Earn 5.4% APY staking with Solana Compass
Help decentralize and secure the Solana network delegating your stake to us and earn an impressive 5.4% APY yield on your SOL, while supporting us to create new guides and tools. Learn more
Zero fees until Feb 2022, then just 0.39% annualized. APY based on last 3 epochs average
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Earn 5.4% APY staking with Solana Compass
Help decentralize and secure the Solana network delegating your stake to us and earn an impressive 5.4% APY yield on your SOL, while supporting us to create new guides and tools.Learn more
What is Solana? How Does It Work?
What is Solana (SOL)?
Solana is one of the fastest and most functional web-scale projects that leverage the features of programmable blockchain technology to deliver Decentralized Finance (DeFi) solutions. The project’s protocol is:
It adopts the flexibility of open-source infrastructure to create decentralized apps (DApps) and marketplaces for mass adoption.
Solana's developers state that it is the fastest blockchain globally, supports non-fungible and tokens (NFTs) smart contracts and other decentralized finance platforms. Solana currently has over 400 projects running on its ecosystem. The developers claim that SOL cryptocurrency supports 50,000 transactions per second (TPS) and 400ms Block Times.
Solana uses several ground-breaking computational technologies to handle thousands of nodes, enabling transaction throughput to grow proportionately with network bandwidth. The project adopts the proof of history and proof-of-stake (PoS) consensus mechanisms to improve scalability and throughput.
What's unique about PoS? Many computers (nodes) verify transactions in a decentralized blockchain system like Solana and Ethereum. A malicious actor may want to add a large number of nodes to gain control of the network. It’s possible to prevent this by having the computers solve complex mathematical equations, making any attack on the network rather expensive.
That method is what proof-of-work (PoW) uses; it is efficient, but the network consumes a lot of energy. An alternative approach is to have the network validator nodes stake something like the SOL tokens in Solana’s instance. Although these validators also require power to work, it is much less than Bitcoin or Ethereum miners.
Solana has gained popularity among small-time and institutional traders because of its unique hybrid consensus model. The Solana Foundation aims to DeFi accessible to users on a larger scale.
What is a Solana Cluster?
In general terms, a cluster refers to a group of computers working together simultaneously such that they appear to be a single system from the outside. The Solana Cluster refers to a group of validators working together to maintain the ledger’s integrity to attend to client transactions.
The Solana Cluster is an essential part of the Solana software. Every Solana cluster is a collection of individually owned computers that usually work together but compete against each other. These computers aid in the authentication of untrusted and user-submitted software output.
The cluster is also applicable when a user wishes to save an irreversible record of events or programmatic interpretations. It is possible to have several clusters coexisting; however, when two Solana clusters reside on the same genesis block, they attempt to merge.
Some of the technology's applications include tracking which computers completed the critical tasks that contributed to the cluster's continued operation. Another possibility is to keep track of real-world assets.
When separate Solana Clusters fail to converge, one can ignore the existence of the other. Nonetheless, as long as a copy of the ledger exists somewhere, the overall output of its programs is reproducible and utterly independent of the organization that issued it.
Why Solana is a Programmable Blockchain
Solana is a fast-growing programmable blockchain in the crypto marketplace currently. Many experts even consider it a potential successor to Ethereum (ETH). But why do experts refer to this project as a programmable blockchain?
A programmable blockchain is a tamper-proof, massive, decentralized global computer that functions as a ledger to record transactions. The result of the computation and transaction is accessible to everyone on the blockchain. It also allows people to send money and perform other transactions without involving a third party.
Programmable blockchains store codes in bits called smart contracts. Smart contracts allow users to create numerous automatic structures for business transactions.
These smart contracts are programmable to perform specific actions when users fulfill the terms of the contract. For instance, an insurance company can set up a smart contract to pay a farmers’ insurance when certain weather conditions prevail.
How Does Solana Work?
Solana works like Ethereum. It is a cryptocurrency platform for creating and running cryptocurrency apps, from the Serum decentralized exchange (DEX) to Degenerate Apes.
Solana is a high-performance permissionless blockchain with 200 unique nodes, generating a throughput of 50,000 TPS with GPUs. It is a third-generation, proof-of-stake consensus blockchain.
This proof-of-stake (POS) consensus model in Solana, the Tower BFT consensus, allows the network to reach an agreement regardless of the potential attacks that may result from malicious nodes.
The Tower BFT consensus also imposes a universal time source across the network, creating a uniform blockchain record of transactions and events. The system uses these records as permanent references for all the nodes using the network.
On this page
- Our Validator
- Liquidity Pools
- Token Swaps & Trading
- Yield Farming
- Solana Explained
- Is Solana an Ethereum killer?
- Transaction Fees
- Why Is Solana Going Up?
- Solana's History
- What makes Solana Unique?
- What Is Solana?
- How To Buy Solana
- Solana's Best Projects: Dapps, Defi & NFTs
- Choosing The Best Solana Validator
- Staking Rewards Calculator
- Can You Mine Solana?
- Solana Staking Pools
- Staking On Solana
- How validators earn
- Best Wallets For Solana