Key Takeaways
- Solana is a high-performance proof-of-stake blockchain designed for fast, low-cost transactions.
- SOL is its native token, used to pay fees and to secure the network through staking.
- Solana is popular for trading, payments, stablecoins, NFTs and consumer apps.
- Its trade-offs include past network outages and higher hardware demands for validators.
Solana is one of the largest smart contract blockchains and Ethereum's best-known competitor. It's built for speed: transactions typically confirm in under a second and cost a fraction of a cent. This guide explains what Solana is, how it achieves that performance, what people use it for and the risks to be aware of.
What is Solana?
Solana is a public, proof-of-stake blockchain that runs smart contracts, similar to Ethereum. Developers use it to build decentralized exchanges, payment apps, games and NFT marketplaces. Its native cryptocurrency is SOL.
Solana was founded by Anatoly Yakovenko, a former Qualcomm engineer, who described its core idea in a 2017 white paper. The network's main beta launched in March 2020, and development is supported by Solana Labs, the Solana Foundation and a growing set of independent teams.
How does Solana work?
Proof of stake
Like Ethereum, Solana is secured by validators who stake SOL. Holders can delegate their SOL to validators to earn rewards without running hardware themselves.
Proof of history
Solana's signature innovation is proof of history, a cryptographic clock that timestamps events before they're processed. Because validators share a verifiable sense of time, they don't need to spend as long communicating to agree on the order of transactions, which helps the network produce blocks very quickly.
Parallel execution
Most blockchains process transactions one after another. Solana's runtime can execute many non-overlapping transactions at the same time, making better use of modern multi-core hardware.
A single, fast base layer
Instead of relying mainly on layer 2 networks, Solana aims to scale its base layer directly. That keeps apps in one shared environment but requires validators to run powerful machines with fast internet connections.
What is Solana used for?
- Trading: decentralized exchanges and aggregators on Solana handle large volumes thanks to low fees.
- Stablecoins and payments: USDC and other stablecoins move quickly and cheaply on Solana, and some payment companies use it for settlement.
- Memecoins and token launches: low costs have made Solana a hub for new tokens, many of which are extremely speculative.
- NFTs and consumer apps: including games, social apps and loyalty programs.
- DeFi: lending, liquid staking and derivatives. See what is DeFi.
Solana vs Ethereum
| Solana | Ethereum | |
|---|---|---|
| Launched | 2020 | 2015 |
| Scaling approach | Fast single base layer | Base layer plus layer 2 rollups |
| Typical fees | Fractions of a cent | Varies; low on layer 2s |
| Programming language | Rust (mostly) | Solidity (mostly) |
| Popular wallet | Phantom | MetaMask |
| Validator hardware | High-end servers | Consumer-grade possible |
Ethereum has a longer track record, more value locked in DeFi and a more decentralized validator set. Solana offers a faster, cheaper user experience on one chain. Many users are active on both. Compare the two leaders in our Bitcoin vs Ethereum guide.
How to buy, store and stake SOL
SOL is listed on almost every major crypto exchange. To use Solana apps you'll need a Solana-compatible wallet such as Phantom or Solflare; for larger holdings, both can be paired with a Ledger hardware wallet. When withdrawing SOL from an exchange, always select the Solana network.
You can stake SOL directly from most Solana wallets by choosing a validator, or use liquid staking tokens that keep your SOL usable in DeFi. Read our guide to crypto staking to understand rewards and risks.
Risks to consider
- Network outages: Solana suffered several outages in 2021 and 2022 that halted the chain for hours. Reliability has improved significantly, and new validator software such as Firedancer aims to reduce single points of failure, but the history is worth knowing.
- Centralization concerns: high hardware requirements mean fewer people can run validators than on some other networks.
- Speculative tokens: many tokens launched on Solana are highly speculative or outright scams. Learn the warning signs.
- Volatility: SOL's price has historically moved far more than Bitcoin's in both directions.
Frequently asked questions
Is Solana a good investment?
SOL offers exposure to a fast-growing ecosystem but carries higher risk than Bitcoin. It has experienced very large price swings, including a drop of more than 90% during the 2022 bear market. Only invest what you can afford to lose.
Does Solana have a maximum supply?
No. SOL has an inflationary supply with an issuance rate that decreases each year toward a long-term floor, and part of each transaction fee is burned.
Why is Solana so cheap to use?
Solana processes a large number of transactions per block and executes them in parallel, so the cost of each transaction is spread very thin.
Can I use MetaMask with Solana?
Yes. MetaMask, originally built for Ethereum, has added Solana support. Many Solana users still prefer wallets designed specifically for it, such as Phantom or Solflare. Whichever you use, make sure you're sending and receiving on the Solana network.
Convert SOL to dollars with our crypto converter.
This guide is for educational purposes only and is not financial advice.
This content is for educational purposes only and is not financial advice. Cryptocurrency investments are volatile and risky. Some links may be affiliate links — see our disclosure.