The world’s largest stable coin by market capitalization and the third largest among all cryptocurrencies, Tether (USDT), announced on September 9, 2020, that it is the first stable coin to be launched on Solana Network. 

Before we discuss the benefits of launching USDT on Solana, it would be nice to know a little more about Solana Network.

Introduction to Solana

Solana is the world’s first Web-Scale Blockchain that can launch secure and scalable decentralized applications (Dapps) and marketplaces. It was developed with a mission to host high growth and high-frequency applications with the computational bandwidth compared to that of the modern internet.

Founded by former Qualcomm, Intel and Dropbox engineers in late 2017, Solana is a high-speed layer 1 blockchain that delivers the second-layer solutions of security and stability using a Delegated Proof of Stake (DPoS) consensus mechanism.

The reason behind Solana’s scalability solution is a decentralized clock titled Proof of History (PoH), that has been built to solve the problem of time faced in the distributed networks. By using Verifiable Delay Functions (VDF), PoH allows each node to locally generate timestamps with SHA256 computations. This eliminates the need for the broadcasts of timestamps across the network, improving overall network efficiency.

Intending to democratize the world’s financial systems, Solana can offer around 50,000 transactions per second (TPS) as compared to 15-20 TPS that Ethereum offers. It also maintains a block time of 400 milliseconds which is possible through the PoH. 

Solana’s Turbine solves the problem of data propagation in the network. We know that the increase in the number of nodes in the network must lead to an increase in the amount of time necessary to propagate the data. Turbine, on Solana, simply breaks down large amounts of data into small packets and transmits them to different validators on the DPoS blockchain network.

These validators in turn retransmit those packets to its group of peers called a neighbourhood. With the use of Turbine block propagation protocol, the platform can support thousands of nodes while remaining performant and scalable.

Each neighbourhood is then responsible for transmitting a portion of its data to the neighbourhood below it. As explained by Solana on its Medium channel, if each neighbourhood is comprised of 200 nodes, a 3-level network, starting with a single leader at the root, can reach 40,000 validators in 2 hops — or roughly 200 milliseconds assuming each network link is 100ms on average.

Lastly, the Solana network boasts speeds of greater than 50,000 transactions per second, and costs lower than $0.00001 per transaction.

To know more, read the white paper for Solana here. 

Metrics

At the time of writing, the SOL/BTC pair is trading at 0.00033228 BTC on CoinDCX’s platform. The highest value for the trading pair went to 0.00037941 BTC in the last 24 hours. With a circulating supply of 34,621,118 SOL and market capitalization of $116,249,386, Solana ranks 94th on CoinMarketCap.

As seen in the chart below, the announcement of Tether’s integration on Solana Network led to a ~33% rise in the price of the SOL/BTC pair.

Let us now discuss the benefits of this integration.

Tether on Solana

The integration of USDT on Solana Network will facilitate the building of high-speed, low-cost decentralized finance (DeFi) applications. This would be beneficial for institutions that require much faster transaction processing.

Tether CTO, Paolo Ardoino, said, “Our integration with Solana serves a growing ecosystem of projects that are now getting developed and launched on Solana, Serum being a notable example.”

Alongside Solana, Tether also supports Algorand, Ethereum, EOS, Liquid Network, Omni, OMG Network, Tron and Bitcoin Cash’s Standard Ledger Protocol.

With more and more people relying on stable coins for trading and hedging purpose, the circulating supply of USDT has risen by 256% since the beginning of the year. With around 60% of USDT still on Ethereum, this has led to an increase in the gas fees and more congestion on the network. The launch of USDT on SOL will help in easing this congestion.

Anatoly Yakovenko, the founder and CEO of Solana, said, “Tether is the lifeblood of DeFi and an important pillar of the crypto community at large. In order for developers to leverage the real potential of Solana, an integration with USDT was absolutely essential.”

Despite being a year old, this integration will help Solana realize its dream to support thousands of transactions at Nasdaq speed. 

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