Solana (SOL) guide

Solana traces its roots back to late 2017, when Anatoly Yakovenko, formerly of Qualcomm, published a white paper introducing the concept of Proof of History (PoH), a novel method for embedding time within blockchain systems. The mainnet officially launched in March 2020, marking Solana’s entry into the world of smart contract-capable blockchains. 

Designed to address scalability and performance limitations in existing blockchains, Solana differentiates itself through lightning-fast transaction speeds, minimal latency, and low fees. The platform aims to serve applications requiring mass throughput and usability at scale, areas where traditional Layer‑1 networks struggle, and aspires to be the infrastructure of choice for major financial players. “We seek to build the best infrastructure, the best ecosystem for capital,” Solana Foundation President Lily Liu said to CoinShares during an interview in 2025. 

Key technical features

Solana’s technical foundation centers around Proof of History (PoH), which encodes timestamps cryptographically, creating a verifiable order of events without continual inter-node communication. This mechanism is paired with Tower BFT (Byzantine Fault Tolerance), a built-in agreement protocol that keeps the blockchain in sync, fast, and resistant to bad actors, in order to achieve rapid transaction finality in a secure, decentralized manner.

Solana also uses several performance-boosting design choices that work together to keep the network fast and efficient. For example, it breaks up large amounts of transaction data into smaller chunks so they can be sent quickly across the network, routes transactions to validators in advance so they can be processed without delay, and allows multiple transactions to be processed at the same time instead of one by one. Together, these features help Solana maintain high speeds and low costs even when activity spikes. 

Network performance 

Solana has proven to be one of the fastest blockchains in terms of throughput: compared to Ethereum’s approximative 30 transactions per second (TPS), Solana consistently handles around 1,000 TPS under real-world usage, with an even greater capacity under optimal conditions, while keeping transaction fees nominal, often just fractions of a cent.

What are SOL main use cases? 

• Transaction fees: SOL serves as the native token used to pay for transaction fees across Solana’s high-speed blockchain.

• Staking & Security: SOL is staked by validators as collateral to power the network’s security model.

• Governance: token holders participate indirectly in the network’s governance through validator selection and strategic decisions.

• Special Use: SOL frequently serves as collateral or fee token in DeFi applications and local liquidity protocols.

Ecosystem and use cases

Solana supports a vibrant and rapidly expanding ecosystem that spans DeFi, NFTs, DePIN, traditional finance integrations, payments, and consumer applications. Its growth is propelled by the combined efforts of Solana Labs, the Solana Foundation, and numerous ecosystem partners operating around the globe.

On the infrastructure side, Solana has become a natural home for DePIN (Decentralized Physical Infrastructure Network) initiatives. A standout example is Helium, which migrated its decentralized bandwidth network onto Solana by minting nearly one million hotspots as state-compressed NFTs. This move has enabled Helium to deepen its real-world utility, broadcasting 5G and IoT coverage via user-owned hardware in more than 170 countries, while leveraging Solana’s fast, economical transactions and global scale.   

Meanwhile, on the DeFi front, protocols such as Kamino Finance and Jito are transforming how DeFi operates on Solana. Kamino offers automated vaults that manage concentrated liquidity, auto-compounding rewards and liquidity positions for users. Its TVL and yield-optimization tools reflect how DeFi continues to get smarter and more efficient on Solana. Jito and Marinade Finance spearhead liquid staking by issuing tokenized representations of staked SOL allowing holders to earn staking rewards while still deploying liquid assets across the ecosystem.  

On the institutional and traditional finance side, Solana has increasingly attracted TradFi players launching tokenized versions of money market funds and other financial instruments directly on-chain. Noteworthy launches include Franklin Templeton’s FOBXX, VanEck’s VBILL, and BlackRock’s BUIDL, each bringing real-world assets to Solana’s programmable infrastructure.  

These developments come against the backdrop of explosive growth in DeFi adoption. In Q4 2024, Solana’s DeFi TVL soared to $8.6 billion, marking a 64% increase in just one quarter and establishing Solana as the second-largest DeFi network, surpassing Tron, according to Messari. At the same time, app-generated revenue climbed an astounding 213%, with real economic value reaching $840 million, driven by increased activity from DEXs, meme coins, AI tokens, and innovative protocols like Raydium and Jupiter Perps.  

Together, these elements paint a picture of Solana as a multi-dimensional, enterprise-grade ecosystem that supports everything from decentralized infrastructure and next-gen DeFi systems to institutional finance tools. Its ecosystem continues to evolve beyond being “Ethereum’s alternative,” emerging as its own robust, interconnected platform ecosystems, with unique strengths, scalability, efficiency, and real-world integration, that are increasingly difficult to match.

Pros and Cons

Pros

Solana shines with exceptional speed, expansive scalability, low transaction fees, and a dynamic, rapidly growing ecosystem. Its architecture invites real-time use cases, from DeFi to DePIN, while future innovations like Alpenglow promise even greater performance.

Cons

The network has experienced noteworthy outages and periods of congestion, exposing vulnerabilities. SOL remains highly volatile, and a big share of its network activity comes from the memecoins speculation, which creates some reputation issues on top of doubts about the durability of its economy.

Main takeaways

Solana stands as a leading modern blockchain, delivering what Ethereum often cannot: unmatched throughput, near-instant finality, and developer-friendly economics. It serves in many ways as a complement to Ethereum by offering an alternate high-performance environment for applications that demand scale. 

From a portfolio perspective, SOL offers exposure to bleeding-edge blockchain technology while institutional and savvy crypto investors acknowledge that Solana is a pivotal ecosystem offering both innovation potential and considerable volatility.