All About Solana, the Blockchain Behind BONK
Last week, the memecoin BONK effectively saved Solana’s Saga phone enterprise. BONK is a dog-based memecoin popular on the Solana blockchain. Those new to the cryptocurrency world may have heard of BONK because of its sudden price rally but could be in the dark about Solana itself. Solana has taken price hits in recent years and dropped below the radar because of events in its history.
Solana’s Background
Co-founded in 2017 by computer programmer Anatoly Yakovenko and current Solana COO Raj Gokal, Solana is the prime competitor of the popular currency Ethereum. Dubbed “The Ethereum Killer” in 2020, Solana is able to process 65,000 transactions per second, one of the fastest in the industry. The network’s high speeds, low fees, and scalability make it ideal for NFT-based decentralization applications, dApps, and decentralized finance. The layer-one blockchain was created to be a fast and efficient network with an underlying smart contract protocol.
Solana’s Technology and Tokenomics
Solana’s native token, SOL, is used for staking to support the validation process and for peer-to-peer payments. Much like any cryptocurrency, the SOL price fluctuates. Unlike other cryptos, SOL has an unlimited token supply, and anyone holding enough SOL can become a network validator or a delegator. This allows users who stake in support of the Solana blockchain to claim rewards. The network is comprised of the PoH timing mechanism and a consensus layer that operates on a PoS algorithm. During transactions, 50% of the SOL used is burned, and the remaining 50% is awarded to the transaction’s validator. This helps Solana maintain its year-over-year inflationary rate.
Challenges Faced
In August 2022, a major data breach occurred on the Solana blockchain. The cyber attack was announced on social media by decentralized finance apps Phantom and Slope. The hacks resulted in the loss of approximately $8 million in SOL and affected an estimated 8,000 people. Those affected by the breach reportedly used their Solana wallets in interactions with other apps on iOS and Android networks. The cause of the attacks remains unknown. This breach greatly affected Solana’s standing in the crypto community and was one cause of its decline in popularity.
Decline in Public Perception
Public perception of Solana further declined in the fall of 2022 and throughout 2023 as charges were filed against Sam Bankman-Fried, former CEO of FTX and champion of the Solana project. All of Bankman-Fried and FTX’s assets were frozen as a result, leaving FTX’s 55.8 million SOL tokens locked up and not tradeable on the market. With so much SOL not available for trade, prices plummeted as traders started to divest their SOL.
Recent Developments and Recovery
However, things are starting to look up for Solana. The recent price rally related to BONK has driven the SOL price up by over 200% to where it currently sits at $68.97. As Bankman-Fried’s trial started to wrap up, the currency also saw a spike in interest. Solana is slowly regaining its former prowess as real-world events change. The Solana phone, Saga, has also seen a rise in sales with the popularity of BONK. Purchasing the phone awards the user 30 million BONK tokens, leading to the $599 phone flying off the shelves. The future of SOL may still be in flux, but crypto enthusiasts love a surprise. It looks like Solana might be just the thing to shake up the market.
