What is Solana (SOL)? A Plain-Language Explainer
Solana is a fast, low-cost blockchain whose SOL token pays fees and secures the network. Learn how it works, its history, risks, and rivals.
Key points
- Solana is a layer-1 blockchain designed for high speed and low transaction costs.
- SOL is used to pay fees, stake for security, and participate in governance-like decisions.
- Solana has suffered major outages and faces criticism over validator hardware requirements.
What is Solana?
Solana is a public blockchain — a shared, tamper-resistant ledger that anyone can read and anyone can use to send transactions. It is often described as a layer-1 network, meaning it is a base chain rather than a system built on top of another blockchain. Its native token is SOL.
The project was designed to solve a common problem: most blockchains are either fast and expensive or slow and cheap. Solana aims to be both fast and cheap, so that applications can handle large numbers of users without fees eating into every transaction. As of September 29, 2026, Solana had a market capitalisation rank of 7 and a circulating supply of 587,851,508 SOL, according to the data provided.
SOL is not a company share or a claim on profits. It is a cryptoasset used to pay for network operations, reward validators, and take part in staking.
How Solana works, in plain language
Like other blockchains, Solana keeps a record of transactions and uses many independent computers — called validators — to agree on that record. What makes Solana different is the set of engineering choices it makes to reach agreement quickly.
Proof of stake
Solana uses a proof-of-stake system. Instead of mining with energy-hungry computers, validators lock up SOL as collateral. If they behave honestly, they earn rewards. If they try to cheat or go offline, they can lose some of their stake. This is how the network tries to keep validators honest without relying on raw computing power.
Proof of History and parallel processing
Solana’s best-known technical feature is called Proof of History. It is not a separate consensus mechanism; rather, it is a way of timestamping transactions so that validators can agree on their order more efficiently. Think of it as a cryptographic clock that helps the network avoid endless back-and-forth about what happened when.
Solana also processes many transactions at the same time rather than one after another. This is possible because transactions that do not touch the same data can be handled in parallel. The combination of fast ordering and parallel execution is what allows Solana to aim for high throughput and low fees.
Validators and hardware
Running a Solana validator requires powerful hardware and a fast internet connection. That keeps the network fast, but it also means fewer people can afford to run a validator compared with some other chains. This trade-off is central to the debate about how decentralised Solana really is.
What SOL is used for
- Transaction fees: Every transaction on Solana costs a small amount of SOL. Fees are usually tiny, but they are paid in SOL.
- Staking: Holders can stake SOL to help secure the network and earn rewards. Staking can be done directly or through a validator.
- Network security: Validators put SOL at risk. The more value staked, the more expensive it becomes to attack the network.
- Applications: SOL is used across apps built on Solana, including decentralised exchanges, lending protocols, and NFT marketplaces.
- Governance-like participation: Some decisions about the network and its ecosystem are discussed and voted on by token holders and validators, though the process is not identical to corporate governance.
SOL is not required to read the blockchain, but it is required to write to it. That gives it a clear role in the network’s day-to-day operation.
Notable history
Solana was founded by Anatoly Yakovenko, a former engineer at Qualcomm, and launched in 2020. It quickly gained attention for its speed and for attracting developers building consumer-friendly apps.
The network has also had well-documented problems. In September 2021, Solana suffered a major outage that lasted several hours. In 2022, it experienced further disruptions, including a period when block production stalled. These outages became a common criticism: a blockchain that stops working is not useful, no matter how fast it is when it is running.
In November 2022, the collapse of FTX, a major crypto exchange, hit Solana hard because FTX and its affiliated trading firm Alameda Research had been large holders of SOL and investors in the Solana ecosystem. The event damaged confidence and led to a sharp drop in activity and value, though the network continued to operate.
More recently, Solana has focused on improving reliability and on attracting developers in payments, consumer apps, and decentralised finance. It has also become known for a vibrant memecoin trading scene, which has brought both attention and criticism.
Main risks and criticisms
- Outages: Solana has a history of network-wide outages. Each one raises questions about whether the design is robust enough for serious use.
- Centralisation concerns: High hardware requirements mean fewer validators. Critics argue this makes the network more vulnerable to collusion or censorship than chains with lower barriers to entry.
- Validator economics: Running a validator is expensive, and rewards may not always cover costs for smaller operators, which could push consolidation.
- Competition: Solana competes with other fast, low-cost chains and with layer-2 networks built on Ethereum. Developers and users can switch.
- Token concentration: Large holders, including venture investors and foundations, can have outsized influence on the market and on ecosystem decisions.
- Regulatory uncertainty: Crypto rules vary by country and can change. This affects exchanges, apps, and token holders.
None of these risks is unique to Solana, but together they explain why some people remain cautious about the network despite its technical strengths.
How Solana compares with alternatives
Solana is often compared with Ethereum, BNB Chain, and newer layer-1 networks. The table below summarises the main differences in plain terms.
| Network | Design focus | Typical fees | Trade-offs |
|---|---|---|---|
| Solana | High speed, low cost, single base layer | Very low | Higher hardware needs, past outages |
| Ethereum | Security and decentralisation, with layer-2 scaling | Higher on base layer, lower on layer 2 | More complex user experience |
| BNB Chain | Low cost, linked to Binance ecosystem | Low | More centralised validator set |
| Other layer-1s | Varies; many aim for speed or low cost | Varies | Smaller ecosystems, less liquidity |
The key difference is philosophy. Ethereum prioritises broad participation and relies on separate layer-2 networks for scale. Solana puts speed and low cost into the base layer itself, accepting that validators need powerful machines. Neither approach is strictly better; they reflect different priorities.
For users, the practical question is what they want to do. If they need very cheap transactions and are comfortable with Solana’s trade-offs, it can be a good fit. If they value maximum decentralisation or want access to Ethereum’s large developer community, they may prefer another chain.
What to watch
Solana’s future depends on whether it can keep improving reliability while staying fast and cheap. Watch for network upgrades, changes to validator requirements, and growth in real applications beyond trading. As of September 29, 2026, SOL ranked 7th by market capitalisation with a circulating supply of 587,851,508 tokens. That position reflects both the network’s popularity and the competition it faces.
Disclaimer: This article is for information only and is not investment, financial or trading advice. Cryptocurrency prices are highly volatile. Always do your own research.
