What is Solana (SOL)?

As blockchain technology rapidly evolves, next-generation networks are racing to offer faster, lower-cost and more scalable solutions. One of the most notable participants in this race is Solana, a project that has attracted the attention of both developers and investors in recent years. So what makes Solana such a special and prominent project? Let's take a step-by-step look at what Solana is and how this network came to be.

Definition and Emergence of Solana

The short answer to the question of what Solana is is that it is a decentralized, high-performance Layer-1 blockchain network. Solana aims to offer fast transaction speeds and low fees for developers and users. These aspects stand out, especially when compared to older open blockchains such as Ethereum. Solana is seen as a censorship-resistant, secure and fast blockchain to facilitate global adoption.

Solana was developed by Solana Labs, a San Francisco-based technology company. So, when did Solana come out? When was Solana founded? Although the project was officially founded in 2018, development work on the protocol first began in 2017 when co-founder Anatoly Yakovenko wrote the original Proof-of-History (PoH) white paper. Yakovenko had extensive experience in distributed systems and compression algorithms at Qualcomm, where he previously worked. This experience helped him understand that a reliable clock that simplifies network synchronization can ultimately make the network exponentially faster. Yakovenko reasoned that using PoH, he could speed up the blockchain tremendously compared to “clockless”, “timeless” blockchain systems like Bitcoin and Ethereum.

According to Yakovenko, his team wanted to build a smart contract platform that leverages reliable computations without performance limitations and high costs. With traditional blockchains struggling with speed and throughput, Anatoly thought of applying his expertise in distributed systems to blockchain.

The first PoH technical paper was published in November 2017. Greg Fitzgerald posted an open source implementation (prototype) of Anatoly's white paper to GitHub in February 2018. Greg released the first version at the end of February, showing that the prototype could process 10,000 transactions per second. Stephen Akridge then demonstrated an improved throughput by offloading signature verification to GPUs. Anatoly, Greg, Stephen and three others founded the company, which was initially called Loom. However, it turned out that there was already an existing project called Ethereum-based Loom Network, so the team had to change the name. Since the co-founders often surfed at Solana Beach in California, they chose the name “Solana” for their blockchain, inspired by the beach's name, and the name stuck.

The “mainnet beta” version of the project went live in March 2020. This marked the transition from an experimental protocol to a functional network. The project launched the Solana mainnet beta, offering smart contract support and basic transaction capabilities. Thus, SOL coin came into our lives.

The most important building block that makes Solana technically different and powerful is the Proof of History (PoH) mechanism. So, what is Proof of History? PoH is designed to keep time between computers in a decentralized network without the need for all computers to communicate and agree about it. Solana uses cryptographic functions to timestamp transactions so that each verifier can trust the network's timeline without waiting for collective confirmation. This mechanism increases transaction throughput by reducing the need for coordination between validators. While PoH plays an important role in the PoS consensus mechanism, it is not a standalone consensus mechanism.

History of Solana: Key Milestones

Having familiarized ourselves with the technical background of Solana, let us now take a look at the development process of the project, i.e. its journey through time. Here are some of the highlights of Solana's history:

• November 2017: Anatoly Yakovenko published the Proof-of-History (PoH) technical paper describing a new timekeeping method for distributed systems.
• February 2018: Greg Fitzgerald uploaded an open source implementation (Silk) of Anatoly's technical paper to GitHub. The first release verified and processed 10,000 transactions per second.
• June 2018: Solana technology started working on cloud-based networks.
• July 2018: The Solana team released the first public test network of 50 nodes, capable of accelerating up to 250,000 TPS.
• December 2018: The team launched a 150-node, gigabit network testnet (v0.10 Pillbox) and conducted a “soak test” with bursts averaging 200,000 TPS and up to 500,000 TPS.
• July 2019: The Solana team raised around $20 million in funding rounds (private token sales) led by Multicoin Capital.
• August 2020: The incentivized testnet (Tour de SOL) was launched.
• March 2020: Solana's Beta Mainnet was launched. The team also raised $1.76 million through a public token auction.
• 2021: Solana's price rises 13500% to over $260 during a bull run in 2021. This coincided with FTX launching a new NFT marketplace on the Solana blockchain, OpenSea, the world's largest NFT marketplace, providing support for Solana collections, and a huge surge in NFT and DeFi projects. This period of growth is often referred to as “Solana Summer”. New wallets like the Phantom wallet and ecosystem projects like Serum emerged, increasing user adoption.
• September 2021: Raydium suffers a major network outage due to a denial-of-service attack by bots. The network was offline for 17 hours.
• January 2022: There were partial outages for two weeks. The network experienced prolonged outages, including a 30-hour outage due to heavy bot operations.
• May 2022: A network outage caused by NFT minting bots occurred and lasted for 7 hours.
• June 2022: There was a consensus failure due to a software bug, which led to another network outage.
• July 2022: Solana Ventures launches a $100 million investment fund for Korean startups GameFi, NFT and DeFi.
• August 2022: Around 8000 Solana-based hot wallets (including Phantom and Slope) are exploited and millions of dollars are lost.
• 2022 FTX Collapse: With FTX founder Sam Bankman-Fried being a prominent Solana supporter, the collapse of FTX created a major test on Solana. SOL price plummeted. The project team and developers who chose to stay on the network showed resilience, releasing new updates and products. After the crash, the slogan “Only Possible on Solana” (OPOS) became popularized and became a rallying call for the community.
• February 25, 2023: Another network outage caused by a slowdown in block production after a validator software upgrade.
• December 2023: Circle's EURC stablecoin goes live on Solana. Solana sets a record for monthly new and active addresses, with the number of active addresses surpassing 15.6 million, 50% above November's figures. Solana records higher trading volume than Ethereum in December 2023, and does so without downtime.
• Late 2023/Early 2024: The rise of the BONK meme coin attracted significant interest in the Solana ecosystem and attracted investors and users. Network performance improved and on-chain user and activity metrics surpassed their peaks in 2021.
• In 2024, SOL grew: Solana was the fastest growing ecosystem for new developers, with 81% of all DEX transactions reported to come from the Solana ecosystem. New innovations such as liquid staking were introduced. Solana starts to overtake Ethereum in terms of fees and revenue. Platforms like Pump.fun make it easier to launch meme coins. Upgrades like Firedancer and Runtime V2 continued. The second version of the Solana Saga mobile phone is ready. Solana Pay launches as an integrated app on Shopify for millions of businesses. Franklin Templeton expanded the Franklin Onchain US Government Money Fund to Solana.
• The reconfiguration process for network outages has begun: By 2025, Solana will have been operating without interruption for more than 1 year. This is an important milestone to remove the “mainnet-beta” label. The frequency of network outages is decreasing as the network matures. But some community leaders predict that outages will continue. As of April 2025, Solana has a market capitalization of over $50 billion, making it one of the most influential blockchains. Real-world performance hovers around 4,000 TPS per second. Although Solana faced challenges (including network outages and decentralization concerns), the team quickly deployed upgrades such as the QUIC protocol and stake-weighted transaction prioritization to stabilize the network and significantly improve it by 2025.
• January 2025 saw a record high: Solana's Mainnet Beta network and its native token, SOL, went public in March 2020. Looking at price history, SOL hit an all-time low of $0.5052 on May 11, 2020. Despite the difficult period after the FTX crash, the project team continued to develop. The recovery process gained momentum towards the end of 2023 as users returned to the network. The SOL price rose rapidly from $10, reaching $101 in early January 2024. Then, continuing its momentum, Solana reached an all-time high of $294.33 on January 19, 2025. Behind this rise, US President Donald Trump's TRUMP and his wife Melania Trump's MELANIA meme coins were issued on the Solana network. As of April, the token is around $150.

Why is Solana valuable?

After all these historical developments, we need to take a closer look at the technological value of Solana to better understand why it has attracted so much attention. Solana's features and technological innovations are the key elements that make it valuable in the blockchain space:

High transaction speed and low transaction cost

Solana's most distinctive feature is its speed. The network can theoretically process up to 65,000 transactions per second, or according to some sources, up to 710,000 on a standard gigabit network. In Solana vs Ethereum comparisons, this difference is quite striking; while Ethereum processes about 13-15 transactions per 1.0 second, Solana's capacity sets it apart from many blockchain networks. BNB Chain, on the other hand, is around 74.41. This speed is the result of Solana's unique Proof-of-History (PoH) mechanism, a process of “layering” on top of the Proof-of-Stake (PoS) system. PoH allows blocks to be generated much faster by sequencing transactions without the need for validators to communicate.

Feature	Ethereum (ETH)	Solana (SOL)	BNB Chain (BNB)
Consensus Mechanism	Proof of Stake (PoS)	Proof of History (PoH) + PoS	Proof of Staked Authority (PoSA)
Real-Time TPS	14.38 TPS	1,214 TPS	74.41 TPS
Maximum TPS (100 blocks)	62.34 TPS	2,909 TPS	1,731 TPS
Transaction Fee (Average)	$1.90	$0.006	$0.02

In addition to speed, low transaction costs are also a key advantage. Unlike older blockchains where simple transactions became expensive, Solana makes even micro-transactions feasible. The average transaction fee is typically less than a cent, or even $0.00025 according to some sources. This affordability makes Solana particularly attractive for high-volume applications and frequent transactions. Low fees and high speed have the potential to enable Solana to compete with centralized payment processors (such as Visa).

Ideal infrastructure for Web3 and NFT projects

Solana's high throughput and low fees have created an attractive environment for experimenting with new applications in various categories such as DeFi, NFTs, GameFi and DePIN. Applications on Solana benefit from the speed and low cost of the network. Solana is particularly well suited for NFT minting and trading on NFT platforms, allowing users to list, buy or sell NFTs without incurring the high “gas” costs seen on other networks. Projects such as Serum, Raydium, Jupiter, Magic Eden, Solanart, Phantom, Backpack, Solflare, Bonfida (offering interface, API and data analytics for Serum), Orca (DEX) are operating in the Solana ecosystem. DePIN projects such as Helium and Render Network also use Solana.

Overall, the Solana ecosystem is constantly growing. There are hundreds of native protocols in areas such as DeFi, NFT and DePIN. Giant exchanges, institutional investors and global banks are starting to show interest in Solana. Circle's USDC and EURC stablecoin integrations and bridging protocols like Wormhole have increased liquidity and allowed users to easily transfer funds to Solana. The Solana Pay integration with Shopify and institutions like Franklin Templeton moving their funds to Solana show that adoption is growing. Moreover, Solana accounted for 81% of all DEX transactions in 2024.

Solana has a developer-friendly environment and an open source structure

Solana uses a powerful and adaptable programming language like Rust. Compared to Ethereum's Solidity, Rust is considered less difficult to learn and attracts a wider pool of developers. It also offers the flexibility to code in popular languages like C++ and C. This opens the door for developers who may not have considered blockchain before. More developers means more projects and a more diverse ecosystem. Solana offers a developer-friendly environment; tutorials and a comprehensive coding guide are available. All core client software is publicly hosted on GitHub under open source licenses, allowing open access and community contributions. Solana became the #1 blockchain for new developers in 2024. The diversity of Solana developer tools enabled this first place.

Hybrid structure with Proof of History (PoH) and Proof of Stake (PoS)

Solana combines the unique Proof-of-History (PoH) mechanism with Delegated Proof-of-Stake (DPoS) or Proof-of-Stake (PoS). PoH acts as the network's “clock” by verifying the chronological order of transactions. This allows validators to process transactions much faster. The PoS layer is used to secure the network. Validators (or agents) stake SOL tokens to validate transactions and add new blocks. This hybrid approach ensures high transaction speed and scalability, while balancing energy efficiency and security (malicious actors risk losing their staked SOL).

Thanks to the PoS network and other innovations, Solana's energy consumption is low. Each transaction reportedly uses only as much energy as a few Google searches. Combined, these factors make Solana a valuable blockchain network that is high-speed, low-cost, scalable and has a thriving ecosystem.

What does SOL coin do between the technical features?

Just as important as Solana's technical power and ecosystem is the economic model at its heart: SOL coin. Because within Solana's ecosystem, not only the technical infrastructure, but also the economic elements that feed and run this infrastructure play a critical role. So, what does SOL coin do? SOL plays multiple roles within the Solana network. First of all, we need to explain what SOL coin is. SOL is the native cryptocurrency of the Solana blockchain. Its value stems from the network's core capabilities and its own use cases.

SOL is the native cryptocurrency of the Solana network and plays a key role in its functioning. First of all, transaction fees for all transactions on Solana are paid in SOL. This enables the fast and low-cost structure of the network.

Furthermore, the network is secured by staking SOL tokens. In this way, validators or delegators both support the network and earn rewards. This system forms the basis of Solana's Proof-of-Stake model. SOL also plays a role in governance. Holders have the right to vote on protocol updates and decisions on the network. In the DeFi and NFT projects, the SOL is used as both collateral and a means of payment. Above all, SOL can be traded and used as a store of value, just like other major cryptocurrencies.

Who is the Founder of Solana?

The answer to the question of who founded Solana is Anatoly Yakovenko, the lead developer and visionary. Yakovenko is the CEO and co-founder of Solana Labs. Anatoly Yakovenko's background is important for understanding Solana's technical vision. Yakovenko worked for many years at Qualcomm, a Fortune 500 company that provides semiconductors, software and wireless technology services for mobile phones. At Qualcomm, he focused on distributed systems and compression techniques. He also worked at companies like Dropbox. His experience in this industry and his knowledge of distributed systems design led to the idea of improving blockchain efficiency with Proof-of-History. Yakovenko realized that creating a chronological record of events by adding a “clock” to his block could make the blockchain more efficient. This idea led him to write a technical paper in 2017 defining the concept of Proof-of-History.

Solana founder Anatoly Yakovenko teamed up with former Qualcomm colleagues Greg Fitzgerald and Stephen Akridge to develop the project. Greg Fitzgerald worked on the first iteration of the PoH blockchain and moved to Rust. Stephen Akridge worked on porting signature verification to GPUs. Raj Gokal later joined the team. Other key members of the Solana team include Jeffrey Levy (Solana Foundation and Solana Labs Operations Advisor), Matthew Sorg (Technology and Product Lead), Caesar Chad (Rust Developer and Investor Relations) and Spencer Spinell (Strategic Advisor).

Two key organizations play a role in the Solana ecosystem:

• Solana Labs: A technology company based in San Francisco, California. It has built the basic building blocks of blockchain and continues to develop the infrastructure and technology underlying the network. It is responsible for optimizing the network and keeping it running efficiently. Solana Labs also acts as an incubator, providing teams with tools and connections to build their businesses. The Solana Labs team is skilled and able to react quickly to changes in the network and provide timely fixes.
• Solana Foundation: A Switzerland-based non-profit organization founded in June 2019. Dedicated to the decentralization, adoption and security of the Solana ecosystem. Oversees funding for grants, the Delegation Program and developer tools. Controls official brand assets, social media accounts, websites and trademarks. It operates with a relatively small team (60-65 full-time employees).

Decentralization process with community input

The Solana network is distributed across 4,514 nodes (including 1,414 validators and 3,100 RPCs). The validator set is spread across 37 countries. The Nakamoto Coefficient (the minimum number of independent entities that must cooperate to stop the network's viability) is usually quoted as 19, but the actual figure is likely to be lower as individual entities can anonymously operate multiple validators. The set of validators and hosting providers (with the leading ones such as Teraswitch, Latitude.sh, OVHcloud, Cherry Servers) still shows some concentration. However, multiple client implementations such as Firedancer aim to increase client diversity, reducing the risk of a single failure affecting the entire network. Solana and Ethereum are currently the only layer 1 blockchains that offer multiple client implementations. Significant changes to the core components of the network go through a public SIMD (Solana Improvement and Development) proposal process. Decentralization is an area of ongoing development and improvement for Solana.

Frequently Asked Questions (FAQ)

Following our guide to Solana, we wanted to answer the most frequently asked questions. In this section, you can find short and clear answers to frequently asked questions about Solana for both beginners and curious followers.

• What is Solana and how is it different from Ethereum? Solana is a scalable Layer-1 blockchain that offers high speed and low transaction costs. It is faster than Ethereum (in terms of TPS), has much lower transaction fees and includes an innovative time mechanism such as Proof-of-History (PoH). While Ethereum is considered more established and stronger in terms of decentralization, Solana is an attractive alternative for performance-oriented projects.
• Who founded Solana: Solana was founded by former Qualcomm employee Anatoly Yakovenko. Yakovenko was joined by Greg Fitzgerald, Stephen Akridge and later Raj Gokal. Development began in 2017, with the main network launching in 2020.
• Why is the Solana network so fast? Solana's speed is due to the chronological ordering of transactions thanks to the PoH mechanism and the ability of validators to operate with synchronized time information. Furthermore, the high hardware requirement and the ability to execute parallel transactions (Sealevel) increase the TPS.
• How the NFT and DeFi projects work at Solana: Solana's low compute overhead and high speed make it an ideal infrastructure for NFT and DeFi projects. Projects such as Magic Eden, Raydium, and Jupiter run on Solana. NFT minting is cheap and fast, while DeFi protocols support functions such as liquidity, staking and lending.
• Is Solana reliable, why are there network outages? While Solana is generally reliable, it has experienced network outages in the past. These were usually caused by bot attacks, software bugs and heavy transaction load. However, since 2024, network stability has improved significantly and there have been no outages for the last year.
• What does Solana's future look like: The future of SOL coin shows strong growth with developer interest, user adoption and innovative infrastructure. Upgrades like Firedancer, the expansion of Solana Pay, and growing institutional interest make the network's future bright. By 2025, Solana stands out as one of the strongest Layer-1 projects with its stable operation and growing ecosystem.

Follow our JR Kripto Guide series to learn more about the Solana network and its place in the Web3 world!