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title: $SOL - CODEC Analisys

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title: $SOL - CODEC Analisys

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## [CODEC -$SOL]
- Overview of the Protocol and Metrics
- Protocol Summary
The Protocol Summary should provide a brief introduction to the underlying protocol of the asset and its token mechanics:
-- Peer-to-peer or peer-to-liquidity pool lending protocol.
-- Asset type - native or wrapped:
-- Asset (token) use - governance token used to control the protocol parameters, utility token giving for example discounts on fees, work token, etc.
*Solana (SOL) is the name of the native token of the Solana blockchain. Mainly focused on the speed and price of transactions, Solana proposes a new blockchain structure based on the high frequency Verifiable Delay Function “Proof Of History”. As its name indicates, this proof of order verification and passage of time between events, together with its Tower BFT (Byzantine Fault Tolerance) consensus mechanism, place Solana at the top of the blockchain in terms of effectiveness and accessibility.* 
*Just like Satoshis are for Bitcoin, Solana has Lamports. Small portions (0.0000000000582) of SOL that are used to pay transaction fees or running smart contracts. Together with the Solana Staking System are the two the main utilities. SOL tokens also serve as the underlying collateral for lending & borrowing protocols*.
![](https://i.imgur.com/01ls3kf.png)
[Source: Solana Medium ](https://medium.com/solana-labs/proof-of-history-a-clock-for-blockchain-cf47a61a9274)
Context:PoH Timestamp.
-- High-level history of the project and token:
Founding members: [Solana Labs](https://solana.com/es)  & [Solana Foundation ](https://solana.org/) [(Anatoly Yakovenko, Raj Gokal, Greg Fitzgerald)](https://www.sec.gov/Archives/edgar/data/0001735643/000173564319000002/xslFormDX01/primary_doc.xml)
-- Fundraising History: 
 Apr 2018. Seed Sale. 79.9M Tokens. $0.04/token. $3.1 M Raised
Jun 2018. Founding Sale. 63.1M Tokens. $0.2/token. $12.6 M Raised
Jul 2019. Validator Sale. 25.5M Tokens. $0.225/token. $5.7 M Raised
Feb 2020. Strategic Sale. 9.1M Tokens. $0.25/token. $2.3 M Raised
-- Public ICO date: 10 PM PST on March 23 2020 until 4 AM PST on March 24 2020. Auction Type: Dutch Auction - Dates: March 17 Deposits Open & Pre-bids start. Marc 23: 6 hours for live auction. Participants:  Non-US. Starting Bid: $4/token. Reserve Price: $0.04/token.  Minimum Bid: $100. Supply: 8M (1.6% of the genesis block distribution)
-- Initial price and valuation: Price floor: $0.04/SOL and the public auction closed at $0.22/token.
- Capital raised (in USD & crypto terms): $1.76M *Sold Out*
-- ![](https://i.imgur.com/qEvmVYz.png)
[Source: Solana Medium](https://medium.com/solana-labs)
-- How much of the ICO raised was converted into fiat (described in both terms of that fiat currency and the amount of tokens?
Since the [investment rounds](https://https://icodrops.com/solana/#:~:text=Solana%20is%20a%20high%2Dthroughput,like%20sharding%20or%20layer%2Dtwo) were made through USDC / USD, the raised amount was originally Fiat.
-- Legal structure of the protocol:
[Solana Labs, Inc](https://www.sec.gov/edgar/browse/?CIK=1735643).
[Solana Foundation Non-Profit Organization.](https://solana.org/).

- Tokenomics
Purpose: to understand circulating supply of the token, as well as how its mechanics might impact the supply in the future
-- What was the way of issuing and distributing the tokens? What is the current token distribution?: 
*When it comes to the initial 500M genesis block tokens distribution, we can name the following six distributions:*
![](https://i.imgur.com/bOstyPG.png)
*Source: [Coinlist](https://coinlist.co/solana?*mc_cid=e6de888757&mc_eid=[UNIQID])
-- Pre ICO Investors: 
*--  Led by [Multicoin Capital](https://multicoin.capital/)
-- [Distributed Global](http://www.distributedglobal.com/)
-- [Blocktower Capital](https://www.blocktower.com/)
-- [Foundation Capital](https://foundationcapital.com/)
-- [Blockchange VC](http://www.blockchange.vc/)
-- [Slow Ventures](http://slow.co/)
-- [NEO Global Capital](https://www.ngc.fund/)
-- [Passport Capital](https://www.passportcapital.com/)
-- [Rockaway Ventures](https://www.rockawaycapital.com/en/)*

-- Proportion of tokens held by the project team versus investors versus public: 
*Purchaser Distribution:*
 ![](https://i.imgur.com/vft1RmB.png)
Source: [Coinlist](https://coinlist.co/solana?mc_cid=e6de888757&mc_eid=[UNIQID])
*The current circulating supply is ◎333,435,834 with a total supply of ◎519,977,847. The initial total supply was ◎500,000,000, and Solana Foundation has removed ◎11,365,067 in May 2020, we can say that the distribution has changed over the time and will keep changing since the projected supply for the year 2032 is ◎746,913,269.*
- ![](https://i.imgur.com/u9R7xGV.png)
Source: Messari

-- Burn Mechanism:

*As a part of Solana's security design, all fees will be paid in SOL and will be burnt, reducing total supply. This deflationary mechanism to SOL supply incentivizes more token holders to stake which results in increased network security*
-- Staking Mechanism: 

*Users can Stake their SOL tokens by delegating them to validators who process the transactions and thus run the network. Token holders can enjoy this financial model by sharing both profits and risks with the rest of the delegators.*

*One of the goals of validators is also to run the blockchain as quickly and correctly as possible, which is why the more transactions the validator writes, the greater the rewards and their delegates get.*

*In the case of malicious behavior, such as creating invalid transactions, the validator will be penalized with a removal or destruction of a portion of the validator stake in response to the actions. Generating a negative impact on all the token holders that have delegated to that validator.*
-- Slashing mechanism:
*"The proposed solution to the nothing at stake problem in Proof
of Stake systems. When a proof of voting for a different branch
is published, that branch can destroy the validators bond. This is an
economic incentive designed to discourage validators from confirming multiple branches."* Yakovenko, A. (2017). Solana: A new architecture for a high performance blockchain v0.8.13. Solana Labs.
-- Tokens on vesting schedule

[Nine-month lockup after network launched for the three pre-launched private sales](https://coinlist.co/solana?mc_cid=e6de888757&mc_eid=[UNIQID]).

Nine-month lockup after network launched for the 12.5% of the initial supply, these tokens will vest monthly for another two years  and are expected to be fully vest by January 2023.

The Grant Pool and Community Reserve, represents the 38% of the initial total supply. This tokens together started to vest in small amounts since Mainnet launch. The entire allocation for this two categories was totally unlocked in Jan 2021
![](https://i.imgur.com/WZWvvQ7.png)
Source: Messari
Context: Detailed Liquid Supply
-- Allocated tokens for specific purpose: N/A
- On Chain Fundamentals: 
-- Active Addresses: With a total of 77MM total transactions, [Solana counts with more than 454.7k active wallets. (07/06)](https://analytics.solscan.io/public/dashboard/8d888828-baae-47b9-948b-d087e5de1411)
![](https://i.imgur.com/bNBj9SK.png)
Source: Solscan
Context: Daily active addresses

--Details and amounts of any fees generated by the protocol: 

*Each transaction sent through the network, to be processed by the current leader validation-client and confirmed as a global state transaction, contains a transaction fee. We can estimate the total fee revenue generated by taking the total number of transactions and the average cost per transaction*

*In an attempt to create a sustainable economy through protocol-based rewards and transaction fees, a fixed portion (initially 50%) of each transaction fee is burned, with the remaining fee going to the current leader processing the transaction.*

*For more information about how fees works on Solana, visit [this link](https://docs.solana.com/implemented-proposals/transaction-fees#congestion-driven-fees).*
![](https://i.imgur.com/OZiAqHs.png)
Source: TokenTerminal
Context: Solana Revenue (06/06)

- Audits
-- Solana’s software architecture was audited by [Kudelski](https://solana.com/solana-security-audit-2019.pdf) in November 2019.
![](https://i.imgur.com/xV2yAK1.png)
Source: Solana Medium
Context: Innovation Dimension Rankings.
*--Kudelski Security maintains a sterling global reputation and its audits are considered gold standard - It was recognized by Fortune 500 as a Preferred Vendor.*

- DEX's Volume & Liquidity 
-- Serum
As of 06/06/2022, SOL/USDC pair has a 7-day trailing volume of $248mn, well in excess of the required minimum of $21mn. 
An interactive plot of recent volume is available [here.](https://projectserum.vybenetwork.com/#/markets/9wFFyRfZBsuAha4YcuxcXLKwMxJR43S7fPfQLusDBzvT)
![](https://i.imgur.com/TnMxscl.png)
Source: VybeNetwork

--Orca
*Orca hosts a [SOL/USDC pool](https://www.orca.so/pools) that also shows sufficient volume and liquidity.*

-- Raydium
*A [SOL/USDC pool](https://raydium.io/pools/) is also available on Raydium, with approximately $46mn of liquidity. Historical volume information is not readily available.* 

- Oracles
-- *Pyth [provides data](https://pyth.network/price-feeds/#Crypto.SOL/USD) feeds to SOL.*
- Downside Risks
--How often the asset drops significantly in price ? 
*SOL has suffered a downside from NOV-2021 until today. The motives are attached to the bear market situation*
- Bridges: N/A
- DeFi Presence
--Does the token have utility outside of its protocol?:
*Yes, besides the utility within the Solana Ecosystem, SOL is usable as a peer to peer payment system in multi-chain platforms such as OpenSea NFT marketplace, multi-chain wallets such as Trust Wallet, and multi-chain CEX’s such as Binance.*
--The protocols into which the asset is integrated: *Categorized as one of the Top 10 assets with highest MC in the entire “Crypto Ecosystem”,  SOL is integrated in mostly all dApps, CEX’s & DEX’s, NFT Marketplaces across multiple networks. Within SOL ecosystem, Solana has recorded over 77M transactions in all the dApps builded on it.* 
-- DeFi dApps where SOL is integrated: ![](https://i.imgur.com/1s5pELF.jpg)
Source: Solanians
- Summary of notables risks or red flags:
-- Concentration of stake: At the time of writing this, Solana Network counts with [1785 active validators](https://solanabeach.io/validators), wich the biggest 23 (1,2%) [runs the 29% of the total amount of SOL staked (111M / 385M )](https://solanacompass.com/validators/)
--Considerations: Solana Blockchain faced a network crashing in mid-sept 2021, mid-Jan 2022 and 7 hours of downtime last beginning of may 2022. 

- Legal Specification
-- Token Issuer: Solana Labs
-- Governance: Solana Foundation posses the intelectual property 
-- Jurisdiction(s) in which the token was issued: San Francisco, California, US.
--Was the token issued as part of a regulatory process (e.g., securities offering)? : No, SOL is not registered with the SEC as a security token.

