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Solana aims to achieve high transaction speeds without sacrificing decentralization, hence it is a crypto-computing platform. It is both a cryptocurrency and a flexible platform for running decentralization apps (dApps), like Ethereum. However, its major innovation is speed, via a bundle of modern technologies including a consensus mechanism called proof of history(POH). It can process approximately 50000 transactions per sec. Since Solana is so fast, congestion and fees remain low, developers hope will eventually enable Solana to scale completely with centralized payment processors like Visa.
How did Solana Prove to be Unique?
Bitcoin was founded more than a decade ago that solved a tricky problem – how to make it possible for strangers anywhere around the world to make financial transactions over the internet without any financial intermediaries and payment processors assisting the transaction. Blockchain is a technology that decentralized transactions possible and created the universe of cryptocurrencies. Previously, it had one major downside compared to centralized networks like the ones credit-card companies use, they’re slower.
However, Solana uses a suite of clever technologies, including a novel mechanism called proof of history (POH). Solana employs a mixture of time-tested cryptographic algorithms and fresh ideas to address the flaws of crypto’s first-wave solutions, claims Konstantin Anissimov, chief operating officer of cryptocurrency exchange CEX.IO.
Solana’s primary goal was to address Ethereum’s scalability difficulties, which it accomplished thanks to its distinctive blend of proof-of-history and delegated proof-of-stake algorithms. A variant of the more conventional proof-of-stake algorithm is called delegated proof-of-stake.
For those who need a refresher, the proof-of-stake mechanism is a series of transactions that uses a validator system to add new blocks to a blockchain.
Solana’s delegated proof-of-stake method benefits consumers in several ways. According to Christian Hazim, an analyst at ETF provider Global, the history algorithm offers an additional degree of protection to the network.
Solana Futures OI Exceeds $200M
Institutions have been eyeing Solana despite the market being a bad one. It is the institutions’ preferred bear market pet since it has continuously been able to record positive flows. SOL inflows were $0.4 million, as reported a fortnight ago. The following week, the number increased even further. SOL reported a positive flow of $0.7 million based on statistics from mid-December. All other products tied to crypto assets, except those that short bitcoin, have negative flows, as illustrated below.
Deribit delists futures and inverse options for Solana
The biggest options exchange, Deribit, declared on Monday that it will no longer provide Solana inverse products. This indicates that the platform won’t list any new Solana inverse options or futures after the impending December 30, 2022 expiry. The reason for the de-listing was not clearly stated in Deribit’s Twitter thread. Locals, however, attributed the same to a possible lack of demand. They also noted that these instruments had wide spreads and were probably illiquid.
Recovery of Futures OI Notes
Aside from inverse Solana products, conventional Solana futures contracts have shown an increase in recent months in terms of Open Interest. The same is true for fresh capital entering the system. The total SOL OI (futures) as of December 17 was $163.66 million. Following the slow incline, the amount is currently north of $217 million. In the same period, the amount of Deribit alone increased from $1.89 million to $2.03 million.
New money entering the ecosystem is not necessarily a good thing because traders may be using them to short the asset collectively. That seems to be the situation this time for Solana. The financing rate was somewhat negative on every major exchange. The same resulted in the conclusion that short sellers currently have the upper hand since they are ready to finance long sellers. As a result, it can be argued that the sentiment of all traders is slightly bearish.
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Hi, I’m Ahmed Falah. I work at the intersection of technology, finance, and human well-being, exploring how emerging digital systems can create sustainable and impactful growth across businesses and society.
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