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PDF Report Solana

The Solana platform, founded in 2017, is a high-performance blockchain that utilizes a unique Proof of History consensus mechanism to achieve fast transaction speeds of up to 50,000 transactions per second. Its native cryptocurrency, SOL, serves multiple purposes including transaction fee payments and staking, while the platform supports various decentralized applications. From a Shariah compliance perspective, Solana's infrastructure and the utility of the SOL token are deemed acceptable and do not violate Shariah principles.

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13 views6 pages

PDF Report Solana

The Solana platform, founded in 2017, is a high-performance blockchain that utilizes a unique Proof of History consensus mechanism to achieve fast transaction speeds of up to 50,000 transactions per second. Its native cryptocurrency, SOL, serves multiple purposes including transaction fee payments and staking, while the platform supports various decentralized applications. From a Shariah compliance perspective, Solana's infrastructure and the utility of the SOL token are deemed acceptable and do not violate Shariah principles.

Uploaded by

ashrafalifaiyaz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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SHARIA

ANALYSIS
Solana

Property of Shariyah Review


BureauW.L.L.

SHARIA ADVISOR LICENSED BY THE


CENTRAL BANK OF BAHRAIN
2 Property of Shariyah Review Bureau W.L.L.
REPORTS ABOUT CRYPTOS

INTRODUCTION
The Solana (SOL) platform was founded back in 2017 by
Anatoly Yakovenko.

It is a crypto computing platform that aims to achieve high


transaction speeds without sacrificing decentralization. It
employs a bundle of novel approaches, including the “Proof
of History” mechanism. Solana is a web-scale blockchain
that provides fast, secure, scalable, decentralized apps and
marketplaces. The system currently supports 50,000 TPS
(Transactions per second) and 400ms Block Times.

Ticker SOL

Consensus Proof of History


mechanism

Network type Open-source, Decentralized &


Permissionless blockchain

Maximum Supply No fixed supply


of Tokens

Hosting decentralized applications


Platform Function

Fees and powering Dapp building


Token Function
3 Property of Shariyah Review Bureau W.L.L.
REPORTS ABOUT CRYPTOS

SOLANA PLATFORM

Solana is both a cryptocurrency and a flexible platform for running crypto apps — everything from
Degenerate Apes to the Serum decentralized exchange (or DEX). Its major innovation is speed, via a
bundle of new technologies including a consensus mechanism called proof of history. Solana can
process around 50,000 transactions per second

SOLANA
PLATFORM
Solana is both a cryptocurrency and a flexible platform for running crypto apps — everything from
Degenerate Apes to the Serum decentralized exchange (or DEX). Its major innovation is speed, via a
bundle of new technologies including a consensus mechanism called proof of history. Solana can process
around 50,000 transactions per second.

Solana Token and Utility

Solana’s native cryptocurrency is SOL, which is used to pay transaction fees and for staking. It also gives
holders the right to vote in future upgrades. SOL is Solana’s native cryptocurrency, which works as a
utility token. Users need SOL to pay transaction fees when making transfers or interacting with smart
contracts. The network burns SOL as part of its deflationary model and its holders can also become
network validators. Like Ethereum, Solana allows developers to build smart contracts and create projects
based on the blockchain. SOL uses the SPL protocol which is the token standard of the Solana blockchain,
similar to ERC20 on Ethereum.

The SOL token has two main use cases:

• Paying for transaction fees incurred when using the network or smart contracts.
• Staking tokens as part of the Proof of Stake consensus mechanism.

DApps building on Solana are also creating new SOL use cases. For example, Chainvote is creating a
(decentralized finance) DeFi voting app for corporate governance using SOL tokens to vote. Solana’s price
saw an almost 30 times increase in the first two quarters of 2021, making it a popular pick with investors
and speculators.
4 Property of Shariyah Review Bureau W.L.L.
REPORTS ABOUT CRYPTOS

SOLANA CORE TECHNICAL


FEATURES
The Solana team has developed eight core technical features to help the blockchain match the capabilities of a
centralized system. Proof of History is perhaps the most notable one, but there are also:

• Tower BFT — a PoH-optimized version of Practical Byzantine Fault Tolerance


• Turbine — a block propagation protocol
• Gulf Stream — Mempool-less transaction forwarding protocol
• Sealevel — Parallel smart contracts run-time
• Pipelining — a Transaction Processing Unit for validation optimization
• Cloudbreak — Horizontally-Scaled Accounts Database
• Archivers — Distributed ledger storage

These features create a high-performance network that has 400ms block times and operates thousands of
transactions per second.

CONSENSUS MECHANISM
As one of the most performant permissionless blockchains in the world, the network has 200 physically
distinct nodes supporting a throughput of more than 50,000 TPS when running with GPUs. One of the
biggest challenges with distributed systems is the agreement in time.

Unlike Bitcoin that uses the PoW algorithm as a decentralized clock for the system, Solana uses a Proof of
History method. With Proof of History, you are able to create historical records that prove that an event
occurs during a specific moment in time. The algorithm is a high frequency Verifiable Delay Function. This
function requires a specific number of sequential steps to evaluate.
By ordering the transactions in a chain of hashes, validators process and transmit less information in each
block. Using a hashed version of the latest state of transactions greatly reduces the time of confirming a new
block.

It’s important to understand that Proof of History is not a consensus mechanism. It is instead a way of
improving the time spent confirming the order of transactions. When combined with proof of stake,
selecting the next validator for a block is much easier. Nodes need less time to validate the order of
transactions, meaning the network chooses a new validator quicker.
5 Property of Shariyah Review Bureau W.L.L.
REPORTS ABOUT CRYPTOS

SHARIAH OPINION

Solana is a platform used for several objectives. It displays a new structure for verifying transactions and a more
efficient consensus algorithm. Being a computing platform that can interact with smart contracts, it powers a
wide range of applications. From a Shariah compliance perspective, Solana is just digital infrastructure. The use
case and its usability will depend on the end user. But the infrastructure provides services and utilities which
are Shariah compliant. Additionally, the utility of the SOL token does not violate any Shariah principles and
hence, the SOL token is acceptable.

RESOURCES

Website: https://solana.com
Whitepaper: https://solana.com/solana-whitepaper.pdf

Secondary sources:

https://academy.binance.com/en/articles/what-is-solana-sol
https://www.coinbase.com/learn/crypto-basics/what-is-solana
https://genesisblockhk.com/what-is-solana/#Background-of- Solana
6 REPORTS ABOUT CRYPTOS
Property of Shariyah Review Bureau W.L.L.

ABOUT SRB

Since our humble beginnings 17 years ago in the


Kingdom of Saudi Arabia we’ve grown to include
+100 companies across a host of industries, 5,000
transactional programs, 5 interdisciplinary teams
and a combined scholarly workforce of 31 Sharia
Scholars from 16 countries. And we’re not done yet:
our Sharia Audit and Sharia Advisory services will
continue to improve—serving local and
international businesses to help them maintain and
manage Shari’a compliance.

Our combination of international and local market


knowledge and multi-disciplinary perspective of
Sharia give us an edge in the professional Sharia
Advisory and Sharia Audit services industry in the
GCC. The scope and value of our services, and the
help they offer in building a thriving economy, keeps
us excited.

The future of Sharia Advisory and Audit is exciting


and we are very lucky to be a part of this business!

DISCLAIMER: This publication contains general information only and has been written in general terms. Shariyah Review Bureau W.L.L. is not, by means of this
publication, rendering Shariyah compliance, accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not
a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect you or your business. Before
making any decision or taking any action that may affect you or your business, you should consult a qualified professional and/or Shariyah adviser. Shariyah
Review Bureau W.L.L. does not endorse or sponsor any vendor or product mentioned in this document.

Vendor and product names mentioned in this document are the trademarks or registered trademarks of their respective owners and are mentioned for
identification purposes only. Shariyah Review Bureau W.L.L. is not responsible for the functionality or technology related to the vendor or other systems or
technologies as mentioned in this document. A vendor or product mentioned in this report may not be regulated by an appropriate regulator, such as the Central
Bank of Bahrain (CBB). Shariyah Review Bureau W.L.L. shall not be responsible for any loss sustained by any person who relies on this publication.

In Bahrain, you should be aware of the CBB regulations regarding crypto-assets, including those set out in the CBB Rulebook-Volume 6. The CBB has the
authority to approve or reject, from time to time, crypto-assets offered or to be offered by its licensees. For the avoidance of doubt, nothing set out in in this
publication should be read or construed as indicative of or affecting such approval or rejection.

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