Solana, one of the most popular blockchain networks and known by the nickname “Ethereum killer,” has lately become the host of many DeFi projects, dApps, NFTs, etc. SOL, its native coin, is traded on the most well-known crypto exchanges. What determines such success of SOL?
These value units are utilised in transfers on the Solana platform, which uses a Proof-of-History (POH) consensus protocol that uses timestamps for blockchains.
The proof-of-work consensus protocol is extremely energy-consuming for crypto assets like BTC and LTC. Ethereum chose a more effective way to address this problem — the Proof-of-Stake algorithm, which mandates validators to store tokens in staking positions until they agree on the chain’s next block.
Faster transaction execution is achieved by Solana’s innovative alternative to current blockchain networks — Delegated Proof-of-Stake and Proof-of-History consensus protocols. Instead of using miners for block definition as in traditional PoW systems or staking tokens like in PoS systems, Solana uses timestamps via the POH technology.
Solana’s proof-of-history method provides a more secure and effective blockchain ecosystem by enabling validators to vote on timestamps on the chain. Offering quicker and safer calculations than those in Proof-of-Work or Proof-of-Stake systems contributes to ensuring decentralisation.
Staking is one of Solana’s key features. Staking SOL tokens allows token owners to join the Solana network. This financial model compensates stakeholders for assisting in the security and maintenance of this blockchain network technology without seriously endangering users. Returns on a long-term token delegation to validators provide incentives for stakeholders.
Validators must optimise their systems to process more transactions, allowing them and delegators to earn greater rewards.