Solana (SOL): A Guide to the Fast Blockchain Built for Web3

Solana is among the many blockchains that are being discussed a lot within the cryptocurrency world. It has gained popularity due to its fast processing speeds and lower costs associated with transactions, which allows for the development of an extensive network of decentralized applications, NFTs, and other DeFi protocols. For individuals who are new to cryptocurrency or have prior knowledge about Bitcoin and Ethereum, Solana offers a unique approach toward blockchain technology: build a single high-performance blockchain instead of relying heavily on separate scaling layers.

If you’re wondering whether Solana is worth learning about, this guide will give you the background you need.

Coinminutes has been tracking the development of Solana since its inception as a small project and now as one of the top 10 cryptocurrencies by market cap. In this article, we discuss exactly what Solana is, how it functions, the uses for its native token SOL, and also highlight some of the risks you may encounter prior to investing in Solana, utilizing various numbers and statistics from both official documents, as well as publicly available market data.

1The Basics of Solana

Before diving into the technology, it helps to understand what Solana actually is, how it relates to SOL, and who built it. This section covers the essential background you'll want to know before going any further.

Solana Explained in Simple Terms

Solana is described by its creators as a layer-1 blockchain. This means it is a base-layer blockchain rather than one built on top of another blockchain. Like Ethereum, Solana allows developers to write smart contract code and develop decentralized applications (dApps). These types of apps can be used for decentralized finance (DeFi), non-fungible tokens (NFTs), games, and even simple payment systems.

Solana is a Layer 1 blockchain that supports smart contracts and decentralized applications.

The most notable thing about Solana when I first started researching it several years ago was how different it felt from using Ethereum at a time when gas prices were extremely high. On Solana, transactions are typically confirmed within seconds and cost almost nothing.

Solana vs. SOL: What Is the Difference?

The main difference between "Solana," which is the blockchain network, and "SOL", which is the native coin for that network, is what most beginners tend to mix up. 

As of mid-2026, CoinLore states there are approximately 543.15 million SOL in circulation. MetaMask's tracker has a slightly higher number of SOL coins in circulation as of this date - 580.77 million - due to slight differences between platforms used by both parties to calculate circulating supply at any particular moment in time. You use SOL to pay transaction fees, stake tokens, and interact with apps through your wallet. Simply put, Solana is the network, while SOL is its native token.

Who Created Solana?

Anatoly Yakovenko, one of Solana’s creators and a former Qualcomm engineer, developed the idea for the network after spending over 10 years developing operating systems and wireless protocols at Qualcomm. He wrote the first whitepaper explaining how to implement a new technology called "Proof of History," which is described as a way to increase blockchains' scalability in a 32-page document published in November 2017. After writing this whitepaper, Yakovenko joined forces with Greg Fitzgerald, Raj Gokal and other engineers to develop Solana Labs. The team initially named the project Loom, but it was later renamed Solana.

Anatoly Yakovenko, one of Solana’s creators.

According to CoinStats, there were 500 million tokens released during the official launch of the Solana mainnet on March 20, 2020. Additionally, the Solana Foundation was founded in Switzerland in 2020. According to CoinLore, when SOL launched through an initial coin offering (ICO) in March of 2020, the cost to purchase each token was $0.22. The sale lasted for two days and raised about $1.76 million.

Why Was Solana Created?

The core problem Solana set out to solve was throughput. In its whitepaper review, ChainClarity argues that the main issue with previous blockchain systems such as Bitcoin and Ethereum is that they are slow. A major reason is that validators must agree on the order of transactions before finalizing them. Because the validators need to go back and forth to confirm the transaction sequence, as the number of users increases so does the amount of back and forth communication required, which causes congestion. 

Yakovenko came up with an idea that by having all validators have a shared, verified clock, the validation process would become much faster. This concept became "Proof of History", and the whitepaper stated that it could theoretically reach 65,000 transactions per second (TPS) at maximum capacity (a comparison will be made to actual numbers for Solana’s performance throughout this document).

2How Does Solana Work?

Solana's speed doesn't come from a single trick — it's the result of several technical components working together. The next two sections break down the core idea and why it translates into fast, cheap transactions for you as a user.

The Simple Idea Behind Solana's Technology

Solana utilizes a hybrid model combining Proof of History (PoH) and Proof of Stake (PoS). In detail, PoH relies on the use of a continuous sequence of SHA-256 hashes. Each input or previous hash provides the subsequent hash. A consequence of this process is that the input for hash #10,000 cannot be computed until after all prior hashes (hashes #1 thru #9,999) are calculated. As a result, the chain creates a verifiable record of elapsed time. The other validators do not need to constantly communicate with one another to verify the timeline; they only need to run the same series of hashes.

Solana using a hybrid model combining Proof of History and Proof of Stake.

On top of that shared time mechanism, Solana uses a consensus system called Tower BFT. According to ChainClarity, the original whitepaper outlined 8 core innovations described in the whitepaper, including Sealevel (a parallel execution engine), Turbine (an erasure-coded block propagation system), and Gulf Stream (mem-pool-less forwarding). While the original 8 innovations have made their way onto mainnet, at least 2 (namely the original Archivers storage architecture) have undergone significant architectural changes since launching as Filecoin and Arweave-based solutions.

Why Are Solana Transactions Fast and Cheap?

Much of Solana’s speed comes from parallel execution. Sealevel enables many transactions to be processed at once using multiple CPU cores to execute the operations on different accounts. This allows for a much faster throughput compared to sequential processes.

Solana’s speed is partly driven by Sealevel, processing transactions across different accounts at the same.

In terms of real-world throughput, ChainClarity's data indicates Solana’s historical average is about 2,000-4,000 TPS. However, there have been times when the network reached approximately 7,000-10,000 TPS when memecoins are actively being traded. Again, these numbers represent a fraction of the theoretically possible 65,000 TPS as stated in the whitepaper, yet still far exceed what Ethereum can achieve.

As an added benefit of Sealevel’s ability to process a large number of transactions at one time, fees remain very low. However, it was necessary to make some adjustments over time. The solution implemented by Solana was creating local, per-account fee markets. Therefore, if a specific app causes congestion, users interacting with that app may pay higher fees.

3What Is SOL Used For?

SOL plays several roles within the ecosystem beyond simply being a tradable asset. The sections below outline the main ways you might end up using it yourself.

Paying Transaction Fees

All activities that occur on Solana (sending tokens, using dApps, creating NFTs) are charged a very small amount of SOL. In general, this is around a few cents per transaction. In practice, you’ll need at least a small amount of SOL in your wallet regardless of whether you are mostly holding or trading tokens that aren't SOL.

Staking SOL

Staking SOL is a straightforward method that allows holders to "stake" or lock up SOL with validators on the network to assist with the security of the Solana blockchain network. Staking lets SOL holders participate in network security without needing to run expensive validator hardware themselves. If you're holding SOL long-term, staking is worth considering as a way to put your tokens to work rather than leaving them idle.

Staking SOL lets holders delegate tokens to validators, helping secure the Solana network and potentially earning rewards.

Using SOL in DeFi

SOL is used in several ways across Solana’s DeFi ecosystem, such as providing liquidity, lending and borrowing, and using on decentralized exchanges. We can see from WEEX’s market data that Solana has had a 24-hour trading volume consistently over $2-3 billion across spot markets, which suggests strong trading activity and continued demand across exchanges and DeFi markets. When trading frequently, you may save money quickly compared with using many other blockchains.

Buying NFTs and Digital Assets

SOL has become the main currency to purchase and sell NFTs as well as to mint, buy, and sell NFTs across open marketplaces on the network. As both minting and trade costs have remained relatively cheap, Solana quickly became a popular choice for many of the newer NFT collections as well as the growing memecoin craze which utilized similar token launch protocols.

Payments and Web3 Apps

Beyond trading, SOL and other Solana-based tokens can be used as real-world payment options in addition to trading on Solana. Solana Pay is an open payments platform available to merchants and developers, allowing them to accept direct crypto payments with near-instant settlement and potentially lower costs than traditional payment systems. This can help businesses accept international payments while reducing settlement friction in cross-border payments.

4Why Is Solana Popular?

Solana's popularity stems from a combination of technical performance and ecosystem growth. The points below outline the main reasons it may have caught your attention in the first place.

Fast Transactions

As covered earlier, Solana's sustained throughput is approximately 2,000-4,000 TPS. This represents about 100-200 times the number of transactions that can be processed at the same price on the Ethereum network, even though it falls well short of the whitepaper's original 65,000 TPS target. In practice, most users notice the speed difference the first time they send a transaction or swap a token.

Solana typically processes transactions much faster and cheaper than Ethereum.

Low Transaction Fees

Even during periods of high network activity, Solana's fees generally remain a small fraction of a cent, far lower than what users experience on Ethereum during congestion. This is one of the most commonly cited reasons new users try Solana-based apps.

Growing Ecosystem

Solana is home to many applications: DeFi platforms that allow users to swap and lend, NFT marketplaces, blockchain games, and an emerging memecoin ecosystem due to relatively inexpensive ways to create new tokens. The fact that SOL is listed on 56 exchanges also shows how established it has become across the broader crypto market.

Developer-Friendly and Consumer-Focused Design

The Solana website has an official developer hub that includes web-based development environments, officially supported SDKs for several programming languages, and documentation intended to make it easier for new developers to get started. The Solana Playground is a web environment where you can build and test code for Solana applications directly in your web browser so you don't have to install anything local to begin working with Solana. If you want to test Solana right away, you can use the "solana airdrop 5" command to request free devnet SOL in your terminal.

Unique Angle: Solana as a "Crypto App Store"

When I've come to explain Solana to non-crypto users, I’ve used the description of Solana as something like an app store rather than just an application. An app store hosts many different apps developed by many different development groups with many uses. In that manner, Solana is similar to an app store where there are many different protocols (trading platforms, gaming platforms, payment tools) built on the Solana platform using the same low-cost, fast technology at its base. The framing above helps some Coinminutes users understand how Solana’s value is not based on a particular function or use, but rather, the number of functions and projects that exist utilizing the Solana platform.

Solana can be understood like an app-store-style platform.

5Solana vs. Ethereum: Key Differences Everyone Should Know

Although Solana and Ethereum both support smart contracts, there are significant differences in their approaches. In order to facilitate an easy-to-read side-by-side comparison, we have compiled all of the above-mentioned information into a single table below.

Comparison table: Key differences between Solana and Ethereum.

There isn’t a universally better choice between these two networks. However, each has its own unique characteristics that reflect trade-offs involving speed, decentralization, and validator accessibility. Ultimately, it is likely that users will use each network for specific reasons as opposed to having to choose one or the other.

6Risks and Criticisms of Solana

No blockchain is without trade-offs, and Solana is no exception. The following points highlight the main risks you should be aware of before getting involved.

Network Reliability

Solana has had significant issues with network availability, as reflected in ChainClarity’s review of the network’s outage history. The most notable were: 

• A 17 hour downtime event on September 14, 2021 due to an excessive volume of legitimate (bot) transaction submissions overwhelming the transaction validation capacity of the validators, processing ~400,000 TPS of spam during a token launch 

• A 7 hour downtime event on May 31-June 1, 2022 resulting from NFT minting bot activity, creating hundreds of thousands of duplicate transactions

• A 4.5 hour downtime event on June 1, 2022 caused by a software error in the handling of transaction throughput at scale

If you're using Solana for anything time-sensitive, it's worth keeping this history in mind, even though fixes like local fee markets and QUIC-based networking have since been introduced to reduce this risk.

Centralization Concerns

Running a competitive Solana validator requires significant hardware, as shown in the comparison table above: 256 to 512GB of RAM, a high-end multi-core CPU, 10Gbps network connection, etc., and estimated hosting cost for each validator is $5,000 - $10,000 per year.

Due to the need for such expensive equipment, there are currently only around 1500-2000 active validators on Solana compared to approximately 1 million validators on Ethereum. This has led to many discussions among members of the Solana community regarding potential trade-offs related to decentralization.

Solana’s high validator hardware requirements support performance but create decentralization trade-offs.

Smart Contract and DeFi Risks

As with all smart contract platforms, applications that run on Solana can have all of the typical DeFi risks such as bugs, exploits, and failures at the protocol level. As with any DeFi application, you will want to conduct your own research prior to adding your money to an application (such as an auditor for their history) rather than simply using the reputation of the underlying blockchain.

SOL Price Volatility

Like many cryptocurrencies, SOL has experienced significant price volatility. According to CoinLore, the highest price that SOL has been sold for is $294.87 on January 19, 2025, while the lowest price was $8.13 during December 2022.

Currently, price tracking tools are showing SOL's price at about $72-$74 as of mid-2026. CoinLore shows a 12 month volatility percentage of 72% and a max historical draw down percentage of approximately 96%. Be aware that if you invest in or trade SOL you will need to expect the same type of price fluctuations to affect your investment portfolio.

Wallet Safety Risks

The security of Solana was affected by an incident that targeted users. The exploit is reported as having been successful in compromising over 7,000 users' wallets through major Solana wallet providers (Phantom and Slope) in 2022. Therefore, all individuals that own SOL have a need to protect their wallets by protecting their seed phrase, and will be responsible for the protection of their digital asset when connecting to unfamiliar dApps.

7How to Get Started With Solana Safely

For readers ready to explore Solana firsthand, a cautious, step-by-step approach reduces unnecessary risk. The steps below outline a practical path you can follow from research to your first transaction.

Step 1: Understand Solana Before Buying SOL

If you have plans to invest in SOL (or buy a Solana-based coin), it is important to understand the fundamentals that were discussed earlier, specifically, what Solana does, how validation of transactions occurs on the network, and what your potential exposure may be. You can use these resources to get started: Coinminutes, official Solana documentation, independent data platforms such as CoinLore, etc. Use them to establish your knowledge base before making any investment decisions.

Step 2: Choose a Solana Wallet

Solana requires a wallet in order to be able to hold, send, receive, or stake your SOL as well as allow you to interact with other dApps. Some popular, non-custodial choices that offer browser extension and mobile app support are Phantom and Solflare. In addition, if you prefer to keep your private keys offline via hardware wallet, you can use Ledger to access your Solana wallet.

Several compatible wallet options for holding, sending, staking SOL, and interacting with dApps.

Step 3: Get a Small Amount of SOL

Rather than investing significant amounts of money, new users will have an opportunity to acquire a relatively small amount of SOL through a reputable exchange. The Solana's Quick Start documentation provides information about how you can get up to 5 SOL at a time on the devnet by entering an airdrop command in the Solana Playground terminal. If the terminal is rate-limited, you may use Solana's public web faucet. The terminal option gives developers and beginners a risk-free way to experiment with the network.

Step 4: Try a Basic Transaction

Trying a small transaction (even just transferring SOL from one wallet that you own to another) is probably the easiest way for you to see how quickly your transactions get confirmed and what it costs in terms of fees. On devnet, this can be done without risking real funds. This type of practical experience is part of what the official Solana Quick Start guide helps newer developers do as they go through this process on their own before any real money is involved.

Step 5: Explore the Ecosystem Slowly

Once comfortable with the basics, you can gradually explore Solana's ecosystem: trying a DeFi swap, browsing an NFT marketplace, or testing a Solana-based payment app. Moving slowly and starting with small amounts, such as $10-$20 worth of SOL, reduces your exposure while allowing hands-on learning at your own pace.

8A Final Word on Solana

Solana represents one of the more technically ambitious attempts to solve blockchain scalability through a single, high-throughput chain rather than a layered scaling approach. Its combination of Proof of History and Proof of Stake, along with a growing ecosystem spanning DeFi, NFTs, payments, and even mobile hardware, has made it one of the most active networks in the industry. At the same time, its history of network outages, centralization concerns tied to validator hardware costs, and the inherent volatility of SOL are all factors beginners should weigh carefully.

Coinminutes will continue tracking Solana's development, including major upgrades and ecosystem shifts, as the network matures. For now, understanding the fundamentals covered in this guide is the most useful first step for anyone considering getting involved, whether as a developer, a user, or simply someone trying to make sense of where Solana fits in the broader crypto landscape.