What Is Solana (SOL)? How It Works, Use Cases and Risks
What is Solana? A plain-English guide to how the Solana blockchain and SOL token work, what they are used for, how supply works, and the main risks to know.
Solana is a high-speed public blockchain designed for fast, low-cost transactions, and SOL is its native coin, used to pay transaction fees and to stake in securing the network. It is best known for processing large numbers of transactions quickly by combining proof of stake with a timekeeping technique called Proof of History.
Solana has become one of the main hubs for decentralized trading, memecoins, payments and consumer crypto apps. It also has a track record of network outages and debates about how decentralized it is. This guide covers both sides.
Origins and Team
Solana was conceived by Anatoly Yakovenko, a former engineer at Qualcomm, who published a whitepaper in 2017 describing Proof of History. He co-founded Solana Labs with Raj Gokal. The network launched its mainnet beta in 2020. Our NEAR Protocol (NEAR) explainer covers the project's basics, use cases and risks.
The Solana Foundation, a non-profit based in Switzerland, supports the ecosystem with grants and coordination. Solana Labs has developed much of the core software, and other teams have built independent validator clients, including Firedancer from Jump Crypto, which aims to reduce reliance on a single codebase. If you want to go further, read NEAR vs Solana.
How Solana Works
Most blockchains spend a lot of time having validators agree on the order and timing of transactions. Solana's approach is to give the network a shared clock.
- Proof of History (PoH): a sequence of cryptographic hashes that acts as a verifiable record of time passing. It lets validators agree on ordering more efficiently. PoH is not a consensus mechanism by itself.
- Proof of Stake: validators lock up SOL, and holders can delegate their SOL to them. Validators take turns producing blocks according to a schedule and vote on blocks using a mechanism called Tower BFT.
- Parallel execution: Solana's runtime can process transactions that touch different accounts at the same time, rather than strictly one after another.
This design delivers short block times and low fees, but it demands powerful hardware and fast connections from validators. That raises the cost of running a validator compared with some other networks, which critics argue limits decentralization. For background on the trade-offs, see proof of stake explained and our comparison of Ethereum vs Solana.
What SOL Is Used For
- Transaction fees: every transaction pays a small base fee in SOL, plus an optional priority fee during busy periods. Part of the base fee is burned.
- Staking: SOL holders can delegate to validators and earn staking rewards, while validators earn rewards and fees. Liquid staking tokens let users stake while keeping a tradable token.
- Rent and accounts: storing data on Solana requires a small SOL deposit to keep accounts open.
- Collateral and trading: SOL is widely used as a trading pair and as collateral in Solana DeFi apps.
Supply in Plain Words
SOL does not have a hard cap. The network issues new SOL as staking rewards according to an inflation schedule that started higher and decreases each year toward a long-term floor. Burning part of transaction fees offsets some of that issuance. For a scenario-based view of where SOL could head, read Solana (SOL) price prediction 2026–2027.
A significant share of SOL was allocated to early investors, the team and the foundation, and these allocations have unlocked over time. For live circulating and total supply, check the Solana coin page rather than relying on figures quoted in articles.
Ecosystem and Use Cases
Solana's low fees make it practical for activities that would be expensive elsewhere:
| Area | Examples of activity |
|---|---|
| Trading | DEXs and DEX aggregators such as Jupiter and Raydium |
| Stablecoins and payments | USDC and other stablecoins issued natively on Solana |
| Memecoins | Large volumes of new token launches |
| NFTs and consumer apps | Collectibles, games and social apps |
| DeFi | Lending, liquid staking and perpetual futures |
Tokens on Solana follow the SPL token standard. Our guide to what an SPL token is explains how they differ from ERC-20 tokens.
Risks and Criticisms
- Outages: Solana halted or degraded several times in 2021 and 2022 and required coordinated validator restarts. Reliability has improved since, but the history matters if you depend on the network.
- Decentralization concerns: high hardware requirements and the influence of a few organizations draw criticism, although validator numbers and client diversity have grown.
- Scams and low-quality tokens: easy, cheap token creation means huge numbers of memecoins and many rug pulls. Check mint and freeze authority before buying any SPL token.
- Association risk: in late 2022, SOL fell sharply after the collapse of FTX and Alameda Research, which had been prominent backers.
- Market volatility: SOL's price has swung widely, and you could lose a large part of what you invest.
How to Avoid Fake SOL and Solana Scams
Native SOL has no contract address, so any "SOL token" on another chain should come from a documented, official bridge or issuer. For SPL tokens, always confirm the mint address using our guide on how to confirm you have the real token contract. Use official websites you type yourself, and be wary of airdrop links and "support" DMs. Check the live price and official links on Certified Crypto Market's Solana page before trading. Related reading: Solana in the Next Bull Run.
For background on the project itself, see Fartcoin explained.
If Pump.fun is new to you, start with what Pump.fun (PUMP) is and how it works.
Our Toncoin (TON) explainer covers the project's basics, use cases and risks.
Bottom line
Solana is a fast, low-fee blockchain whose SOL coin pays for transactions and secures the network through staking. It has built one of crypto's busiest ecosystems, but it comes with a history of outages, ongoing decentralization debates and a flood of risky tokens. Understand those trade-offs, verify every token address, and only commit money you can afford to see swing sharply.
Frequently asked questions
Who created Solana?
Solana was created by Anatoly Yakovenko, who described its Proof of History idea in a 2017 whitepaper. He co-founded Solana Labs with Raj Gokal, and the network's mainnet beta launched in 2020. The Solana Foundation, a non-profit, supports the ecosystem's development and growth.
Does SOL have a maximum supply?
No. SOL has no fixed maximum supply. New SOL is issued as staking rewards on an inflation schedule designed to decline over time toward a long-term floor, while part of each transaction fee is burned. Check the live circulating and total supply on the SOL coin page.
Why has Solana had outages?
Solana suffered several network halts and periods of severe degradation, especially in 2021 and 2022, often linked to floods of transactions or software bugs. Validators had to coordinate restarts. Developers have since made changes to improve resilience, but past outages remain a common criticism.
Does native SOL have a contract address?
Native SOL is the network's own coin and has no token contract address. Tokens built on Solana, called SPL tokens, each have a mint address. Be wary of any token claiming to be SOL on another chain unless the bridge or issuer is official and documented.