What is Solana? SOL Explained with Animations
Summary
TLDRThis 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
🚀 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.
🌐 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.
💰 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.
Mindmap
Keywords
💡Solana
💡Proof of History
💡Transaction Fees
💡Validators
💡Sea Level
💡Rust Programming Language
💡Tokenomics
💡Inflation Schedule
💡Decentralized Applications (DApps)
💡Network Downtime
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
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