What is Solana?
Solana is a blockchain designed to handle many transactions quickly and at low cost. It was founded by Anatoly Yakovenko, who described its core idea in a 2017 paper, and its main network went live in 2020. Development is led by Solana Labs and supported by the Solana Foundation, among other teams.
Its native coin is SOL, which pays for transactions and secures the network through staking.
How does it work?
Solana uses proof of stake: validators lock up SOL, either their own or delegated by holders, to take part in producing and checking blocks. In return they earn rewards.
It adds a technique called proof of history, a kind of cryptographic clock that puts transactions in order before validators vote on them. This helps the network agree on the order of events without as much back-and-forth.
Running a Solana validator needs powerful hardware and a fast internet connection. New SOL is issued as staking rewards, and part of each fee is burned.
What is it used for?
Solana hosts a wide range of activity:
- Trading on decentralised exchanges and other DeFi apps
- Payments and stablecoin transfers
- NFTs and on-chain games
- Launching and trading new tokens, including many meme coins
Low fees make Solana popular for activities that involve many small transactions, such as frequent trading. SOL holders can also stake their coins by delegating them to a validator, while keeping control of them and earning rewards. Delegating does not remove all risk: rewards vary, and the choice of validator matters for the health of the network. Spreading stake across many validators helps keep Solana decentralised.
Key facts
- Launched: 2020
- Founder: Anatoly Yakovenko (Solana Labs)
- Consensus: proof of stake, combined with proof of history
- Blockchain: its own network, Solana
- Supply: no fixed maximum
Explainer written by Finvane from official project documentation. It is not investment advice.