Solana is a blockchain that has conflicting conversations around it. Many see it as a capable competitor to Ethereum, given the lower transaction cost and high throughput. However, hacks and technological failures have given critics reason to make their voices heard. In this article, we dig deeper into what Solana is, its technology, its rise, and why it is facing so many problems right now. We will also take a look at what the possible future of this Ethereum killer could be.

The beginning

Solana was founded in 2017 by veteran software engineer Anatoly Yakovenko and built by Solana Laboratories in the USA. Its current development is provided by the Solana Foundation, a non-profit association based in Switzerland.

During its three-stage ICO from 2018 to 2020, the project raised nearly $25 million for further development and more than $300 million from crypto venture capitalists last year.

The Solana blockchain uses a new proof-of-stake consensus mechanism that leverages a technology known as proof-of-history that allows transactions to be timestamped.

The Solana mainnet went live in 2020, but it’s still in beta, and we haven’t yet gotten confirmation on when the full or final version will go live.

What makes Solana special?

Solana has over 1,900 validators, but smaller clusters of around 150 validators process transactions. This form of centralization, coupled with its sub-second block time, enables throughput of 50,000 to 65,000 transactions per second, making Solana the fastest blockchain currently on the planet.

To date, Solana has processed over 15 times the number of transactions compared to Ethereum at a fraction of the cost. Transaction latency is also much better; this is less than a second compared to more than 5 minutes that Ethereum typically takes for transactions.

What makes Solana more special is the Phantom wallet which has an intuitive user interface that makes it easy to interact with Solana. The wallet has already been downloaded millions of times – a good sign for the blockchain.

SOIL Factor

Sol is the native currency of the Solana blockchain which is used for two reasons. The first is to pay transaction fees. Half of each transaction fee is burned and the other half is rewarded by validators. The other use of SOL is staking. You can wager your SOL holdings to earn more SOL.

The problems

Solana has had many problems in the short time she exists. These issues are reason enough for people to start seeing it as a fading star instead of a longtime competitor to Ethereum. Let’s look at the most common problems.

Downtime has been the biggest problem for Solana and its users. In May, the network suffered its 5th outage of 2022. While the last outage was caused by what is known as a “durable nonce instruction”, the other outages had a common reason: spam bots.

Solana’s incredible transaction speeds make it easier for bots to spam fake transactions and flood the blockchain, bringing it to a standstill. In Solana’s defense, the spam is constant, and it’s actually commendable that downtime is generally limited to less than 24 hours. Users, however, are as impatient as the rest of the world, and any downtime is bad press for Solana.

The second set of problems comes from hacking wallets. Twice in recent memory, Solana wallets have been hacked and millions have been taken from users. Sometimes it’s because of a third-party bug, and other times it’s a Solana collaboration with security vulnerabilities. While these may be mistakes that will never be repeated, the impression this leaves on new users is one of extreme caution given the history.

The third and final problem is the lack of transparency. It started with long-term transaction records, which would have been kept somewhere, but are now stored with Google Bigtable. People are also wondering if centralization within Solana has passed a point of no return as one of the USPs of blockchains is verifiable transparency, which Solana has failed to maintain.

Conclusion

Despite all these issues, the media and crypto channels have consistently ranked Solana on their lists of bankable cryptocurrencies. Solana also ranks very high on the Nakamoto coefficient, which has led people to question the metric itself.

In its first four years, Solana achieved a very happy audience and user base with its ease of use, high transaction speeds, and low costs. Solana’s NFT market has even overtaken OpenSea to become one of the largest in terms of number of transactions. Solana Pay protocols are also seeing more and more merchants joining the bandwagon.

With all these advancements, all that remains is to streamline operations so that bot hacks and bugs do not disrupt the blockchain. With the right vaults in place, Solana has a lot of potential to become a globally available, cheap, and fast alternative to big daddy Ethereum.