What Is Solana and How Does It Work?
Solana is a high-performance public blockchain known for its speed, low fees, and ability to scale. Launched in 2020, it supports smart contracts, decentralized apps (dApps), and digital assets — much like Ethereum, but faster and cheaper.
It uses a proof-of-stake (PoS) consensus mechanism alongside a unique feature called proof-of-history (PoH), which timestamps transactions to keep the network in sync. This design helps Solana process thousands of transactions per second with near-instant finality.
As of June 2025, Solana powers a $198B ecosystem, with its native token, SOL, valued at over $95.65B. It ranks sixth globally by market cap and is a favorite among developers aiming to build efficient, scalable blockchain applications.
Now let’s dive deeper to understand what Solana is and what makes it successful.
Key Takeaways
What Is Solana?
Solana is a public blockchain that supports dApps and crypto projects through smart contracts, which are self-executing programs.
The Solana ecosystem is supported by its native cryptocurrency, SOL, which allows holders to participate in consensus and governance.
While it offers features similar to Ethereum, BNB Chain, or Avalanche, Solana prioritizes performance. It is one of the fastest blockchains, focusing on three key aspects: speed, throughput, and cost.
With Solana’s high performance, blockchain-based apps can offer a seamless Web2-like experience. Although Ethereum has dominated Web3, it has often faced congestion issues and high transaction fees, making resource-intensive dApps less practical.
Solana can, in theory, support up to 65,000 transactions per second (TPS), compared to only around 15 TPS on Ethereum. As per Chainspect, it currently has the highest real-time tips across all chains, overtaking the likes of BNB Chain and Tron.
Solana’s maximum capacity of 65,000 TPS is no coincidence. It was meant to challenge the throughput of Visa, the world’s largest payment provider. Visa has a similar theoretical capacity, and Solana’s achievement reflects blockchain technology’s potential to compete with traditional finance.
Besides its high throughput, Solana is also very fast, achieving finality in about 13 seconds. While this is much quicker than Ethereum’s 16-minute waiting time, it still lags compared to other high-performance chains like Algorand, Avalanche, and Sonic, which provide near-instant finality. Solana plans to reduce finality by 100 times with the Alpenglow upgrade.
Solana is also one of the most cost-effective blockchains. The average transaction cost is only $0.01, cheaper than Avalanche or Ton.
To accelerate adoption in Web3, Solana offers many developer tools.
Since then, Solana has been constantly improving its design and adding new features.How Did Solana Start?
The story of Solana starts in 2017 with Anatoly Yakovenko, a computer scientist who aimed to improve existing blockchain infrastructure by introducing the PoH concept, which was essential for the network’s high performance.
How Does Solana Work?
Before discussing the upcoming upgrades, including the Alpenglow fork, let’s examine how Solana has worked since its launch five years ago. Solana’s high performance is possible thanks to its unique combination of PoS and PoH.
Proof-of-Stake (PoS)
Solana relies on a PoS version where regular SOL holders delegate their staked coins to validators, who form the network’s backbone.
Validator nodes ensure Solana’s functionality and security, creating new blocks with transactions. They earn SOL rewards based on their share of staked coins. Part of the rewards is shared with delegators based on their staking contribution.
Validators on Solana use high-performance hardware, with requirements much higher than those on Ethereum. For example, the minimum requirements to run a Solana node are 256 GB of RAM (versus 8 GB on Ethereum), a 12-core CPU, and over 1 TB of storage space.
As of this writing, there are 1,240 validators, 21 of which form the so-called superminority, as they control over 33% of the total stake. Some of the biggest validators include Helius, Binance, Coinbase, Ledger, and SOL Community.
Solana validators are dispersed across all continents, though with a higher concentration in Europe and North America.
Solana’s PoS algorithm helps it remain energy-efficient compared to Bitcoin’s proof-of-work (PoW), as it doesn’t require extensive computational resources. In fact, each Solana transaction consumes less energy than a Google search.
Proof-of-History (PoH)
What sets Solana apart is its PoH mechanism, a cryptographic clock that timestamps and verifies the sequence of all network events.
PoH enables validators to handle transactions in parallel, boosting throughput and reducing congestion. By timestamping each transaction before reaching a block, PoH streamlines the validation process.
The PoH algorithm is closely associated with Solana’s Tower BFT (Byzantine Fault Tolerance) system, a consensus mechanism that helps validators agree even if some nodes fail or behave maliciously.
Thanks to PoH, validators know the exact order of transactions without having to communicate with each other constantly. This way, Tower BFT reduces the communication requirements typical of other chains.
Validators vote on the validity of each new block using Tower BFT. The blocks are added if at least 66% of validators approve them.
Other Key Features
Today, Solana is supported by key features that contribute to its performance:
- Gulf Stream: This system reduces the number of unconfirmed transactions, allowing the network to handle up to 65,000 transactions per second.
- Turbine: This tool makes the data smaller and easier to send between nodes, helping the network work faster.
- Sealevel: This engine lets the network process multiple transactions simultaneously.
- Pipelining: This tool speeds up how the network processes incoming data.
- Cloudbreak: This database helps the system read data faster and store it more efficiently on solid-state drives (SSDs).
- Archivers: This is the storage of the distributed ledger.
Upcoming Upgrades: Firedancer and Alpenglow
Solana’s already impressive performance is about to improve further with the Firedancer upgrade, which is about integrating an independent validator client to enhance Solana’s infrastructure.
Developed by Web3 infrastructure firm Jump Crypto, Firedancer could handle over 1M TPS, a massive increase from Solana’s current capability. The client software has been running on testnet for years and is set to go live in 2025.
Probably the biggest upgrade coming to Solana so far is the so-called Alpenglow, which will rewrite the network’s consensus architecture by eliminating the PoH feature and the Tower BFT, which is used to reach consensus even if some nodes fail.
The plan for this major overhaul was announced in mid-May 2025, and one of the goals is to reduce transaction finality by 100 times, from about 13 seconds to 100 milliseconds.
How Will Alpenglow Work?
With the Alpenglow upgrade, both the PoH and Tower BFT systems will be eliminated, and Solana will strengthen its PoS mechanism.
The network will introduce two new features: Votor and Rotor.
➡️ Votor will take over the voting and block finalization logic. Traditionally, validators shared information with nearby nodes through “gossip,” a gradual process. With Alpenglow’s Votor, communication will be done in parallel and faster, reducing latency.
➡️ Rotor will be the data dissemination protocol, coordinating and streamlining communication.
Nodes will be able to vote on new blocks simultaneously using two paths, reducing waiting time. If 80% of the stake validate a block, it reaches “notarization” and can be finalized.
If this percentage is not reached, a second round with about 60% of the stake can conclude validation without compromising security.
Solana will perform even better thanks to these changes, with latency reduced to 100 milliseconds.
What Makes Solana Different From Other Chains?
Solana differs from other PoS chains thanks to its unique design, which enables it to achieve high performance on Layer 1. Ethereum, its direct rival, relies on an entire ecosystem of Layer 2 crypto rollups to speed up transaction processing, making it more fragmented and convoluted.
Thanks to its core innovations, Solana is already the fastest chain, and it plans to further improve performance with the Alpenglow upgrade.
Solana Mobile
An interesting feature that differentiates Solana from other chains is its proprietary smartphone, which has Web3 tools integrated into its Android system.
It launched the first mobile device, Solana Saga, in 2023. At the beginning of 2025, Solana Mobile announced the launch of the second generation of its phones, the Solana Seeker. It will even include a proprietary ecosystem token, SKR, to fuel Solana’s mobile economy.
The Seeker will integrate Web3 features, a hardware wallet, a new architecture, and potential for blockchain gaming.
Pros and Cons of Solana
Solana is a high-performance chain that has experienced rapid adoption during the last two years, but also faces some challenges. Here’s a quick breakdown of the pros and cons of Solana:
- High Transaction Speed: Solana can theoretically handle up to 65,000 TPS, making it one of the fastest chains.
- Low Fees: Solana charges very low fees, typically under $0.01 per transaction.
- Scalable Infrastructure: With its PoH feature or the upcoming Alpenglow upgrade, Solana can scale to meet growing demand for Web3 apps.
- Energy Efficiency: Thanks to PoS, Solana’s carbon footprint is minimal.
- Developer-Friendly Ecosystem: Solana offers robust tools and resources for developers, making it easy to build dApps and create new tokens.
- Staking Rewards: Solana’s average staking reward of 8% is quite generous, enabling users to earn passive income.
How Safe Is Solana?
Solana is a decentralized blockchain network where transactions are settled without any central authority, such as a bank or government institution.
Its architecture implies a high degree of security thanks to the mix of PoS and PoH, which enables validators to reach consensus transparently and efficiently.
However, Solana is known for its occasional outages, which raised concerns about its reliability. These may be caused by a sudden increase in traffic, overloaded validators, or even bugs in the code.
While these incidents are concerning, the team behind Solana has been working to improve network stability.
Over the past five years, the network has experienced seven outage incidents, five of which were caused by client bugs and two by increased transaction spam.
Solana has a dedicated page to track its status and check the history of incidents.
Today, the situation has improved. Previously, the network didn’t have features like priority fees and local fee markets, which have proven to reduce congestion. Since implementing these features last year, Solana has never experienced such incidents.
Solana offers bug bounty programs that reward researchers for detecting software vulnerabilities and securing the network.
In addition, the Firedancer client offers an independent bug bounty program that offers up to $500,000 for critical findings.
What Is Solana Used For?
Solana’s speed and scalability make it ideal for a wide range of real-world applications across Web3, from finance to gaming and digital collectibles. Let’s briefly explore some of the main use cases on the network:
DeFi
Solana has quickly emerged as one of the most important players in decentralized finance (DeFi), a leading blockchain sector that comprises financial services built on decentralized infrastructure.
As of May 2025, it has over $11 billion in total value locked (TVL), which reflects all crypto deposited on Solana DeFi apps. Therefore, Solana accounts for nearly 9% of the total liquidity in DeFi, while Ethereum still dominates at 54%.
Popular DeFi apps on Solana include decentralized exchanges (DEXs) and trading ecosystems like Jupiter and Raydium.
Meme Coins
Solana hosts the second-largest meme coin ecosystem after Ethereum. Solana-based Official Trump (TRUMP), Bonk (BONK), dogwifhat (WIF), and Pudgy Penguins (PENGU) are among the top ten largest meme coins by market cap. The total valuation of the top Solana meme coins is over $13 billion.
Meme coins are the main catalyst of DEX activity on Solana, with Raydium and PumpSwap processing hundreds of millions in daily trading volume.
NFTs
Due to its low fees, many artists and developers choose to mint non-fungible tokens (NFTs) on Solana, benefiting from a fast-growing community.
So far, over 110 million NFTs have been minted on Solana, and more than 14 million wallets have held one. The cost for minting an NFT using state compression is $0.00011. Typical NFT minting costs between $0.01 and $1.
The most popular Solana-based NFT collections include Frogana, FAB Punks, and Okay Bears.
Solana has surpassed Bitcoin, Ronin, and Polygon to become the second-largest NFT chain by trading volume. It also boasts the highest number of buyers and sellers.
Gaming
While Solana is not a gaming hub like some specialized blockchains, such as Ronin or Beam, it has a strong presence in this fast-growing Web3 sector.
According to DappRadar, gaming accounts for nearly a third of all dApp activity, and Solana is looking to attract game developers and players to win market share. Popular Solana games include MomoAI, Star Atlas, and Slotana Coin Flip.
Interestingly, Solana is the fifth-largest gaming chain by transaction count.
Solana vs. Ethereum
Solana came to address many of Ethereum’s challenges at the time and eventually emerged as a direct competitor. Let’s see how the two compare and see which one comes out ahead so far:
Speed and Scalability
Following the Merge upgrade in 2022, Ethereum replaced the PoW algorithm with PoS, becoming more scalable and efficient. However, it still cannot match Solana, which remains the fastest chain.
As mentioned earlier, Solana has a maximum recorded TPS of 2,909, while Ethereum’s is only 62. Solana is also ahead in terms of actual transactions, processing 100 million on average every day versus Ethereum’s 1.4 million.
Additionally, Solana has a much higher throughput, which can surpass an impressive 1 GB/s after the Firedancer upgrade, while Ethereum remains with only about 1 MB/s.
Unlike Ethereum, which relies on multiple crypto rollups to achieve scalability, Solana can scale on its Layer 1.
Cost
Ethereum’s average transaction fee significantly declined from a 2025 high of $10 to only $0.7 in May, but it’s still higher than Solana’s average fee of $0.01. Thanks to its low fees, Solana is one of the most efficient chains, making it a great choice for dApps.
Ecosystem Maturity
Ethereum boasts a much larger and diverse ecosystem of dApps, but Solana has demonstrated exponential growth since 2023.
As mentioned earlier, Ethereum accounts for over 50% of TVL in DeFi, with over $68 billion as of May 2025. Solana has surpassed the $11 billion mark with nearly 9% market share in the sector.
Ethereum is also a leader in the NFT space, but Solana has been expanding its presence. At the end of 2023, CryptoSlam data showed that Solana’s monthly NFT sales volumes beat Ethereum for the first time ever.
Judging by the number of daily active addresses, Solana boasts the highest adoption rate among all chains. Solana’s active addresses metric recovered at the end of 2023 to surpass Ethereum’s, and it hasn’t looked back since. It has over 5 million active wallets on a daily basis, which is ten times more than Ethereum.
Consensus: PoH + PoS vs PoS
Both chains use proof-of-stake to reach consensus, but Solana introduced the PoH feature for greater efficiency.
As with any PoS, users can stake the native coin to earn passive income. At the blockchain level, Ethereum requires a minimum deposit of 32 ETH (over $84,000 at today’s prices), creating a high entry barrier for regular stakers.
Solana has no minimum deposit threshold; instead, it has hardware requirements surpassing Ethereum’s.
These obstacles encourage retail users to delegate their coins to existing validators. They also prompted the rise of liquid staking platforms on both chains, allowing users to stake any amount of the native coin and receive derivative tokens in return, which can be used in DeFi.
Ethereum’s liquid staking ecosystem is valued at $35 billion versus nearly $10 billion on Solana. The staking reward for ETH is about 3% per year versus 8% for SOL.
As of May 2025, Ethereum has ten times more validator nodes than Solana, which implies a higher degree of decentralization. However, Solana may actually be more resilient against attacks. Its Nakamoto Coefficient (the smallest number of validators that can collectively attack a blockchain) is 20 versus only 2 for Ethereum.
Solana is the clear winner on most fronts due to its unmatched performance in terms of speed, cost, and scalability. However, Ethereum still enjoys a larger and more diverse ecosystem, as many developers prefer it due to its ability to communicate with other Ethereum Virtual Machine (EVM) chains, including BNB Chain, Avalanche, and multiple Layer 2 (L2) networks. Ultimately, the choice depends on individual goals. High-activity dApps can build on Solana, while DeFi projects looking for EVM compatibility can choose Ethereum, one of its L2s, or another interoperable chain.Winner: Solana
How to Use Solana
Getting started with Solana is easier than it might seem. First, you’ll need a Solana-compatible wallet. We’ll go over how to choose one in the next section, but Phantom is a popular choice for beginners. Just install it as a browser extension or mobile app, create a wallet, and securely store your recovery phrase.
Next, fund your wallet with 
SOL +0.99%, Solana’s native token. You can buy SOL on major exchanges like Coinbase or Binance and then send it to your wallet address or buy directly in-app.
Once you’re set up, you can explore Solana’s ecosystem:
- Want to try DeFi? Head over to platforms like Jupiter or Marinade.
- Curious about NFTs? Check out Magic Eden, a leading Solana NFT marketplace.
Developers can interact with Solana using Rust or Solana’s SDKs, and dApps connect via RPC nodes or APIs like Helius or QuickNode.
How To Choose a Solana Wallet
You’ll need a crypto wallet that supports Solana to buy and store SOL. Since it is not EVM-compatible, storing the coin on popular DeFi non-custodial wallets has been difficult, but things have changed. Today, there are multiple options for storing SOL.
The most popular wallets for Solana are:
- Phantom: A browser extension wallet that allows you to interact with Solana dApps and send, receive, and stake SOL tokens.
- Solflare: Another popular Solana wallet available as a browser extension or mobile app.
- Sollet: A web-based wallet mainly used for interacting with DEXs and storing Solana-based assets like meme coins.
On May 27, 2025, MetaMask, the most popular EVM wallet, announced full support for Solana. This enables users to store Solana-based assets and interact with dApps.
When choosing a wallet, think about your goals:
- If you want to stake the coin, specialized Solana wallets like Phantom are the best option.
- If you wish to hold EVM and Solana assets in a single wallet, MetaMask is now the best choice.
- For long-term, secure storage, you can opt for a cold wallet like Ledger or Trezor, which hold your assets offline.
Solana Staking
As a PoS chain, Solana enables users to stake SOL and earn rewards.
To stake Solana, you can follow these simple steps:
- Buy SOL: You can purchase SOL from a crypto wallet or exchange like Binance, Coinbase, Raydium, or Phantom.
- Transfer to Your Wallet: If you purchased through an exchange, move your SOL tokens to a Solana wallet like Phantom or Sollet.
- Choose a Validator: In your wallet, you can select a validator to delegate your SOL tokens to.
- Delegate Your Tokens: Once you select a validator, you can delegate your tokens to them. You can stop staking or change validators at any time.
- Earn Rewards: At this stage, you can earn staking rewards, typically paid out in SOL.
If you want to maximize your returns, you can join a liquid staking platform like Jito, which offers JitoSOL in exchange for your staked SOL. This derivative token accrues staking rewards and can be used in DeFi for additional liquid mining opportunities.
Some exchanges even offer advanced financial instruments for Solana, such as futures, which allow you to gain exposure to SOL price movements, whether it’s rising or falling.
Its PoS mechanism, combined with the unique PoH feature, enables it to process thousands of transactions per second cheaply. The Alpenglow update will eliminate the PoH component, but boost its scaling potential further. With a rapidly growing ecosystem across DeFi, NFTs, and gaming, Solana will likely remain a leading blockchain. It has emerged as a direct competitor of Ethereum, the largest Web3 player. Despite its impressive capabilities, Solana has to address challenges like occasional network outages and centralization concerns. You can set up a compatible wallet like Phantom or MetaMask to gain exposure to Solana and its robust ecosystem of dApps and assets.Conclusion
Solana has proven its status as a high-performance blockchain focused on speed and scalability. It has demonstrated that it can handle many transactions and active addresses, bringing the Web2 experience to blockchain.
Solana Frequently Asked Questions
What exactly does Solana do?
Is Solana a good investment?
Is Solana the same as Bitcoin?
Can I mine Solana?
How often does Solana go down?
Can I stake Solana on a mobile wallet?
References
- Blockchain speed metrics (Chainspect)
- DeFi TVL by chain (DefiLlama)
- NFT volume by chain (Cryptoslam)
- Top gaming chains by transaction count (DappRadar)
- Solana validators map (Solana)
- Solana electricity consumption comparison (Solana)
- Alpenglow latency histogram (Anza)
- The Protocol: Solana to Get Major Design Overhaul (CoinDesk)
- Solana 8 innovations infographic (Anna Kubešová via Medium)
- Solana mobile infographic (SolanaMobile)
- Blockchain throughput comparison (VanEck)
- Solana outages chart (Helium)
- Solana vs Ethereum charts (Artemis)
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