Like most computers, they can run programs and host applications
Unlike traditional computer networks, they i) can’t be shut down, ii) aren’t controlled by any one entity and iii) anyone can use them
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🔶 Problem
Ethereum is the dominant Layer 1, but it has a major problem – it’s slow and expensive
For much of 2022, average fees were in the range of $10 — $30 per transaction (and sometimes were in the thousands!)
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🔶 Solution
As such, in 2021 a set of “alternative L1s” started to emerge to challenge Ethereum’s dominance with higher throughput, faster speeds and cheaper transactions
Some of the most prominent include BNB, Avalanche, Cardano, Polkadot and – of course – Solana
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🔶 Protocol Overview
Founded by former Qualcomm, Intel, and Dropbox engineers in 2017, #Solana is a single-chain, dPoS protocol whose focus is on delivering scalability without sacrificing decentralization or security
At its peak, the protocol currently held over $11B locked in #DeFi, generated an average of 430M of volume every 24 hours and boasted an average transaction fee of $0.18
#SOL 's high throughput, low latency and low fees ($0.0025) make it an ideal fit for decentralized governance
To date, 140 DAOs have been created on Solana with $1B in AUM
Major DAOs include Star Atlas DAO, Mango DAO and @MonkeDAO
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🔶 How does it work?
#Solana is a “monochain” network - it executes all of the major functions of an #L1 on a single blockchain:
• Security
• Data
• Execution
Most L1s have abandoned monochain structures in favor of “modular” ones as they’re considered faster
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Like adding lanes to a highway, splitting a blockchain into multiple chains allows it to handle a lot more transactions and therefore run at a much faster speed
That’s why nearly every #L1 today uses a modular structure, and Ethereum is migrating to one as well
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Solana has taken a different approach though, using a concept known as “Proof-of-History”
#PoH acts as a “decentralized clock”, automatically ordering all transactions
(arranging transactions correctly is one of the hardest things for a decentralized network to do)
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Proof of History allows Solana to be unbelievably fast and cheap - boasting a theoretical TPS of 65,000 to 710,000 and fees under $0.00019 - WITHOUT sacrificing its monochain architecture
As we will soon see, this may prove to be a major long-term competitive advantage
$SOL is the cheapest major chain with average transaction fees of $0.00019
This makes it an ideal #blockchain for high-volume use cases such as:
• Micropayments
• Remittance payments
• Gaming
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🔹 Speed
#SOL 's maximum TPS is estimated to be anywhere from 65K to 750K and it has consistently proven real world speeds of 3,500
Unlike ETH, transactions on Solana are almost instantaneous (400ms)
This seamless UX is essential to recreating the Web 2.0 feel on Web3
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🔹 Scalability
Solana has proven its ability to scale
The network processes more transactions than all other L1s combined
Even when voting transactions are removed, Solana is doing 7x more transactions than its closest competitor
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🔹 Composability
Solana is unique among L1s in that it has chosen to retain its single-chain structure
While critics argue that so called monochains are inferior and risk becoming irrelevant, this might ultimately prove to be Solana’s biggest long-term advantage
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Monochains allow for very efficient communication between dapps and may be able to support products and uses cases - such as flash loans – that wouldn’t be possible in a modular architecture
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Given its popularity and huge market size, many predict that it will be the first technology to “cross the chasm” and introduce #Web3 to the broader market
But current offerings may not be enough to get us there