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Web3 is a future version of the internet that will be built on decentralization, user ownership, scalability, and privacy through technologies like blockchain and smart contracts.
The problem is that many Level 1 blockchain networks fall short of balancing between all these aspects without reducing one to improve the other.
This is where Solana comes in.
Solana is a high-performance blockchain network that is known for its speed, low transaction costs, and scalability. These features make it a promising tool to lead us into the next wave of digital connectivity, and in this article, I’ll explore why and how.
Let’s begin!
This might sound a bit technical, but don’t worry, it’s nothing too complex, and I'll make it even easier to understand. Solana uses Smart Contracts, Proof-of-Stake, and Proof-of-History mechanisms to create its unmatchable speed.
Let me break each of them down for you to get a clear picture of the system.
Smart Contracts are self-executing contracts stored on blockchain that can automatically execute, control, and document actions and events when predefined conditions are met, eliminating the need for third-party monitoring and optimization.
Proof of Stake (PoS) is a rather new mechanism used by newer cryptocurrencies such as Ethereum 2.0, Cardano, or Tezos. It works on staking, where users place crypto as collateral to approve transactions, making it faster than Proof of Work (PoW), another older mechanism that runs on the energy-consuming process of mining.
Proof of History (PoH) is Solana’s own mechanism created by founder Anatoly Yakovenko. It runs on the idea that the sequence of events in a blockchain network is as critical as the events themselves, and verifying this sequence is important to maintain the network’s integrity. This is achieved using a cryptographic Verifiable Delay Function (VDF), which creates a timestamp for each block in a blockchain network.
With all three of these mechanisms packed into it, Solana can support the unique requirements that Web3 needs to decentralize and allow users more control of their data and online interactions through certain benefits that will be explored next.
From speed to energy savings, the benefits shared here allow multiple applications that can support the creation of a Web3 framework.
Let’s explore!
Even if you use one of the high-speed internet providers in USA, older and even a few current blockchain networks can process and verify transactions only one block at a time.
The Solana blockchain can process thousands of transactions, over 65,000, to be more exact, in a second, making its speed up to par with the unique requirements of Web3. To add to this speed, Solana focuses on sub-second finality, which means that transactions are confirmed and finalized almost instantly, which can also help greatly in improving the user experience.
One of the main issues in traditional blockchain networks is the multiple layers of confirmations and the high gas fees that they charge. Gas fees are the cost of transactions on a blockchain network that users pay for computational power needed to process and validate transactions and smart contracts.
Solana charges gas fees as low as 0.00025$, making it a very cost-effective choice.
Older blockchain networks used mining, which is a very energy-intensive process since a large amount of electricity is needed for the system to be able to solve the complex mathematical puzzles I mentioned earlier.
Since Solana doesn’t use Proof of Work and instead uses Proof of Stake and Proof of History, it is much more energy efficient compared to other options. Essentially, it uses the same amount of energy as a simple Google search would.
The benefits Solana offers have resulted in it being used for a wide range of applications, some of which I will explore next.
Solana’s speed, affordability, and energy efficiency make it a good choice for numerous real-world applications, from decentralized finance to gaming.
Let’s take a look.
Solana’s speed can support the creation of Decentralized Finance (DeFi) platforms where users need to quickly lend, borrow, or trade with low fees. Using these platforms with tools like Solscan can also allow users to keep track of their assets transparently.
Blockchain-based gaming has become quite common, and Solana’s ability to process over 65,000 transactions per second can help make real-time gaming experiences better. It also helps that its gas fees are low, which can make in-game transactions easier for players.
Web3 aims to provide users with more ownership and control, and social platforms can benefit from this. Creators can enjoy complete content ownership, direct monetization models, and create tokenized communities for exclusive access to content.
Solana’s speed, cost-effectiveness, and energy efficiency make it a great tool to support the requirements that Web3 needs to function.
With applications such as decentralized finance, gaming, and social networks, the blockchain network can empower users with more control and privacy, two core principles of Web3.
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Disclaimer: Analytics Insight does not provide financial advice or guidance on cryptocurrencies and stocks. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. This article is provided for informational purposes and does not constitute investment advice. You are responsible for conducting your own research (DYOR) before making any investments. Read more about the financial risks involved here.
