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Tuesday, March 11, 2025 UTC

Solana’s Success Stems From a Powerful Combination of Technical Innovation and Clever Business Strategy

Sponsored Ethan Carter
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People usually start paying attention to a cryptocurrency when it has already made it to the top of the hierarchy. Hardly anyone recalls what happened prior to the big break, and only a few bother to take a peek backstage to find out. Therefore, the path to success and all of the factors that contributed to it are often ignored and remain shrouded in mystery for most people – sometimes, even for industry insiders.

That was the case with Bitcoin, the forerunner of the crypto class. No one really noticed the asset until it finally took off and started to appreciate in value. Then, the whole world found out about BTC, and the rest is history. The same thing happened with Solana, one of the most popular and celebrated crypto initiatives in existence. The project was launched in 2020, but it wasn’t until the Solana price USD skyrocketed in 2021 that people began to take an interest in it.

It’s understandable why most people will never dig deeper into the market and try to spot winners as they rise. The path to the top is often winding and complicated; new ventures emerge faster than one can keep up with, and the complexity of the crypto landscape can make anyone’s head spin.

But since Solana has managed to earn a reputation as a trailblazer and became a major influence in the crypto and blockchain space, we believe it’s high time to take a closer look at its origin story. So, join us as we venture behind the curtains of this one-of-a-kind project and peel off the layers of its success.

A revolutionary idea is brought to life

The concept behind Solana was developed by Anatoly Yakovenko and Raj Gokal, who co-founded Solana Labs in 2018. They had this ambitious vision of creating a blockchain focused on smart contracts and decentralized apps (dApps) that would surpass all the other blockchains developed prior in speed and processing power. If that sounds strangely familiar, it’s because it resembles Ethereum’s approach quite a bit. It’s not for nothing that Solana was nicknamed the Ethereum killer.

However, Solana’s creators took a different path to achieve their bold goals and their intention was to take things one notch up, not to mimic Ethereum’s model. After more than two years of assiduous work, Solana was ready to launch and finally went live in March 2020. The high-performing blockchain platform introduced a host of advanced features to the industry, including enhanced speed, unparalleled throughput, low transaction costs, and impressive scalability.

Bringing transformative technology to the forefront

To overcome the limitations of previous blockchains and ensure its spot in the upper echelons of the crypto sphere, Solana employs a host of revolutionary tech solutions. These include:

Proof of History (PoH) – Most blockchains rely either on a proof-of-work (PoW) or a proof-of-stake (PoS) consensus mechanism to achieve agreement among network nodes and enable the verification of data and transactions. Solana adopts a different approach and utilizes an innovative proof-of-history (PoH) model instead. This technology, unique to Solana, introduces the concept of timestamps which establish the exact order of actions, creating a historical record of events. Therefore, nodes can process multiple transactions at the same time and increase throughput considerably.

Pipelining – To speed up the transaction validation process even more, Solana employs a Transaction Processing Unit (TPU) optimization solution known as pipelining. This allows for different hardware to process the data input stream in separate stages to maximize efficiency.

Tower Byzantine Fault Tolerance (BFT) – This advanced algorithm is a customization of the Practical Byzantine Fault Tolerance and uses the PoH cryptographic clock to support nodes in reaching consensus faster. If one node faces difficulties in completing a task, the Tower BFT mechanism steps in to assist it, thus reducing latency and minimizing network disruption.

Turbine – As a block propagation protocol, the Turbine is in charge of breaking data blocks into smaller structures so they can travel across the network at faster speeds. It also streamlines communication between nodes by creating smaller groups that share information with each other.

Gulf Stream – Mempool management is made easier by Solana’s Gulf Stream protocol. This pushes transaction caching and forwarding to the edge of the network, reducing memory pressure and confirmation times.

Sealevel – Solana is able to run multiple smart contracts simultaneously thanks to its Sealevel mechanism, a parallelized transaction processing engine that allows for horizontal scaling.

Cloudbreak – This feature adds a horizontally scalable database to Solana, where data is distributed across multiple nodes.

These core components represent Solana’s technological backbone and make it the most performant blockchain available, with an impressive processing capacity of up to 65,000 transactions per second (TPS), average block times of approximately 400 milliseconds, and transaction fees ranging between $0.0024 and $0.048.

A savvy business approach

Tech advancements aside, Solana also benefits from a clever business strategy and an efficient economic model that have helped the network develop into the crypto powerhouse we know today. For starters, a substantial amount of Solana’s revenue comes from its transaction fees, which, although considerably lower than those of other blockchains, are higher in volume thanks to the network’s fast transaction processing speed.

Moreover, Solana introduced a system that allows users to pay higher fees should they want to benefit from transaction priority, thus helping validators boost revenue. Solana’s fee structure also allows validators to keep 50% of a transaction fee. This provides an extra economic incentive and encourages engagement and collaboration, as many validators choose to share part of their fees with stakers.

Solana’s Proof-of-Stake (PoS) mechanism not only boosts network participation and security but also strengthens the platform’s economic structure by increasing token function and network value.

Last but not least, Solana employs a deflationary burn mechanism where 50% of each transaction fee is destroyed. This diminishes the token supply and can potentially increase the demand and value of remaining tokens.

As you can see, Solana is not just another blockchain, and its success has not been accidental. It’s the combination of outstanding technological features and solid business model that have come together to create a blockchain platform like no other that continues to attract a growing number of developers, investors, and users.

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