What is Solana (SOL)?

Origins and Founding Team

Solana was founded by Anatoly Yakovenko, a former Qualcomm engineer with extensive experience in distributed systems and compression algorithms. In November 2017, Yakovenko published a whitepaper describing Proof of History, a method for creating a historical record that proves events occurred at specific moments in time. This innovation became the foundation of the Solana blockchain.

He was joined by Greg Fitzgerald, Stephen Akridge, and Raj Gokal to form Solana Labs in 2018, bringing together expertise in systems programming, cryptography, and business development.

Key Milestones

• • 2017: Anatoly Yakovenko publishes the Proof of History whitepaper.
• • 2018: Solana Labs founded with core team including Greg Fitzgerald and Raj Gokal.
• • 2020: Mainnet Beta launches in March with initial validator support.
• • 2021: Rapid ecosystem growth with major DeFi and NFT projects; experienced several network outages.
• • 2022-2023: Network stability improvements implemented; continued expansion despite market downturn.
• • 2024-2025: Increased institutional adoption; major exchange and wallet integrations.

The Solana Foundation

The Solana Foundation, a non-profit organization based in Switzerland, supports the ongoing development and growth of the Solana ecosystem through grants, education, and ecosystem initiatives. It operates independently from Solana Labs, the company that develops the core protocol, creating a governance structure intended to ensure long-term sustainability and community-driven development.

Proof of History

Proof of History is a cryptographic clock that enables the network to agree on time and the order of events without extensive communication between nodes. It uses a verifiable delay function to create a historical record proving that events occurred in a specific sequence.

This allows validators to process transactions and reach consensus faster because they already agree on when transactions occurred without needing to communicate about it. Think of it as a shared clock that all validators can reference independently, eliminating the coordination overhead that slows down other blockchains.

Proof of Stake Consensus

Solana uses Proof of Stake for validator selection and network security. Validators stake SOL tokens and are selected to produce blocks based on their stake and performance. They must run hardware that meets network specifications to process transactions quickly, creating higher infrastructure requirements than some other blockchains.

Delegators can stake their SOL with validators to earn rewards without running their own node. Validators earn rewards from transaction fees and inflation, sharing a portion with their delegators minus a commission. The combination of Proof of History and Proof of Stake allows Solana to maintain high throughput while keeping the network secure.

Programs and Execution

Solana programs, the equivalent of smart contracts on other blockchains, are written in Rust, C, or C++ and compiled to Berkeley Packet Filter bytecode. The Sealevel runtime allows programs to execute in parallel when they don't access the same state, significantly increasing throughput compared to sequential execution models. Programs can be upgraded by their designated authority, though many mature protocols implement governance or multi-signature controls for upgrades to provide users with security guarantees.

Transaction Fees and Economics

Solana transaction fees are based on the number of signatures required and computational resources used. A typical transaction costs around 0.000005 SOL, roughly a fraction of a cent at current prices. Fifty percent of all transaction fees are burned, creating deflationary pressure on the token supply, while the other fifty percent goes to validators.

During network congestion, users can pay priority fees to have their transactions processed faster, creating a market-based system for block space allocation.

Native Staking

To stake natively, you delegate your SOL to a validator through wallets like Phantom or Solflare. Choose a validator based on their commission rate (typically 5-10%), uptime record, and stake concentration. There is no minimum amount required to delegate, though some validators may set their own minimums. After delegating, wait one epoch (approximately 2-3 days) for your stake to become active.

Rewards accrue automatically every epoch and are typically 5-7% APY, though this varies based on network inflation and validator performance. When you want to unstake, there is a one-epoch cooldown period before you can withdraw your SOL.

Liquid Staking

Protocols like Marinade Finance, Jito, and Lido allow you to stake SOL and receive a liquid staking token (mSOL, JitoSOL, stSOL) that you can use in DeFi while still earning staking rewards. This provides flexibility to use your staked assets as collateral or in liquidity pools, effectively earning both staking rewards and potential DeFi yields.

You can redeem your liquid tokens for SOL at any time, though there may be withdrawal periods or small fees. Liquid staking adds smart contract risk and potential de-pegging risk for the liquid token, so understand these trade-offs before participating.

Exchange Staking

Many exchanges like Coinbase, Kraken, and Binance offer staking services. This is the easiest option since everything is handled by the platform, but you don't control which validators receive your stake, the exchange takes a portion of rewards as a fee, and you don't hold your own keys.

For larger amounts or long-term holdings, native staking with self-custody provides more control and typically better returns.

1Compare providers

Options include centralized exchanges like Coinbase, Kraken, and Binance, as well as broker apps, P2P marketplaces, and decentralized exchanges. Compare how much SOL you actually receive after accounting for the quoted price, trading fees, spread, and any withdrawal costs. The cheapest-looking option isn't always the best deal when all costs are included.

2Create an account

Centralized exchanges and broker apps require identity verification (KYC). You'll typically need to provide government ID and proof of address, with verification times ranging from minutes to days depending on the platform. Decentralized platforms work with wallets like Phantom or Solflare without requiring personal information, though you'll need existing crypto to swap.

3Fund your account

Common options include bank transfer, debit or credit cards, PayPal, and other cryptocurrencies. Bank transfers are usually cheaper but slower, taking 1-5 business days. Cards provide instant funding but typically charge 2-4% fees. Availability varies by platform and region.

4Buy SOL

Most platforms offer market orders (buy immediately at current price), limit orders (set a target price and wait), and recurring buys for dollar-cost averaging over time. Start with a small test purchase to understand the process before committing larger amounts.

Custodial vs Self-Custody

You can keep SOL in a custodial wallet or a self-custody wallet. With a custodial wallet, an exchange or platform holds the private keys for you. This is convenient for active trading since you only need a login, but you must trust the platform's security and solvency.

With self-custody, you control the private keys in your own wallet, giving you full control but also full responsibility for backups and security. Many users combine both approaches: keeping trading amounts on exchanges and moving long-term holdings to self-custody.

Software Wallets

Popular Solana wallets include Phantom (browser extension and mobile), Solflare (web and mobile), and Backpack. These wallets let you interact with Solana dApps, stake SOL, manage NFTs, and swap tokens. They're convenient for daily use and DeFi activities. When setting up a software wallet, you'll receive a 12 or 24-word recovery phrase that must be backed up securely offline.

Anyone with this phrase can access your funds.

Hardware Wallets

Hardware wallets like Ledger Nano S Plus, Ledger Nano X, and Trezor Model T provide the most secure option for long-term storage. Your private keys never leave the device, protecting against malware and online attacks. You can connect hardware wallets to software interfaces like Phantom for convenient access while maintaining cold storage security.

For significant holdings, hardware wallets are strongly recommended.

DeFi and Trading

Solana hosts a thriving DeFi ecosystem where SOL serves as the primary currency and collateral. Jupiter aggregates liquidity across decentralized exchanges to find the best swap rates. Lending protocols like Kamino and Marginfi allow you to borrow against SOL or earn yield by lending it.

The low transaction fees make active trading and yield farming strategies practical in ways that higher-fee networks don't support.

NFTs and Digital Collectibles

Solana became a major NFT chain due to its low minting and trading costs. Marketplaces like Magic Eden and Tensor handle significant trading volume, with collections spanning art, gaming items, and community tokens. SOL is the primary currency for purchasing NFTs on these platforms, and the fast confirmation times make the trading experience smooth compared to higher-latency alternatives.

Payments and Transfers

Solana's fast finality and low fees make it suitable for payment applications. Solana Pay enables merchants to accept SOL and other Solana-based tokens with near-instant settlement and minimal fees.

For personal transfers, sending SOL to another wallet costs fractions of a cent and confirms in seconds, making it practical for everyday use cases that would be too expensive on networks with higher fees.

Staking for Passive Income

Many SOL holders stake their tokens to earn 5-7% APY while helping secure the network. Staking is non-custodial when done through self-custody wallets, meaning you maintain control of your keys while earning rewards. Liquid staking options let you use your staked value in DeFi simultaneously, though with added smart contract risk.

Risks

SOL is highly volatile and can experience significant price swings. The network has experienced outages in the past, which can temporarily prevent transactions. Smart contracts and DeFi protocols carry risks including bugs, exploits, and loss of funds. Always research projects thoroughly, start with small amounts when trying new applications, and never invest more than you can afford to lose.

Anatoly Yakovenko

Founder of Solana and creator of Proof of History. A former Qualcomm engineer with deep expertise in distributed systems and compression algorithms, Yakovenko conceived the core innovation that makes Solana's high throughput possible. He continues as a key contributor to Solana Labs and remains the most prominent public figure associated with the project.

Raj Gokal

Co-founder of Solana who focuses on business development, ecosystem growth, and partnerships. Gokal has been instrumental in attracting developers, investors, and projects to build on Solana, helping transform the technical innovation into a thriving ecosystem.

Greg Fitzgerald

Co-founder and former CTO of Solana Labs who was critical in translating Yakovenko's Proof of History concept into working code. Fitzgerald's systems programming expertise helped establish Solana's technical foundation and early development practices.

The Solana Foundation

A non-profit organization supporting Solana's development through grants, education, and ecosystem initiatives. The Foundation plays a key role in network governance, validator coordination, and community building, operating as an independent entity from Solana Labs.

Exchange Requirements

Most countries that allow crypto trading require exchanges to follow Anti-Money Laundering and Know Your Customer rules. Expect to verify your identity with government-issued ID when using centralized platforms. Decentralized exchanges and peer-to-peer platforms may not require identity verification but carry other risks and may have less regulatory protection.

United States

Solana is legal and available on major US exchanges. SOL is generally treated as property for tax purposes, meaning sales and trades may trigger capital gains obligations. Multiple agencies including the SEC, CFTC, and FinCEN oversee different aspects of cryptocurrency activity.

The SEC has included SOL in some enforcement actions alleging certain tokens are unregistered securities, creating regulatory uncertainty that may affect the token's status and availability on some platforms.

Canada

SOL is legal in Canada and subject to capital gains tax on sales and trades. Exchanges must register with FINTRAC and follow AML/KYC requirements. Several Canadian-licensed platforms offer SOL trading with CAD pairs and common payment methods like Interac e-Transfer.

European Union

SOL is legal under the Markets in Crypto-Assets (MiCA) framework, which provides unified licensing and consumer protection standards across member states. Exchanges operating in the EU must comply with MiCA requirements, providing regulatory clarity for users in the region.

Australia

SOL is legal in Australia and treated as property for tax purposes. Exchanges must register with AUSTRAC and meet compliance obligations. Several Australian platforms offer SOL trading with AUD pairs.