Solana is a high-performance blockchain protocol that aims to solve some of the major problems facing other cryptocurrencies like Bitcoin and Ethereum. The main issues Solana tries to address are scalability, transaction costs, and throughput.
Scalability
One of the biggest limitations facing major blockchains like Bitcoin and Ethereum is that they do not scale very well. As more users join the network and more transactions are processed, these blockchains become congested and transaction fees go up. For example, in 2021 Ethereum gas fees reached highs of over $100 per transaction during peak congestion times. This makes using Ethereum prohibitively expensive for many applications.
Solana aims to solve the scalability issue through its unique blockchain architecture. The Solana protocol is designed to scale horizontally across GPUs and SSDs, handling tens of thousands of transactions per second. This is orders of magnitude greater than Bitcoin or Ethereum. Solana achieves this high throughput through innovations like Proof of History, Tower BFT, Gulf Stream, Sealevel, Pipelining, and Cloudbreak.
Proof of History
Proof of History is a timestamping technique that assigns an order to transactions without the need for mining. This allows Solana to process transactions very efficiently in parallel, greatly increasing throughput.
Tower BFT
Tower BFT is Solana’s implementation of the Practical Byzantine Fault Tolerance consensus mechanism. It allows Solana to finalize transactions quickly with minimal computing power.
Gulf Stream
Gulf Stream is a mempool-less transaction forwarding protocol. It reduces confirmation times and speeds up block propagation across the Solana network.
Sealevel
Sealevel is an innovative parallel smart contracts run-time that scales horizontally across GPUs and SSDs.
Pipelining
Pipelining allows transaction batches to be processed concurrently by validators, significantly improving throughput.
Cloudbreak
Cloudbreak is Solana’s horizontally-scaled account database. It allows the network to optimize access to accounts across SSDs.
Together, these innovations allow Solana to process up to 50,000 transactions per second currently, compared to Bitcoin’s 7 and Ethereum’s 15. As hardware improves over time, Solana’s throughput will continue scaling to meet demand.
Transaction Costs
In addition to poor scalability, high transaction costs are another major issue facing blockchain users. Sending transactions on Bitcoin and Ethereum can cost upwards of $10 to $50 depending on network congestion. This prevents everyday micropayments on the blockchain.
Solana aims to solve this through a combination of high throughput and clever design. Because Solana can process thousands of transactions per second, it is able to offer much lower fees. Current median fees on Solana are about $0.00025 per transaction.
Solana is also able to reduce fees through its block structure. It uses a single-block leader scheduling protocol that allows validation to be delegated to a single node instead of the entire network. This greatly reduces duplication of work and saves on fees.
The low fees on Solana open up many more use cases that are impractical on Bitcoin and Ethereum, like micropayments, decentralized exchanges, gaming applications, and more.
Throughput
In addition to scalability and fees, the other major issue Solana tackles is throughput – i.e. the number of transactions the network can process per second. As mentioned earlier, Bitcoin is limited to about 7 TPS while Ethereum can handle around 15 TPS currently.
This severely limits the number and types of applications that can be built on these blockchains. Complex consumer apps and financial transactions require much higher throughput to operate.
Solana achieves throughputs in the tens of thousands of transactions per second through its innovative blockchain architecture. This allows it to support applications that need high-speed transactions at scale – things like trading, gaming, data analytics, advertising, and more.
The following table compares the throughput of Solana to other major blockchains:
| Blockchain | Estimated TPS |
| Bitcoin | 7 |
| Ethereum | 15 |
| Solana | 50,000 |
As you can see, Solana is orders of magnitude faster than legacy chains. And as hardware and software improves, its throughput will continue to scale.
Use Cases Enabled by Solana
By solving for scalability, fees, and throughput, Solana is able to support advanced use cases that are too expensive or slow on other chains:
Decentralized Finance
Decentralized exchanges and lending protocols require fast and low-cost transactions. Congested chains like Ethereum make DeFi apps slow and expensive to use. By comparison, Solana’s high speed and sub-penny fees make it ideal for DeFi. Projects like Serum, Orca, Saber, and more are building a thriving DeFi ecosystem on Solana.
NFT Marketplaces
NFT minting and trading needs high throughput and low fees to function well. Ethereum’s 14 TPS makes using NFTs sluggish, especially when gas fees spike. Solana’s 4000+ TPS makes NFT marketplaces like Solanart fast and usable. Users can mint and trade NFTs efficiently at a fraction of the cost of Ethereum.
Gaming
Online games need to process tens of thousands of transactions per second to run smoothly. This is impossible on chains like Ethereum. By comparison, Solana can easily achieve the throughput needed for complex blockchain-based games. Projects like Star Atlas, Aureum, and RaceFi are building unique Web3 games on Solana.
Ad Exchanges
Digital ad markets involve huge volumes of impressions and clicks that need to be tracked and billed in real time. This requires extreme transaction throughput that only Solana can provide. Projects like Solana Media are bringing on-chain ad exchanges to life by leveraging Solana’s speed.
Analytics and Data
Analytics applications need to ingest and process massive datasets. Slow networks and high fees make it difficult to put structured data on chain. With Solana’s industry-leading throughput, developers can build powerful new datasets and analytics tools on the blockchain.
Conclusion
In summary, Solana innovates on scalability, fees, and speed to unlock new possibilities in blockchain. By supporting thousands of transactions per second at a fraction of a penny each, Solana provides the performance needed to build highly functional apps. Use cases like DeFi, NFTs, gaming, ads, and analytics become practical on Solana, allowing the development of Web3 technologies not possible on other chains.