In addition to automated chart patterns, altFINS’ analysts conduct technical chart analyses of top 30 cryptocurrencies. We call these Curated Charts and they evaluate 5 core principals of technical analysis: Trend, Momentum, Patterns, Volume, Support and Resistance.
Solana (SOL) technical analysis:
Trade setup: Pullback near $150 support zone is potentially an attractive entry area. Forecast: $200. (set a price alert).
Trend: Neutral on Short-Term basis and Uptrend on Medium- and Long-Term basis.
Momentum is Bearish but inflecting. MACD Line is below MACD Signal Line and RSI is below 45 but momentum may have bottomed since MACD Histogram bars are rising, which suggests that momentum could be nearing another upswing.
OBV (On Balance Volume): is flat, indicating that volume on Up days is equal to volume on Down days. Hence, demand from buyers and supply from sellers are in equilibrium
Support and Resistance Nearest Support Zone is $125, then $80. The nearest Resistance Zone is $150, then $200.
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What is Solana (SOL)?
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Solana is a public base-layer blockchain protocol that optimizes for scalability. Its goal is to provide a platform that enables developers to create decentralized applications (dApps) without needing to design around performance bottlenecks. Solana features a new timestamp system called Proof-of-History (PoH) that enables automatically ordered transactions. It also uses a Proof of Stake (PoS) consensus algorithm to help secure the network. Additional design goals include sub-second settlement times, low transaction costs, and support for all LLVM compatible smart contract languages.
Solana’s origins date back to late 2017 when founder Anatoly Yakovenko published a whitepaper draft detailing a new timekeeping technique for distributed systems called Proof of History (PoH). In blockchains like Bitcoin and Etheruem, one of the limitations to scalability is the time required to reach a consensus on the order of transactions. Anatoly believed his new technique could automate the transaction ordering process for blockchains, providing a key piece that would enable crypto networks to scale well-beyond their capabilities at the time. Anatoly later teamed up with former Qualcomm colleague Greg Fitzgerald to build a single blockchain network in Rust that used PoH as its “internal clock.” The two released the first internal testnet (with demo) and official version of the project’s whitepaper in Feb. 2018. Another former Qualcomm cohort, Stephen Akridge, suggested that offloading signature verification to graphics processors could further increase transaction throughput (i.e., scalability). Anatoly recruited Greg and Stephen, and three others to found the company that would eventually become Solana Labs.
The founding team included former Apple engineers in addition to the Qualcomm veterans. They initially named the project Loom but later rebranded it to Solana to avoid confusion with the Ethereum Layer-2 scaling solution, Loom Network. Solana Labs began raising funds to build its new crypto network in Q2 2018.
Between Apr. 2018 and Jul. 2019, the team raised a little over $20 million in various private token sales. They announced the sales as a single Series A in late-July 2019. The fundraising effort ran parallel to Solana’s work on the protocol, which went through several permissioned testnet phases before the team announced its public incentivized testnet, called Tour de SOL, in Q3 2020. The first stage of Tour de SOL went live in Feb. 2020, and it continues to run alongside the Mainnet Beta version of Solana today.
Solana launched on Mainnet Beta in Mar. 2020, shortly after raising $1.76 million in a public token auction hosted on CoinList. The project’s beta network featured basic transaction capabilities and smart contract support. But it did not include any staking rewards as Solana was still determining its ongoing issuance schedule. The current plan is to upgrade from its current beta stage to a more production-ready version in either later 2020 or early 2021. At the moment, Solana Labs remains a core contributor to the Solana network, while the Solana Foundation helps fund ongoing development and community building efforts.
Solana’s highly performant blockchain is built using the eight innovations: Proof of History: A clock before consensus Tower BFT: A PoH-optimized version of PBFT Turbine: A block propagation protocol Gulfstream: Mempool-less transaction forwarding protocol Sealevel: World’s first parallel smart contracts run-time Pipelining: Transaction processing unit for validation Cloudbreak: Horizontally-scaled accounts database Archivers: Distributed ledger storage Proof of History: A clock before consensus The biggest challenge in distributed networks is agreeing on the time and sequence in which events occurred as nodes within the network can’t trust the timestamp on messages received from other nodes. Solana attempts to solve this with Proof of History (PoH) by creating a cryptographically secure source of time across the network. Proof of History is a high-frequency Verifiable Delay Function (VDF), which requires a specific number of sequential steps to evaluate but produces a unique output that can be publicly verified. This means that nodes can create the next block without having to coordinate with the entire network first because they can trust the timestamp and ordering of the messages that they’ve received. The result is a reduction in consensus overhead.
Tower BFT: A PoH-optimized version of PBFT On top of Proof of History, Solana runs its consensus mechanism called Tower BFT, which is a PBFT-like algorithm that leverages the synchronized clock enabled by PoH to achieve consensus on network transactions. At a high level, each time a node on the network votes on a particular fork, they commit to a certain amount of time where they are locked out from voting on an opposing fork. This period where they are locked out grows exponentially as they continue to vote on the same fork until they achieve a maximum lockout at 32 votes for the same fork. Nodes on the network will only receive inflation rewards when they reach this maximum vote lockout; therefore, it is in their interest to continue voting on the fork they believe the supermajority of the network is voting for.
Turbine: A block propagation protocol Solana transmits blocks (communicates blocks between validators) independently of consensus, using a separate but connected protocol called Turbine. Turbine borrows heavily from BitTorrent and is optimized for streaming. As a block is streamed, it is broken up into small packets along with erasure codes, and then fanned out across a large set of random peers.
Gulf Stream: Mempool-less transaction forwarding protocol In a high-performance network, mempool management presents a new class of problems when it comes to the cost of filtering and maintaining a rising number of unconfirmed transactions. Gulf Stream functions by pushing transaction caching and forwarding to the edge of the network. Since every validator knows the order of upcoming leaders (block producers) in Solana architecture, clients and validators forward transactions to the expected leader ahead of time. This allows validators to execute transactions ahead of time, reduce confirmation times, switch leaders faster, and reduce the memory pressure on validators from the unconfirmed transaction pool. One consequence of knowing leaders ahead of time is an increased risk of validator collusion since the network allows more time for them to coordinate. Solana’s fast block times might mitigate the opportunity for collusion because it limits the time allowed to plan an attack.
Sealevel: Parallel smart contracts run-time Solana built Sealevel, a hyper parallelized transaction processing engine designed to scale horizontally across GPUs and SSDs. Most other blockchains are single-threaded computers. In contrast, Solana can support parallel transaction execution (in addition to signature verification) in a single shard. The solution to this problem borrows heavily from an operating system driver technique called scatter-gather. Transactions specify upfront what state they will read and write while executing. Sealevel is able to find the non-overlapping transactions occurring in a block and execute them in parallel (called parallel execution) while optimizing how read and writes to the state are scheduled across an array of RAID 0 SSDs. Sealevel is a VM that schedules transactions, but it doesn’t actually execute transactions in the VM. Instead, Sealevel hands off transactions to be executed on hardware natively using bytecode called the Berkeley Packet Filter (BPF).
Pipeline: A Transaction Processing Unit for validation optimization The process of transaction validation on the Solana network makes extensive use of an optimization common in CPU design called pipelining. Pipelining is an appropriate process when there’s a stream of input data that needs to be processed by a sequence of steps and there’s different hardware responsible for each step. On the Solana network, the pipeline mechanism, the Transaction Processing Unit (TPU), progresses through Data Fetching at the kernel level, Signature Verification at the GPU level, Banking at the CPU level, and Writing at the kernel space. By the time the TPU starts to send blocks out to the validators, it’s already fetched in the next set of packets, verified their signatures, and begun crediting tokens. The GPU parallelization in this four-stage pipeline allows the Solana TPU to operate at a high performance.
Cloudbreak: Horizontally-scaled accounts database Methods to scale computation using these other innovations could result in memory bottlenecks. Memory is used to keep track of accounts and can struggle to maintain performance due to a lack of memory size and limited access speeds. Cloudbreak was designed to optimize for concurrent reads and writes spread across a RAID 0 configuration of SSDs. Each additional disk adds storage capacity available to on-chain programs, while also increasing the number of concurrent reads and writes programs can perform when executing. This goes hand in hand with Solana’s transaction design, allowing for pre-fetching accounts from disk and preparing the runtime for execution, also enabling nodes on the network to begin executing transactions before they are encoded into a block. All of this aims to help reduces block times and confirmation latency on the network.
Archivers: Distributed ledger storage Storing and maintaining data on a high-performance network is likely to become a primary centralization vector. If storage costs are very high, only well-funded entities will be able to act as validators and participate in consensus. On Solana, data storage is offloaded from validators to a network of nodes called Archivers. Archivers do not participate in consensus. The history of the state is broken into many pieces and erasure codes. Archivers store small parts of the state. Every so often, the network will ask the Archivers to prove that they’re storing the data they are supposed to. Solana leverages Proofs of Replication (PoRep), which are borrowed heavily from Filecoin. Archivers are not currently implemented and are on the long term roadmap. They will be rolled out based on network data demands.
Supply Curve Details
Vesting Schedules Solana’s three pre-launch private sales all came with a nine-month lockup after the network launched. The tokens issued in these sales should become liquid around Jan. 7, 2021. The project’s public auction sale (held in Mar. 2020) did not come with a lockup schedule, and the SOL tokens distributed in that sale (which totaled 1.6% of the initial supply) were fully liquid once the network launched. The founder’s allocation (12.5% of the initial supply) will also be subject to a nine-month lockup post-network launch. After the lockup period ends, these tokens will vest monthly for another two years (expected to fully vest by Jan. 2023). The Grant Pool and Community Reserve (both overseen by the Solana Foundation) contain ~38% of the initial SOL supply combined. These allocations began to vest in small amounts since Solana’s mainnet launch. One million Grant Pool tokens vested every three months for the first nine months, and 35 million Community Reserve tokens vested in 5 million token increments over the same timeframe. The entire allocations for these categories will unlock in Jan. 2021.
The Solana Foundation’s allocation began vesting in small increments every month following the network’s launch. The foundation also unlocked 11,365,067 SOL at launch to lend to a market maker for six months. After disclosing this information to SOL holders, the team opted to burn an equivalent amount of tokens from the foundation’s allocation. Ongoing Emissions Solana validators voted to enable “pico-inflation” on Dec. 24, 2020. The SOL supply is now inflating at an annual rate of 0.1%, with newly minted tokens going to validators and stakers in proportion to their staked amounts. This relatively low inflation rate is only temporary and will be replaced by a more substantial and permanent inflation proposal at some point in 2021. This “final” inflation proposal includes an initial annual inflation rate of 8%. However, this inflation rate will decrease at an annual rate of 15% (“dis-inflation rate”). Solana’s inflation rate will continue to decrease until it reaches an annual rate of 1.5%, which the network should reach in about ten years or 2031. 1.5% will remain the long-term inflation rate for Solana unless the network’s governance system votes to change it.
Solana’s Proof of Stake (PoS) based consensus mechanism, specifically called Tower BFT, leverages the network’s Proof of History (PoH) technique as a clock before consensus to reduce communication overhead and latency. Each time a validator votes on a particular fork, voting is restricted to a fixed period of hashes called a slot. The current network setting has around 400 milliseconds (ms) for one slot. Every 400ms, the network has a potential rollback point, but every subsequent vote doubles the amount of time that the network would have to stall before it can unroll that vote. In short, secondary votes make it much harder to undo the transactions executed in a particular slot. Therefore, a block with several votes has a greater chance of remaining a part of the chain permanently. As an example, each validator has voted 32 times in the last 12 seconds. The vote 12 seconds ago now will have a timeout of 2³² slots or roughly 54 years. Effectively, this vote will never be rolled back by the network. Whereas the most recent vote has a timeout of two slots or about 800ms. As new blocks are added to the ledger, old blocks are increasingly likely to be confirmed because the number of slots old votes is committed to doubles every slot. Tower BTF offers finality once two-thirds of network validators have voted on some order of events. Once transactions are finalized, they can’t be rolled back.
The Solana mainnet is planned to operate in delegated-Proof-of-Stake (dPoS), in which token holders can participate in the block production process and earn rewards by either stake token and become a validator themselves, or delegate their tokens to validators they trust. Any individual can become a validator on the network and contribute to the overall security of the protocol. There is no minimum staking requirement, although the leader selection process (which validator gets to propose the next block) is stake-weighted. The network architecture is designed to scale with bandwidth and hardware, utilizing GPU cores to parallelize execution and reduce verification times. Due to the GPU requirement, hardware expectations are slightly higher than some protocols. Estimated costs for a satisfactory setup are around $5,000.
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