How Solana Blockchain is Different and Why it’s Perfect for DeFi
SolRazr
Sep 20 · 4 min read
Blockchain technology is a relatively new way to approach ledger-based solutions with Bitcoin as the primary catalyst for cryptocurrency and blockchain growth.As cryptocurrency moved from “just Bitcoin” to decentralized finance, different blockchain architectures surfaced, resulting in major players reconsidering how they should lay the foundations of their projects.
In this article, the case is presented on why Solana is a superior blockchain with all things considered when looking at its value, function, and the future of blockchain.
A Brief History of Other Blockchains In the beginning years of crypto, early projects based their networks on Bitcoin using a C++ language with a Proof of Work (PoW) consensus using an SHA-256 hashing function algorithm or a similar model in a different language, typically Python.Other major projects like Ethereum (which itself was a hard fork of Ethereum Classic) uses its own language called Solidity while also using PoW, although it is recently considering changing to Proof of Stake (PoS) to combat network congestion issues.More recently, other Layer 1 blockchains like Ethereum have surfaced to battle the main issues that DeFi presents, mainly the issue surrounding clean functionality — if DeFi is supposed to be as big as everyone states, then infrastructure is needed to be built for future network expectations to be stable, much like how highways need to be extended and cities need to expand to keep the demands of growing traffic or populations.Some of the more recent blockchains like Polkadot do not have a working suitable chain while others like Binance Smart Chain (BSC) are called into question on whether they’re truly decentralized.
The Suitability of Solana With all things considered on the blockchain and DeFi, there is growing difficulty on the type of blockchain that makes sense to use, how to handle consensus models, and what can be determined as fair and fast without compromising on security.As a result, Solana is a worthy candidate that reasonably solves all these issues in a humbled package.
Solana is a fast, secure, and censorship-resistant blockchain providing the open infrastructure required for global adoption.Founded by former Qualcomm, Intel, and Dropbox engineers in late-2017, Solana is a single-chain, Proof-of-Stake protocol whose focus is on delivering scalability and security without sacrificing much on decentralization.
Solana can currently handle up to 50,000 TPS with single transaction costs as low as $0.00001.
Core to Solana’s scaling solution is a decentralized clock titled Proof-of-History (PoH), built to solve the problem of time in distributed networks where there is not a single, trusted, source of time.
By using Verifiable Delay Functions, PoH allows each node to locally generate timestamps with SHA256 computations.This eliminates the need for the broadcasts of timestamps across the network, improving overall network efficiency.The reason for Solana’s fast growth is clear: there is a race between blockchains to deliver scalability and large transaction capacity.Currently averaging 80 million transactions per day, Solana has the capacity to handle over 50 times that much, with average transaction fees of $0.00001 and sub-second settlements, making it the fastest blockchain today.
Contrasting Solana With Ethereum and BSC In stark contrast with other blockchains like Ethereum, which owns a huge market share of the DeFi network, or BSC, which is known for its speed, we can actually take a closer look at why Solana is an appropriate choice in the long run.
Cost-effective: F irst and foremost, it is very cost-effective to run Solana by ensuring composability between the projects in the ecosystem.In layman’s terms, this means that the costs associated with using the chain, like “gas fees”, will not bloat as a result of people using the system.This is in high contrast to Ethereum that has monumental fees, even when activity is low.
High Speed: The Solana network is one of the fastest chains that exist in blockchain technology, with 400ms block times and sub-second finality.Although some Layer 2 chains on Ethereum support such speed, they cannot do so at scale like Solana can in addition to the weight of being a Layer 1 Protocol.
Scaling Smart Contracts: in addition to all these advantages, Solana is built with parallel run-time allowing smart contacts to execute concurrently and leveraging data to a whole new level with the speed and security of a healthy, decentralized network.
Decentralized: Bundled with other elements of Solana and the cornerstone element of any real blockchain, Solana is far more decentralized than many of its competitors claiming speed and cheaper transactions.
Solana is a Complete Blockchain With everything considered, it’s easy to understand why Solana is a great, upcoming blockchain with long-term potential, which proves to be a great choice for any healthy project.Solana is a fast network with a new time of consensus model called Proof-of-History, along with sub-second block times for quick verification and low fees.
Any good project that prefers to excel needs fast confirmation times and lower overhead associated to run a network.
Solana is an extremely powerful blockchain network that will see tons of potential in the coming years, which should prove to be a healthy contender in the blockchain space.
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