What is Solana (SOL)?

Solana’s SOL coin is one of many cryptocurrencies accused by the SEC of being unregistered securities.

Solana uses a proof-of-history consensus mechanism to add blocks to its blockchain, mint coins, and reward users.

A Solana price prediction says the coin will reach $138 in two years.

Solana is a powerful open source project that implements a new, permissionless, high-speed layer 1 blockchain, founded in 2017 by former Qualcomm executive Anatoly Yakovenko. Its core goal is to increase the throughput of blockchains to levels typically unachievable with traditional blockchains, while keeping costs low.

Solana uses an innovative hybrid consensus model that combines a unique Proof-of-History (PoH) algorithm with a lightning-fast synchronization engine, a variant of the Proof-of-Stake (PoS)-based consensus mechanism. As a result, the Solana network can theoretically handle more than 710,000 transactions per second (TPS) without the need for any scaling solutions.

Solana’s third-generation blockchain architecture is designed to facilitate the development of smart contracts and decentralized applications (DApps). The project supports a range of decentralized finance (DeFi) platforms as well as non-fungible token (NFT) markets.

The Solana blockchain was launched in 2017 during the initial coin offering (ICO) boom. The project's internal test network was released in 2018 and went through multiple test network stages before officially launching the main network in 2020.

Here are the early big stories before Solana received funding:

Solana (SOL) Token

Solana’s cryptocurrency is SOL, which is Solana’s native and utility token that provides a means of transferring value and blockchain security through staking. SOL was launched in March 2020 and strives to become one of the top 10 cryptocurrencies by total market capitalization. SOL has three main use cases: staking, transaction fees, and governance.

The SOL token operating scheme is similar to that used in the Ethereum blockchain. Although their functionality is similar, Solana token holders stake their tokens in order to validate transactions through the PoS consensus mechanism. Additionally, Solana tokens are used to receive rewards and pay transaction fees, while SOL also enables users to participate in governance.

The total supply of SOL tokens is just over 511 million, while the circulating supply is slightly less than half that number. This means that approximately 60% of SOL tokens are controlled by Solana’s founders and the Solana Foundation, while the community owns the remaining approximately 38%.

What makes Solana different (its advantage)?

Solana’s grand design aims to solve the three major problems in the blockchain field in a unique way. This trilemma is a concept proposed by Ethereum’s founder Buterin. This trilemma describes the three main challenges that blockchain developers face when creating blockchains: decentralization, security, and scalability.

It is widely believed that the way blockchains are built forces developers to sacrifice one of these aspects in favor of the other two, as they can only provide two out of three benefits at any given time.

Scalability: The Solana blockchain platform uses a unique hybrid consensus mechanism to maximize speed while compromising a degree of decentralization. Its combination of proof-of-stake (PoS) and record-of-history (PoH) mechanisms makes Solana unique within the entire blockchain industry.

Generally speaking, blockchains are more scalable depending on the number of transactions per second they can support, the more scalable they are, the better. However, in decentralized blockchains, time differences and higher throughput slow them down, meaning it takes more time for more nodes to validate transactions and timestamps.

Solana's design solves this problem by selecting a leader node through a PoS mechanism that orders messages between nodes. As a result, the Solana network can increase throughput and reduce workload even in the absence of an accurate central time source.

In addition, Solana builds a chain of transactions by hashing the output of one transaction and using it as the input of the next transaction. The transaction history of this link also gives Solana’s main consensus mechanism the name PoH (History of History). This concept allows for greater scalability of the protocol, thereby increasing availability.

Disadvantages of Solana

Solana has been facing harsh criticism on two themes: high allocations to VC and repeated outages.

First, while the Solana blockchain can compete with high-end blockchain projects, it is still susceptible to centralization because there are not many blockchain validators. Anyone on the network can become a Solana validator, but doing so is still difficult because it requires significant computing resources.

Beyond that, the protocol still labels itself as a beta version of mainnet, which doesn’t negate the possibility of bugs and bugs.

Solana ranks among cryptocurrencies’ biggest gainers, what’s driving it?

The price of Solana’s SOL token has surged 10% in the past 24 hours, making it one of the best-performing cryptocurrencies.

Fake ETF reports and massive FTX staking caused Solana price to rise.

First, false reports that the SEC had approved a spot Bitcoin ETF caused a brief burst of excitement, boosting Bitcoin and other major altcoins like SOL.

While the report proved inaccurate, it provided a temporary boost and highlighted the market's sensitivity to regulatory developments.

Second, the estate of now-bankrupt cryptocurrency exchange FTX just staked over $122 million worth of SOL tokens.

This suggests that the bookmaker does not intend to sell them in the short term, easing concerns about potential price drops.

These developments have reignited interest in Solana, which currently trades around $24.35.

Dubai partnership gives SOL extra impetus

The price increase comes after Solana was announced as an ecosystem partner of the Dubai Multi Commodities Center (DMCC), one of the free economic zones in the United Arab Emirates.

As part of the partnership, Solana will provide technical and business support to DMCC members seeking to use its blockchain platform.

DMCC will also provide preferential treatment to Solana’s partners – potentially boosting adoption.

This latest partnership further validates Solana’s position in global financial centers such as Dubai, where blockchain is also gaining traction in other parts of the world.

As a result, investor confidence in SOL has grown further, with CoinGecko sentiment analysis showing that over 81% of users “feel good” about the token’s prospects.

SOL has gained 142% since the start of 2023, a momentum that appears to be well-positioned for continued growth, especially given expanding institutional interest and strategic partnerships like DMCC.

How is Solana price trending?

After peaking at $260 in November 2021, Solana price experienced a sharp decline, plunging to a low of $8 by the end of 2022. This decline reflects a general downturn in the cryptocurrency market, which was further exacerbated by the crash. Cryptocurrency exchange FTX was the most affected, with SOL being particularly affected.

However, 2023 sees a positive change for Solana. In the first half of January, SOL's price rebounded from a low of $8 to nearly $26, setting the stage for an inverse head and shoulders (H&S) pattern to form.

This inverse H&S pattern, considered a classic bullish reversal signal, started forming in mid-January and continued into October 2023. By mid-March, the left shoulder is obvious, the head forms in early June, and the right shoulder gradually forms. Outstanding performance in October.

A notable feature of this pattern is the neckline resistance, located near $25.81. Solana’s price has challenged this resistance level on several occasions and a decisive break above this threshold would be a strong indicator of a bullish trend reversal. In his analysis, Olszewicz marked the stop loss (SL) for this trading idea just below the right shoulder, specifically around $19.30.

Olszewicz used Fibonacci extensions to plot SOL’s potential price trajectory if it managed to break above the $25.81 neckline. Targets are set at 1.618 ($33.85) and 2.0 ($38.82) Fibonacci levels. If these predictions hold true, traders could earn potential profits of 35% to 55% above current prices.

Is Solana a good investment?

Will Solana be an Ethereum killer? No clear conclusion can be drawn yet, but Solana’s popularity has proven that it is a recognized high-performance and low-cost public chain. Solana’s groundbreaking innovation enables on-chain DAPPs to scale to billions without sacrificing decentralization or security. DeFi can reach its full potential when Solana is combined with other innovative projects such as the Serum centralized limit order book with AMMs powered by the Raydium ecosystem.

Solana public chain, driven by capital support and a large amount of technology research and development, the ecosystem finally exploded after it became more complete. For now, Solana is one of the public chains that aspires to challenge Ethereum’s status.

Among several challengers, Solana may have already moved ahead of its competitors. Let us wait and see how far it can go on the road of public chain in the future!