Understanding Solana #sol Token

Solana’s initial coin offering (ICO) in March 2020 raised approximately $1.76 million, with tokens priced at $0.22 each. As of February 4, 2025, Solana (SOL) is trading at $205.89.

Let's break down how Solana works into simpler terms and compare it to Ethereum along the way.

1. The Big Picture

Solana is a blockchain platform designed for high speed and low cost. It can handle up to 65,000 transactions per second (Max Theoretical Transaction per second) and generates new blocks in about 0.4 seconds. This performance is more similar to fast, centralized systems than many other blockchains. In contrast, Ethereum can handle 119 Transactions (MTTTPS) and has an average block time of 12.06 seconds, which can lead to delays and higher fees when the network is busy.

https://chainspect.app/blog/transactions-per-second-tps

2. How Solana Keeps Time: Proof of History (PoH)

Ethereum’s Approach:

On Ethereum, miners pick transactions mostly based on which ones offer the highest fees. This means that sometimes smaller transactions get left behind, and bots can jump ahead by paying more fees. This creates something known as Maximal Extractable Value (MEV), where miners extract extra revenue from transaction ordering.

Solana’s Twist – Proof of History:

Solana introduces Proof of History (PoH) to address this. Imagine having a super-accurate global clock built into the blockchain itself. PoH creates a verifiable record of time by linking transactions together with a unique, sequential hash (using a function like SHA-256). Each transaction’s data is used as the input for the next, which means every event is stamped with a time proof. This reduces the need for constant communication between validators to agree on the order of transactions and helps prevent the fee-based reordering issues seen on Ethereum. In short, PoH makes it clear “when” each transaction happened, so validators don’t need to debate over timing.

3. Agreeing on the Blockchain: Tower Byzantine Fault Tolerance (BFT)

Ethereum’s Approach:

Ethereum’s consensus (first with Proof-of-Work and later with Proof-of-Stake) requires validators (or miners) to agree on the blockchain state. They communicate a lot to reach consensus, which can slow things down.

Solana’s Approach – Tower BFT:

Solana uses a system called Tower Byzantine Fault Tolerance (BFT). It leverages the global clock from PoH to help validators quickly agree on the state of the blockchain. Tower BFT means that even if up to one-third of the network’s nodes behave badly or fail, the rest of the network can still reach consensus. This method reduces the amount of back-and-forth communication needed, speeding up the process compared to systems that rely heavily on peer-to-peer messaging.

4. Moving Data Quickly: The Turbine Protocol

Ethereum’s Data Sharing:

On Ethereum, data propagation (sending new block data to all nodes) happens as whole blocks are broadcasted, which can be slow if the network is large and busy.

Solana’s Approach – Turbine:

Solana uses a protocol called Turbine, inspired by BitTorrent. Turbine breaks up block data into smaller pieces (packets) and sends them to nearby validators first. These validators then forward the pieces to other groups of nodes. This “relay race” method helps distribute the data quickly across the network. Even if a node decides not to forward some data, Solana uses techniques like erasure codes to ensure nothing gets lost, maintaining high throughput.

5. Running Smart Contracts in Parallel: Sealevel

Ethereum’s EVM:

Ethereum uses the Ethereum Virtual Machine (EVM) to run smart contracts. The EVM processes transactions one at a time, checking all account balances and ensuring transactions don’t conflict. This sequential processing can create bottlenecks.

Solana’s Approach – Sealevel:

Sealevel is Solana’s smart contract engine that runs many transactions in parallel. It knows in advance which parts of the blockchain’s state a transaction will read or write. This means that if two transactions are working on different parts of the state (non-overlapping), they can be processed simultaneously. This parallel processing boosts Solana’s performance and lets it handle thousands of smart contracts at the same time.