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Solana's Resilience: Seeking Opportunities in Challenges.

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Solana, despite being heavily hit, has demonstrated resilience, with its high transaction volume, speed, and low cost attracting developers.

Source: Bankless

Translation: Deep Tide TechFlow

Solana has experienced many difficulties. After struggling to recover from FTX's collapse, L1 has also drawn the dissatisfaction of regulatory agencies. Even Vitalik expressed regret about the situation's development. Despite receiving many blows, the network still demonstrates strong resilience.

Solana was first launched in 2017 and is a blockchain designed to provide higher "base layer" throughput and scalability than other L1 blockchains such as Ethereum and Bitcoin.

Currently, Bitcoin processes about 5 transactions per second, Ethereum processes about 30 transactions per second, while Solana processes about 4,000 transactions per second, and the network theoretically supports transaction levels of 65k-75k TPS.

Therefore, Solana is able to support almost instant transactions at a very low cost, making it an attractive alternative choice for some Web3 developers and users compared to Ethereum.

However, the Solana ecosystem is facing real competition from other L1 blockchains such as Avalanche and Fantom, as well as competition from L2 solutions on Ethereum, such as Arbitrum, Optimism, and Polygon zkEVM. In addition, Solana has also faced significant challenges to date, such as the collapse of FTX (a major stakeholder in many early Solana applications), periodic network interruptions, and the negative impact of regulatory agencies designating SOL as an unregistered security.

Despite this, Solana remains one of the most popular DeFi and NFT chains in the cryptocurrency economy, and its native token SOL is still one of the top 15 cryptocurrencies by market capitalization. Although the network is currently singular in handling its own transaction execution, security, and data availability needs, if attention begins to shift towards Solana's L2, it may become increasingly modular over time.

The Working Principle of Solana

Solana is a blockchain that uses a unique consensus mechanism called Proof-of-History (PoH), which is a variant of Proof-of-Stake (PoS).

PoH optimizes the transaction process by assigning a timestamp to each transaction, allowing Solana to process them in the order they arrive, rather than organizing them into blocks. This consensus method, combined with the Byzantine Fault Tolerance (BFT) algorithm of blockchain, creates a fusion of security, efficiency, and speed.

Unlike Ethereum, which uses the Ethereum Virtual Machine (EVM) to execute "smart contracts," Solana uses a different model to execute "programs." These programs are written in the Rust programming language and compiled into the WebAssembly bytecode format (WASM), enabling Solana to achieve high performance and parallel processing capabilities. This unique approach to smart contracts helps to achieve Solana's renowned high transaction throughput and low latency.

In addition, although Ethereum wallets primarily support ERC20 tokens and Ethereum-based applications, Solana wallets (such as Phantom) are designed specifically for Solana Program Library (SPL) tokens and Solana-based applications. However, there are currently some projects (such as Neon Labs) working to make the Solana network EVM-compatible so that Ethereum-based transactions can be directly conducted on this alternative L1.

As of June 30, 2023, according to DefiLlama's data, the total locked value (TVL) in the Solana DeFi ecosystem is equivalent to approximately $266 million. Compared to the previous TVL peak of approximately $10 billion on Solana, the current TVL is much smaller, but as of the writing of this article, it still makes the network the 11th largest DeFi network.

In addition, currently Solana is also quite active in the NFT field of the cryptocurrency economy. Although compared to Ethereum, Solana's NFT ecosystem is clearly much smaller in terms of activity and breadth.

Token: SOL

SOL is the native token of Solana, used for various purposes in the ecosystem of the network, such as paying transaction fees, participating in Solana staking, and serving as an exchange medium for DeFi applications.

The trading price of SOL is about $19.34, with a market capitalization of $7.73 billion. This makes it the 11th largest cryptocurrency in the crypto economy. At that time, the circulating supply of SOL slightly exceeded 400 million, with a total supply of over 551 million, and steadily increasing with the increase of staking rewards.

What can be done on Solana

On Solana, the following operations can be performed:

Through Marinade Finance, liquidity can be pledged with SOL

As the largest application on Solana currently, Marinade Finance is a liquidity staking protocol built on the Solana network that allows users to stake SOL tokens using automated strategies. By staking on Marinade, users will receive "staked SOL" tokens (mSOL) that can be used in DeFi or unstaked at any time and exchanged back to SOL. As a non-custodial and permissionless protocol, Marinade ensures that users always own and have access to their tokens.

Liquidity staking is an alternative to traditional staking that allows users to stake any amount of SOL without the typical 1-3 day staking warm-up or cool-down period. With Marinade, staking and unstaking SOL can be done immediately, eliminating the wait time required by traditional staking methods. However, immediate unstaking incurs a fee of 0.3% to 9%. Users can also choose to delay unstaking without paying any fees, but they must wait 1-2 cycles to retrieve their SOL and accumulated rewards.

Trade Solana Tokens on Raydium

Raydium is a decentralized exchange (DEX) built on Solana, offering fast trading and liquidity mining. Users can exchange SOL and SPL tokens through liquidity pools using Raydium's trading interface, or engage in more advanced trading using limit orders. Additionally, the platform offers various opportunities to earn RAY tokens, such as providing liquidity to the trading pool or staking, making Raydium an attractive choice for users looking to start their DeFi journey on Solana.

Trade NFTs on Magic Eden

Magic Eden has become the leading NFT marketplace on Solana, with over 8,000 NFT collections listed, providing users with a one-stop platform to discover and trade Solana NFTs. In addition to the core secondary market, the platform also offers Launchpad services for exclusive minting projects and collaborates with NFT brands. Users can also explore NFT games through Eden Games, which focuses on supporting game creators and their communities.

Other Solana Applications

If you are interested in further exploring the content provided by the Solana application ecosystem, the following applications represent some of the most popular projects on Solana. These projects offer a diverse range of features and use cases, which can help you gain a deeper understanding of Solana's potential and application scenarios:

Lido - Liquidity Staking | $54 million TVL;

Orca - Decentralized Exchange (DEX) | $36 million TVL;

Solend - Lending | $37 million TVL;

Atrix - Decentralized Exchange (DEX) | $15 million TVL;

Francium — Leveraged Yield Farm | $12 Million TVL.