Why Solana and other non-EVM chains are becoming increasingly popular
Recent years in the cryptocurrency industry have been marked by the growing popularity of alternative blockchain networks that are not based on EVM (Ethereum Virtual Machine). Among them, Solana stands out as a revolutionary, high-performance platform that offers architecture and technical advantages that transform the standard blockchain approach.
Solana has become a symbol of a new wave of blockchains that simultaneously provide scalability and low transaction costs without compromising on speed or security. Its rapid development and unwavering popularity have added new challenges to classic blockchains.?
In this article, we will explore the factors that have influenced the Solana project's popularity and determine why it is not EVM chains that have gained so much attention and popularity in recent years.
What is Solana
Solana is a blockchain network that, since its inception, has been aiming to solve the blockchain trilemma: balancing security, scalability, and decentralization. Solana uses smart contracts written in the Rust programming language to create dApps (decentralized applications) and execute complex offline transactions on its network. Solana has moved away from the classic Proof-of-work mechanism and uses the Proof-of-History and Proof-of-Stake consensus mechanisms.?
Solana's native token, SOL, is an infrastructure token. The SOL token is used as a “gas” for executing transactions and smart contracts, as well as a means of payment for transactions between users.
Solana belongs to the category of first-tier tokens and aims to cover network transaction fees related to the use of applications on the Solana blockchain. Token holders can add their tokens to the staking on validator nodes to receive rewards as well as transaction fees from network users.
Solana has many potential applications, including DeFi, NFT, payments, and gaming. According to the Solana team, they aim to create a high-performance blockchain that can process hundreds of thousands of transactions per second while keeping fees at a few cents.
Launch of the Solana project
The Solana blockchain was founded in 2017 by Anatoly Yakovenko of Solana Labs. However, the main network was launched only on March 16, 2020. In addition to Anatoliy Yakovenko, Raj Gokal, Greg Fitzgerald, and Stephen Akridge participated in the project launch. All the project founders (as well as Anatoliy Yakovenko) previously worked at Qualcomm, a giant in the development and production of mobile processors.
Between 2017 and 2020, a team of former Qualcomm employees worked on solving the standard challenge for new blockchains: balancing three parameters: decentralization, security, and scalability.
It is the latter parameter that sets Solana apart from dozens of similar projects. Most of these projects were decentralized, reliable, and secure, but they were difficult to scale (the larger the blockchain ecosystem became, the more difficult it was to ensure its high speed).
However, Solana was originally planned as an alternative payment system, so speed was no less important than security. This speed problem was solved by two of the project's co-founders, engineers Greg Fitzgerald and Stephen Ackridge. They were able to improve Solana so that it would not have speed issues, which is a key requirement for a payment system, without compromising its security.
In the fall of 2021, the SOL token jumped significantly in price, which attracted the attention of not only crypto enthusiasts but also the general mass of cryptocurrency fans. The growth of the SOL exchange rate was due to the rapid development of the popular NFT (non-fungible token) trend at the time. Dozens of developers chose Solana as the basis for building NFT trading marketplaces, which had a positive impact on the SOL token price.
For example, the Magic Eden exchange, which runs on the Solana blockchain, unexpectedly outpaced OpenSea (which runs on Ethereum) in terms of the number of transactions. In 2 quarters, the price of the Solana token increased from $30 to $258, and for the whole of 2021, the SOL token showed an increase of 9000%.
However, it is worth remembering that to finance the launch and development of the platform, the Solana project team raised capital from external investors. Since January 2018, the project has been steadily attracting investment through sales to private investors and validators (it has raised $15 million). In July 2019, the Solana team managed to raise $20 million from investors such as Rockaway Ventures, Foundation Capital, and Multicoin Capital. June 2021 was remembered for the initial coin offering (ICO), which raised $314.15 million for the project (the main share of investments was provided by a16z, Jump Trading, and Polychain Capital).
How Solana works
Similar to Ethereum, the Solana token was designed for creating applications and services (dApps, etc.), not for trading on the exchange. Its main advantage is the use of the Proof of History (PoH) consensus, thanks to which Solana achieves relatively high transaction throughput with low fees compared to other Layer-1 blockchain platforms (such as Bitcoin (BTC), Ethereum (ETH), BNB Smart Chain (BNB), etc.) Also, the SOL token was originally designed to allow users to add it to staking, thus contributing to the security of decentralized networks (and receiving a reward).
Let's look at the main components of the Solana blockchain that are worth paying attention to:
Why Solana has become popular
The project's popularity is primarily due to a new approach to classic blockchain processes. Not the least role was played by the emergence of NFT sales and exchange platforms based on Solana and the ability to trade SOL tokens on the exchange. However, this way of gaining popularity through the possibility of earning money is something that has been around for a while; the technical aspects of the project's popularity, namely the problems of classic blockchains that Solana solves, are much more interesting.
What problems Solana solves
Slow validation
Because Solana uses PoH consensus in conjunction with DPoS, it takes much less time to validate transactions than with other consensus methods. This allows Solana to process transactions efficiently (several thousand transactions per second) and cheaply (transaction fees of less than $0.01).
High commission
Solana has meager fees. The average transaction costs about $0.00025. Such low fees eliminate one of the issues of logging into Web3, as fees in other networks are several times higher, making it less profitable for one-time purchases.
Energy efficiency
Because Solana nodes require much less time and resources to verify transactions (mainly due to the PoH consensus), and because they do not require mining (like networks with a Proof of Work consensus), the network has become one of the most energy-efficient blockchains.
According to a report by the Solana Foundation, a single transaction on the Solana network requires 0.51 Watt-hours or 1,836 J of energy. For comparison, a single Google search consumes about 1,080 J of energy. So, two Google searches would consume more power than a single transaction on the Solana network.
All of this makes Solana stand out among dozens of similar projects, and in terms of energy efficiency, Solana outperforms all of its Layer-1 competitors.
Tokenomics Solana
The Solana network does not have a maximum token supply limit (meaning that the number of SOL tokens that can exist in circulation is not fixed or limited). As of July 2024, there are over 570,000,000 tokens in circulation. The initial offering of SOL tokens was 79,250,000 tokens and was distributed as follows:
At the beginning of SOL's existence, the annual inflation rate was 8% (i.e., the supply was increased by 8% each year to stimulate participation in the network and its development). However, this inflation rate is not fixed; as of 2024, the inflation rate is approximately 5.427%. Also, the transaction fee is partially burned, and the rest is taken by the validator who created the block with the corresponding transactions (50% of the cost is burned, and 50% is distributed to the validator). This approach to token distribution means that in the long run, the number of SOL tokens in circulation may decrease, increasing their rarity and value.
Other non-EVM chains
In general, any blockchain project that does not use EVM (Ethereum Virtual Machine) to execute smart contracts and is not compatible with its programming language (Solidity) can be classified as a non-EVM chain, and most of them are simply not worthy of attention. Apart from Solana, it is worth paying attention to other blockchain projects that have their own unique architecture and runtime environment (this is what allows them to offer innovative features optimized for specific tasks). We recommend that you familiarize yourself with the following projects:
Polkadot
Created in 2016 by Gavin Wood, one of the founders of Ethereum, Polkadot is focused on building an ecosystem of interconnected blockchains called parachains. The main programming language is Rust, and its unique architecture allows for the interaction of different blockchains while maintaining their autonomy.
The popularity of Polkadot was driven by the desire of developers and network users to improve compatibility between different blockchains without significant performance loss and without integrating third-party networks.
Cosmos
Cosmos was launched in 2019 with the support of Tendermint. The project is aimed at creating the Internet of Blockchains, and the main function of the platform is to provide tools for creating independent blockchains that can interact with each other via the IBC (Inter-Blockchain Communication) protocol. The main programming language is Go.
The Cosmos project has gained considerable popularity due to its focus on decentralization and the development of custom blockchains with the possibility of their further interaction. This blockchain is most popular among developers because it provides ready-made tools for creating and deploying custom solutions adapted to specific tasks.
Aptos
Aptos is one of the youngest blockchains on this list. The project was launched in 2022 by a team of former developers of Meta's Diem project. This chain is based on the Move language, which is optimized for secure and fast data transfer.
A key factor in the popularity of this project was the ability of Aptos to process up to 160,000 transactions per second, making it one of the fastest blockchains on the market. Although the project has not yet gained the same popularity as Solana, active community support and tools for developing decentralized applications make it extremely promising.
Conclusion
The popularity of Solana and other non-EVM blockchains is a natural outcome of the development of the cryptocurrency industry, which seeks to solve the blockchain trilemma: of scalability, security, and decentralization. These platforms offer new solutions that often outperform traditional EVM blockchains in terms of speed, energy efficiency, and flexibility in application development. Solana, with its PoH mechanism, has opened up opportunities for the massive use of blockchains in financial services, gaming, dApps, etc.
Also, projects like Polkadot and Cosmos implement the principles of interoperability and modularity, allowing the creation of entire ecosystems of interconnected chains. This indicates a general trend towards decentralization, adaptability, and flexibility in the technologies offered by non-EVM chains.
However, the path to further growth is accompanied by challenges. Fierce competition from EVM-compatible platforms, security issues, and the need to attract more developers remain key challenges for all non-EVM projects. In addition, the blockchain market is dynamic, and user needs are changing rapidly, requiring continuous improvement.
The future of Solana and other non-EVM chains depends on their ability to maintain a balance between technical innovation, developer accessibility, and user satisfaction. If these platforms can continue to overcome the current challenges, they are well-positioned to continue their rapid growth and become an important part of the next-generation crypto industry.