Solana Blockchain

Solana is a blockchain platform which uses a proof-of-stake mechanism to provide smart contract functionality. Its native cryptocurrency is SOL.Solana was launched in 2020 by Solana Labs, which was founded by Anatoly Yakovenko and Raj Gokal in 2018. The blockchain has experienced several major outages, was subjected to a hack, and a class action lawsuit was filed against the platform.
Solana's total market cap was US$55 billion in January 2022. However, by the end of 2022, this had fallen to around $3 billion following the bankruptcy of FTX. Following the general rise of the cryptocurrency market in 2023, its market cap rose to $7 billion.

Characteristics

According to the company's white paper, Solana runs on a proof of stake model.[2] The New York Times and Financial Times described the coin as an alternative to Ethereum.[3][4]

History

Solana was first opened to the public in March 2020,[2] with its first block being created on 16 March 2020.[5][third-party source needed] The Solana blockchain was designed to support smart contracts and decentralized apps in particular.[2][6] Large numbers of simultaneous transactions have contributed to several outages of the Solana blockchain.[6]
In June 2021, Solana Labs sold $314 million worth of its native cryptocurrency, SOL, to a group of funds led by Andreessen Horowitz and Polychain Capital.[7]
On 1 July 2022, a class action lawsuit was filed against Solana. The lawsuit accused Solana of selling unregistered securities tokens in the form of Solana from 24 March 2020, onward and that Solana deliberately misled investors concerning the total circulating supply of SOL tokens. According to the lawsuit, Anatoly Yakovenko, the founder of Solana Labs, lent a market maker more than 11.3 million tokens in April 2020 and failed to disclose this information to the public. The lawsuit claimed that Solana stated it would reduce the supply by this amount, but it only burned 3.3 million tokens.[8]On 3 August, 2022, 9,231 Solana wallets were hacked[9] and four Solana wallet addresses stole approximately $8 million from victims.[10] The Solana Foundation stated that the hack was caused by digital wallet software from Slope Finance.[10]
In April 2023, Solana Mobile, a subsidiary of Solana Labs,[11] began selling the Solana Saga, an Android smartphone with several Solana-based decentralized apps preinstalled.[12]
In June 2023, the SEC sued Coinbase, alleging that Solana and twelve other currencies offered by the platform failed the Howey Test and qualified as securities. The suit accuses Coinbase of illegally evading requirements for disclosure by offering these tokens. The SEC had previously issued a Wells notice to Coinbase in March.[13][14]
In September 2023, Visa announced that along with payment processors Worldpay, Inc. and Nuvei, it had added support for the Solana blockchain to send payments to merchants using the stablecoin USD Coin (USDC), rather than fiat currency via bank wire.[15]

Market value

The value of Solana tokens has fluctuated greatly since the system's inception. The market capitalization of the Solana blockchain surpassed $63 billion in September 2021,[16] and reached $74 billion in early November 2021, having risen by nearly 12,000% that year to a price of $259.96.[2] The blockchain's popularity at this time was due in part to interest in NFTs.[6]
In November 2022, the price of Solana dropped by 40 percent in one day following the bankruptcy of FTX, due to sell off from Alameda Research. Solana was Alameda's second-largest holding at the time[17][18] and FTX held $982 million in Solana tokens.[19] By the end of 2022, Solana had lost more than $50 billion in value since the beginning of the year.[6] Since the start of 2023 until 15 March, coinciding with a rise in the cryptocurrency market, Solana's value had risen by 100 percent to a market capitalization of around $7 billion.[20] On 11 June 2023, Solana dropped nearly 30% in one day after the SEC announced that it would make the case in court that Solana is a financial security, causing big exchanges to liquidate their holdings, including Robinhood which delisted SOL and other tokens named by the SEC in its lawsuit.[21][22]

Outages

The Solana blockchain had experienced several notable outages in service.
On 14 September, 2021, the Solana blockchain went offline after a surge of transactions caused the network to fork, and different validators had different views of the state of the network. The network was brought back online the next day on 15 September, 2021.[23] The outage lasted a total of about 17 hours.[16]
The Solana blockchain again went offline on 1 May, with the outage lasting roughly seven hours due to it being taken offline by bots.[24] The blockchain went offline again on 31 May, 2022, due to a bug in how the blockchain processes offline transactions. This outage lasted about four and a half hours.[25][26][27]On 1 October, 2022, the Solana network went down for 6 hours due to a consensus bug in the validator client allowing a misconfigured node to publish multiple valid but different blocks.[28]
Solana's outages have frequently resulted in the value of the network's native SOL token falling.[6][29]