Date: 8th Feb 2022
DAY 1 - Solana? What the fuck is this and why is it so hot?
Basics of Solana and its Ecosystem
It is a decentralised blockchain protocol built to enable faster, scalable, user-friendly apps for the world. As of today, it has achieved the following:
Completes 2552 transactions/second,
1478 validator notes for consensus purposes on the blockchain,
Completed >56B transactions till date,
Fucking low transaction fee at US$0.00025. (Ridiculous!!)
In the decentralised ecosystem, SOL is referred to as a Layer 1 solution (or Blockchain protocol) that is coined the “ETH killer”. It is more cost-efficient and scalable v.s. ETH, and can handle way more transaction at a lower/minimal gas fee. Both are able to have smart contract capabilities - but SOL is quicker, faster, more efficient for devs to create codes to carry out instructions via smart contracts on SOL blockchain, highly essential to run DeFi Apps and NFTs.
SOLANA IS LAYER 1 SOLUTION WITH LAYER 2 SPEED!
The Solana protocol is designed to facilitate decentralised app (DApp) creation. It aims to improve scalability by introducing a proof-of-history (PoH) consensus combined with the underlying proof-of-stake (PoS) consensus of the blockchain. Proof-of-history (PoH) consensus was developed by Anatoly Yakovenko. This concept allows for greater scalability of the protocol, which in turn boosts usability. The protocol is designed in such a way as to have low transaction costs while still guaranteeing scalability and fast processing.
Note: The proof-of-stake (PoS) consensus is used as a monitoring tool for the PoH processes, and it validates each sequence of blocks produced by it. The combination of two consensus mechanisms makes Solana a unique phenomenon in the blockchain industry.
Determinants of SOL tokenomics - Will they dethrone ETH?
The developer’s community: Strong support. ~13,000 today. With top Dapps such as Solanart (NFT), Raydium (AMM/ Dex), Solend (Lending), Serum (Exchange). The ecosystem is massive:
Team pedigree: Solana foundation from Switzerland. Members are fully doxxed and verified software engineers hailing from QualComm, Dropbox etc.
Liquidity in exchanges: Binance, FTX, Huobi. Daily trade = US$2.6B is huge.
Moat: PoH is amazing. Enhances fast processing speed and low gas.
Competitors (e.g. Layer 1 alternatives, Layer 2 scaling solutions): ETH alternatives mainly Cardano, Polkadot, Avalanche, Fantom.
Today’s price on 8th Feb = US$115 (ATH at US$258)
Market cap = US$36.4B
Circulating supply = 317M (Max announced by foundation to be 489M)
Staking yield is great at 6-10% today: FTX, Phantom software wallet.
Solana’s Future
There is going to be a massive adoption rate going into 2022. Not too late for buy recommendation at US$1XX/SOL. The main narratives are:
Gaming. Low transaction fees, fast processing speed. Massive opportunity. Think Fractal from Justin Kan.
Exchanges can benefit from low fees.
Very very strong community/ and dev community in general.
Headwinds/risk - ETH 2.0 in 2022 or 2023 challenging speed and scalability issues’ other ETH killers like Algorand/Cardano etc.
Additional Appendix: Context on Blockchain Layers
Layer 1: BTC, ETH - basically blockchain’s ledger to ensure integrity of chain and consensus mechanism.
Layer 2: BTC’s lightning network, ETH2.0’s Plasma, Polygon as independent project - basically a protocol on blockchain that builds scalability.
Later 3: Serum, AAVE - mainly Dapps using underlying layers 1 and 2 to solve a problem for user. If one uses a Dapp, they are interacting with a web interface.
→ SOL integrates functions of layer 2 into layer 1 via PoH + PoS to create smart contracts at scale, high processing speed and low gas fees.