What is SOL token?
SOL is the native cryptocurrency of Solana. It functions as a utility token. When making transfers or engaging with smart contracts, users pay SOL as transaction fees. As part of its deflationary strategy, the network burns SOL. Holders of SOLs can also serve as network validators. Solana, like Ethereum, allows developers to establish smart contracts and blockchain-based projects.
The SPL protocol is used by SOL. SPL is the Solana blockchain’s token standard, which is comparable to Ethereum’s ERC20.
The SOL token has two primary applications:
- Used as fees to pay when using the network or smart contracts.
- Staked as part of the Proof-of-Stake consensus procedure.
New SOL use cases are being created by DApps built atop Solana. Chainvote, for example, is developing a (decentralized finance) DeFi voting tool for corporate governance that will allow users to vote with SOL tokens. In the first two quarters of 2021, the price of Solana increased by about 30 times, making it a favorite choice among investors and speculators.
Key features of Solana
According to its blog, the Solana team has built eight fundamental technical characteristics to make the blockchain match the capabilities of a centralized system. The most famous is perhaps the Proof of History although there are others as well:
- Practical Byzantine Fault Tolerance (Tower BFT) is a PoH-optimized variant of Practical Byzantine Fault Tolerance.
- Turbine is a protocol for block propagation.
- Gulf Stream is a transaction-forwarding protocol that does not use a mempool.
- Sealevel—Run-time of parallel smart contracts
- Pipelining is a transaction processing unit that optimizes validation.
- Cloudbreak is a database of horizontally-scaled accounts.
- Distributed ledger storage with archivers
These elements combine to provide a high-performance network with block speeds of 400 milliseconds and thousands of transactions per second. To put this in context, Bitcoin’s block time is around 10 minutes, and Ethereum’s is around 15 seconds.
SOL token holders can participate in the blockchain’s PoS consensus method by staking their tokens. You can stake your tokens with validators who process the network’s transactions using a compatible crypto wallet. Those who have staked share some of the rewards with a successful validator. This incentive system encourages validators and delegators to act in the best interests of the network. Solana has roughly 900 validators as of May 2021, making it a fairly decentralized network.
About RoboFi
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