Getting Started With Solana
Crypto and Equities Rebound
Getting Started With Solana
Our previous articles in the Getting Started series have covered Avalanche, Fantom and Binance Smart Chain. This week, we will cover Solana and explore what it is and how you can use it. Solana meaningfully appeared on the scene in 2021 and experienced an explosive rise as it positioned itself as the ultimate Ethereum killer.
What is Solana?
Solana is a layer 1 smart contract platform that is very similar to Ethereum in that it can power a wide variety of applications; these can be anything from DeFi to Web3.
Solana was created in 2017 by Anatoly Yakovenko with a focus on high-throughput and low fees. As it stands, Solana can process 50 000 transactions per second with block times as short as 400ms. It can do this through its novel mechanism called Proof of History.
However, Solana has faced several issues as it has been tested in a live production environment, experiencing repeated downtime. It has also received significant criticism for the high concentration of its token SOL in VC's hands.
How Does Solana Work?
Solana has attempted to solve the blockchain trilemma by sacrificing decentralisation for speed.
The most significant difference between Solana and other layer 1 blockchains is the consensus mechanism it employs; it leverages a combination of TowerBFT, a Proof of Stake system and Proof of History. Proof of History focuses on a transaction's timestamp to help order transactions. As you can imagine, the more transactions a blockchain can process per second, the harder it is for nodes verifying transactions across the globe to keep up without a centralised source of time.
Solana has attempted to solve this by appointing one node as the leader and having that node sequence the messages between other nodes. This significantly reduces the workload on all nodes and increases throughput.
The Proof of History Solana attempts to maintain is the history of transactions created by hashing a transaction's output and using it as the subsequent transactions input.
Below is a good explainer video to understand Proof of History:
Solana has taken a very different approach to achieve blockchain scalability. They have had to sacrifice a level of decentralisation for this; however, it has positioned itself to capture a niche portion of the market due to its speed and novel consensus mechanism.
How to Use Solana
As with both Fantom, Avalanche and BSC, there are several wallet options to choose from. This also depends on what you intend on using the wallet for. A wallet allows you to store your assets, participate in the network through governance and staking/delegating, and it can enable you to interact with both DeFi and Web3 projects.
Phantom is one of the most popular wallets to use with Solana. It has an Apple application or otherwise needs to be used as a browser add on.
Creating a Phantom Wallet
Step 1: Visit the Phantom Wallet Website
Go to the Phantom Wallet Website
Make sure the URL you land on is "https://phantom.app/"
You should see the below screen:
Click Download in the top right
Choose your appropriate browser add on
Install the application
Open the Phantom Wallet
Step 2: Create A Seed/Recovery Phrase
You will now have to create a new wallet. Your seed/key phrase is how you recover access to your account if something happens to your wallet. Therefore, it is crucial to concentrate during the next few steps. Once you have installed and opened the wallet, you should see the below screen:
Click Create a new wallet
Once you have clicked Create Wallet, you will now be prompted to create a password. Enter a strong password. Ensure the password has at least eight characters, including one upper-case letter, a symbol, and a number. Makes sure that you store your password in a safe place. There is no way to recover the password if lost or stolen.
Enter your chosen password
Re-enter your passcode to confirm it is correct
Agree to the Terms of Service once you have read them
Now you will need to back up your wallet. We have previously written about the importance of storing a key phrase correctly. You can access that article here to follow best practices. Copy your 12 words down in order and ensure that they are accurate, store them as suggested in our article. You can never be too careful with your seed phrase.
You can view them by hovering over the blurred section
Copy down the words in order and click Continue
Well done. You have successfully set up your Phantom Wallet.
Step 3: Use your Wallet
You will now have access to your wallet dashboard, which can be accessed through the browser add on icon in the top right of your screen; the wallet should look like the one below:
You can now control all of your Solana assets through this wallet.
Funding Your Wallet
Solana is not an Ethereum Virtual Machine (EVM) compatible blockchain. Therefore a native integration with MetaMask and the option to fund it through an EVM cross-chain bridge will not work as it has for Avalanche, Fantom and BSC. Thus the primary way to fund your wallet is through a centralised exchange. There is, however, a way to do it through a newer bridge that can bridge between both EVM and non-EVM compatible chains, but this comes with its own risks as well.
You can fund your wallet directly using an exchange like Binance or any other exchange that offers SOL as a trading pair. This will differ from exchange to exchange, so giving specifics is hard. But it will involve you withdrawing the SOL token directly to your Phantom Wallet that you have just set up. Be careful during this process and make sure that you select the appropriate chain when going through the withdrawal procedure; this will be the Solana mainnet in our case. Always double-check that the address you are sending to matches the one from your wallet exactly. Sending to the wrong address will mean you lose access to your funds.
We always recommend moving the native asset of the destination chain because once it lands, you require it to pay gas. In this case, it will be SOL; when transferring from an exchange, you should transfer the SOL token as opposed to any other asset, but you can do a combination as well.
Funding Your Wallet Through Allbridge
Allbridge was launched in July of 2021. Allbridge is a Proof-of-Stake blockchain bridge with on-chain consensus. It was created to provide a way to transfer assets between both EVM and non-EVM compatible chains. Allbridge actually started under the name Solbridge and focused on bridging Solana to other blockchain networks but has since expanded its options. Please note this bridge has been audited, but it comes with its own risks that should be understood before using it.
Step 1: Set Up a MetaMask Wallet
To use Allbridge, you will require two wallets, one for the sending chain and one for the destination chain. You can, in theory, transfer from any chain Allbridge supports. In this case, we are going to use our MetaMask and Ethereum wallet address.
You can follow our guide to setting up your MetaMask here.
Once you have done this and funded the wallet, you can start bridging your assets (make sure Allbridge supports them).
Step 2: Use Cross-Chain Bridge
Click on Launch app on the top right-hand side of your screen.
You should land on the following page:
Choose your blockchain and asset
In our case, it will be From Ethereum To Solana
We will bridge ETH
*Please note that you will still have to send SOL from an exchange to your Solana Phantom Wallet so you can pay gas fees when it lands.
Click Connect wallet
Enter your Solana Phantom Wallet address under Address to send your assets to
Enter the amount of the asset you want to send
If you send ETH, you will receive aeWETH (a version of wrapped Ethereum) on the Solana side. Please also confirm you are happy with the fees.
Continue the process and whenever prompted, click "Confirm" to sign the transaction on MetaMask and the Phantom Wallet.
The transaction may take some time, so be patient. However, once it is done, you will notice that the balance of ETH on your MetaMask has adjusted. If you now navigate to your Phantom Wallet, you should see the balance (in aeWETH) you transferred minus any fees.
Step 3: Use Solana
Now that you have bridged your assets and loaded SOL onto your wallet from an exchange, you can start using the DeFi and Web3 applications on Solana. You can view a list of the projects you can use here.
Using these networks is the best way to learn about them. It shows and allows you to understand what blockchain networks are capable of. Each has its own unique advantages, disadvantages and user experiences.
Solana stepped into the spotlight in 2021, and it has had its fair shares of ups and downs through this time. It approached blockchain scalability in a way that hadn't been done before. Through this, it served niches and use cases that aren't currently possible on networks like Ethereum and, therefore, gained significant traction.
If you have any questions or have trouble using the network, please feel free to reach out and ask us questions. We always look forward to chatting with our readers. Otherwise, please feel free to share this article if you know anyone who is interested in using these networks.
Notable Articles and News Stories This Week:
Fed Raises Benchmark Interest Rate by 25 Basis Points
In a widely telegraphed and anticipated move, the U.S. Federal Reserve said Wednesday that it will lift the fed-funds rate by a quarter-percentage point to a range of 0.25%-0.5% from the current rate of close to zero. This is the first time since December 2018 that the central bank has raised its benchmark interest rate.
"Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices and broader price pressures," the Fed said in a statement. "The implications for the U.S. economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity."
The Fed also announced that it will reduce its balance sheet "at a coming meeting." It didn't specify whether that will happen at its next meeting in May.
Read more about the rate hike here
HSBC Buys Virtual Real Estate in Sandbox Metaverse
Financial services provider HSBC said Wednesday it will acquire a piece of virtual real estate in The Sandbox metaverse.
The purchase is a part of a larger partnership with The Sandbox to engage with sports, esports and gaming fans, according to the bank’s announcement.
“The metaverse is how people will experience Web3, the next generation of the Internet — using immersive technologies like augmented reality, virtual reality and extended reality,” Suresh Balaji, chief marketing officer at HSBC Asia-Pacific, said in a statement. Further details on the plot were not disclosed.
HSBC joins a laundry list of big-name brands and companies that have partnered with the blockchain gaming firm, including Warner Music Group, Gucci and Adidas.
Read more about the purchase here
Binance Granted License To Operate in Dubai
Binance was granted a virtual asset license by Dubai’s regulator as the crypto exchange seeks to expand further in the United Arab Emirates (UAE).
Under the Virtual Asset Regulatory Authority (VARA), Binance will be allowed to offer limited exchange products and services to pre-qualified investors and professional financial service providers, the company announced Wednesday.
VARA will monitor its licensed service providers to determine if they may open to the retail market.
Changpeng Zhao, founder and CEO of Binance, called Dubai a “progressive regime” targeting uncompromised governance and market security.
Read more here
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