A public, open-source blockchain called Solana is capable of supporting smart contracts, non-fungible tokens (NFTs), and a wide range of decentralized applications (dApps). The SOL token, which is native to Solana's blockchain, serves as a mechanism of wealth transfer as well as network security through staking. Together with current Solana board member and Chief Operations Officer Raj Gokal, Anatoly Yakovenko founded Solana in 2017. Yakovenko, the current CEO of Solana Lab, has experience in system architecture and sought to apply his skills to a new blockchain paradigm that allowed for quicker processing.
The creators wanted to build a brand-new blockchain with the potential for widespread adoption. When compared to Visa and Mastercard, which can handle about 65,000 transactions per second, blockchain transaction rates at the time were only about 15 per second. To address demand on a worldwide scale, Yakovenko and Gokal set out to create a new blockchain. Due to its speed and low transaction prices, Solana has already reached a potential peak capacity of 65,000 transactions per second and is one of the most widely utilized blockchains in existence.
Solana differs from other blockchains in the method that node consensus is established. Proof-of-history has its advantages, however there are also questions about Solana's voting process and whether it leads to centralization or not. Nodes in Solana must approve blocks and associated transactions in order for them to be included in the chain. Nodes transmit the leader their votes, and the leader is in charge of collecting the votes and approving the block. While in the typical blockchain validators are selected using proof-of-stake. They then produce the following block of transactions and broadcast it to all other network nodes. After that, the rest of the network compares the new block to their own copy of the ledger to audit it. Then, every node in the network verifies the new block and its version of the ledger against every other node in the network. From here, each node decides for itself whether to accept or reject this new block as valid. Up until a majority of nodes have concurred on a single new version of the chain, the procedure is repeated. Letting nodes reach a consensus without a third party counting votes is time-consuming, yet it is essential to decentralized blockchains since the inception of Bitcoin.
Solana began with an inflation rate of about 8%, which is anticipated to fall by 15% yearly, continuing on a decreasing trend until it hits 1.5 percent annually, where it should stay. It is expected that issuances will be given to validators, with 95% of the tokens going toward validator payouts and 5% set aside for running costs.
With a current supply of 315,100,273 SOL coins and a 511,616,946 total supply, there is no set maximum supply. There are two uses for the SOL token. One is staking, in which holders of SOL tokens can stake their SOL and earn incentives. The other enables users to pay for costs related to carrying out smart contracts or other transactions using SOL.
Additionally, Solana's weighted validator set, which protects the Solana network, distributes a predetermined sum of inflation-based incentives. The weight of each staking incentive is determined by the quantity of staked tokens. The ratio of the staked tokens to the total quantity of tokens determines the yield.
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