 25 blocks being

validated by 25 people at once this is

how they're actually able to surpass

visa by such a large factor speaking of

how they're similar to proof of stake

one thing that i personally liked about

solana is that there are no requirements

to be a validator now before i explain

this if you don't understand proof of

stake you definitely should check out

our video on how to understand some of

these next terms so to compare ethereum

2.0 you must take around 32 ethereum

which is equivalent to around 100 000

on solana you only need to hold a very

small amount of the coin and pay a fee

to vote each day there is a catch though

the voting fee is the only thing i don't

like right now it's like one solana per

day so around 70 000 dollars a year

which seems ridiculous but i mean right

now there's almost a thousand people

doing it so maybe they know something

that i don't next up let's talk about

something that no other big blockchain

has tried yet it's called sea level

technically this is just a fun term to

describe that validators can actually

run smart contract code in a parallel

way now if you're not a developer let me

explain it in simple terms let's say you

have to do the dishes you have to switch

the laundry and then you gotta sweep the

floor a human would have to do each one

of these things in order because they're

only one human we call this a serial

task one after the other in terms of

solana the word parallel means you can

do them all at the same time so it's

like if you could make two more copies

of yourself and actually do the dishes

switch the laundry and sweep the floor

all at the same time that is essentially

what solana can do processing their

smart contracts something else i caught

on their website was this quote which

describes how they are not bottlenecked

by software or ideas but instead

bottlenecked by hardware every time

nvidia doubles the number of simd lanes

our network will double in computational

capacity to me it'll be interesting to

see how bitcoin and ethereum handle the

supercomputers that we have in 10 to 50

years from now one more thing before we

get into the tokenomics of seoul is that

you should know that solana has vastly

different smart contracts than ethereum

ethereum uses a virtual machine type

system to run its solidity code while

solana uses the rust programming

language rust is a very low level

language meaning it's much more powerful

but it does require more work to create

things one downside to this is that

developers can't just copy and paste

their adapts and projects like many

other blockchains can from the ethereum

network everything must be coded from

scratch however they will have more

power than ethereum smart contracts

finally let's get into tokenomics as i

know a lot of people watch our videos to

get an idea of how a coin or project

works so that they can invest in it this

is a simple reminder that we will never

offer investing advice we will never

reach out to you to ask for money and we

will never post our whatsapp number in

the comments the spam comments are so

bad lately please do not contact them so

the coin on the solana network is the

soul coin and it is used for transaction

fees and used all over the blockchain

ecosystem from as far as i can tell

solana is both inflationary and

deflationary it's deflationary because

for a long time 100 of all transaction

fees were burned and now it's around 50

percent that are burned but it's also

inflationary because they recently

approved an inflation schedule where

staking rewards are paying out around 8

percent but they do get cut every few

days by a very very small amount until

the final staking rewards hit 1.5

in 10 years now in terms of total supply

they initially started out with around

500 million tokens and of course it will

keep increasing due to the proof of

stake rewards also on the topic of early

distribution there are four private

funding rounds before their initial ico

those four funding rounds and their ico

sold around 36 percent of their supply

and at a very cheap price too i mean

they were selling these things for like

25 cents each while the price currently

sits at 200

another 13 of the tokens went to the

founders of the project another 10 went

to the solana foundation and the

remaining 39

went to fund community initiatives which

is also currently held through the

foundation now some weird thing that i

found out was that there was a solana

wallet holding like 13 million tokens

and nobody knew why so they just burned

a bunch of them definitely worth noting

one more thing worth mentioning is that

solana actually went down for around six

hours in december of 2020. honestly to

me this is a little scary because a

decentralized protocol should never go

down it means everyone participating in

the network had the same bug this

problem did absolutely nothing to the

price though it seems nobody panic sold

due to this news lastly solana is still

in the beta stage so if you're an

investor or want to develop a dap for

them you should definitely know that now

before i end this video i want to let

you know that if you're interested in

coin and token research including some

guides on decentralized finance that i

put together that actually walk you

through from the beginning of knowing

nothing to actually understanding how to

make money by yield farming and avoiding

scams you can check out

whiteboardcrypto.com for our very first

free guide thank you guys so much for

watching we hope you enjoy this video we

really hope that you learned something

and most of all we hope to see you in

our future videos