What is Solana (SOL)? How it works, uses and risks

Solana is a public blockchain designed to process large numbers of transactions quickly and cheaply on a single network. Its native coin, SOL, pays fees and secures the chain through staking. Solana hosts a large share of today's stablecoin transfers, decentralized exchanges and meme coins. This guide explains how it works, what SOL is used for, how to buy and store it, and what can go wrong.

Solana in one paragraph

Most blockchains face a trade-off between speed, cost and decentralization. Ethereum's answer is to keep its main chain conservative and push activity to layer 2 networks. Solana took the opposite route: make the base layer itself fast, by asking validators to run powerful hardware and by processing many transactions in parallel. The result is a chain where a transfer usually costs a fraction of a cent and confirms in well under a second, at the price of higher requirements for the people who run it.

Who created Solana

Solana was described in a 2017 white paper by Anatoly Yakovenko, a former Qualcomm engineer, who co-founded Solana Labs with Raj Gokal. The network's mainnet beta launched in March 2020. Development is now spread across several organisations: the Swiss-based Solana Foundation supports the ecosystem, Anza (spun out of Solana Labs) maintains the main validator software, Agave, and Jump Crypto builds a second, independent client called Firedancer.

How Solana works

• Proof of stake. Validators lock up SOL, and holders can delegate their coins to them. The more stake a validator has, the more often it is chosen to produce blocks and the more weight its votes carry. Our comparison of proof of work and proof of stake covers the basics.
• Proof of history. Solana's signature idea is a cryptographic clock: a continuous chain of hashes that proves the order and timing of events. Because validators share that clock, they spend less time messaging each other about what happened when.
• Short slots. Leaders take turns producing blocks in slots of roughly 400 milliseconds, following a schedule known in advance.
• Alpenglow. On 21 October 2026 Solana replaced its old TowerBFT voting with a new consensus protocol, Alpenglow, aimed at making transactions final in about 150 milliseconds. We covered the switch and its effects.
• Parallel execution. Each transaction declares which accounts it will read and write, so the runtime (called Sealevel) can process unrelated transactions at the same time on many CPU cores.

Programs (Solana's smart contracts) are mostly written in Rust. Tokens follow the SPL token standard, the Solana counterpart of Ethereum's ERC-20.

What SOL is used for

• Fees. Every transaction pays a base fee of 5,000 lamports per signature (1 SOL = 1 billion lamports), plus an optional priority fee when the network is busy. Half of the base fee is burned.
• Staking. SOL holders delegate to validators and receive a share of new issuance and fees.
• Account deposits. Every account that stores data must hold a small minimum balance of SOL ("rent exemption"). Closing an unused token account returns that deposit.

SOL supply and inflation

SOL has no fixed maximum supply. New coins are issued to stakers: inflation started at 8% a year in 2021 and is designed to fall by 15% each year until it reaches a long-term rate of 1.5%. Burned fees offset a small part of that issuance. If you do not stake, your share of the total supply slowly shrinks, which is one reason most SOL is staked.

According to CoinGecko, SOL traded near $103 on 28 October 2026, with a market value of about $61 billion. It peaked at roughly $293 in January 2025 and fell below $10 at the end of 2022, after the collapse of FTX, one of Solana's best-known early backers. That range is a reminder of how volatile it is.

Solana vs Ethereum vs Bitcoin

More on the other two: what Ethereum is and what bitcoin is.

What people use Solana for

• Stablecoins and payments. USDC and USDT both live on Solana, and the network says it processed a record 557 million stablecoin transfers in September.
• Trading and DeFi. Decentralized exchanges and aggregators on Solana handle large volumes because small trades are cheap. New to the idea? Read what DeFi is.
• Meme coins. Launchpads such as Pump.fun made Solana the main home of meme coins, along with many copycats and scams.
• Tokenized assets and funds. Banks and asset managers have started issuing tokenized funds and stocks on Solana, and US-listed spot Solana ETFs began trading in late October 2025.

How to buy, store and stake SOL

Most large exchanges list SOL. To hold it yourself, use a Solana wallet such as Phantom, Solflare or Backpack, or a hardware wallet that supports Solana. Write down the recovery phrase offline; our guide to seed phrases explains why it is the master key to your coins.

To stake, choose a validator in your wallet and delegate. Your SOL stays in your account, but staked coins only become active, and later withdrawable, at an epoch boundary, so expect a wait of a few days. Liquid staking tokens give you a tradable receipt instead, with extra smart-contract risk. Rewards, lock-ups and risks in general are covered in what crypto staking is.

Risks to know

• Outages. Solana halted several times in 2021 and 2022, and once more for about five hours in February 2024. Fidelity's research unit says there has been no major mainnet outage since then.
• Concentration. The same Fidelity report warns that a small number of large validators, data centres and software clients still hold too much influence.
• Hardware demands. Running a validator needs expensive machines and bandwidth, which limits who can take part.
• Scams and speculation. Cheap token creation means a flood of short-lived coins. Nothing here is investment advice.