What Is Solana (SOL)?

What Are Solana’s Key Features?

What if there was a blockchain that was designed to process up to 65,000 transactions per second with near-zero fees? Meet Solana — one of the fastest and most scalable blockchain networks reshaping DeFi, NFTs, and Web3. Solana has a variety of features that make it particularly appealing:

• Unmatched Scalability: Solana can process approximately 65,000 TPS, significantly faster than Ethereum’s 15 TPS.

• Minimal Transaction Fees: Utilizes PoH + PoS to ensure security without sacrificing speed. 

• Growing Ecosystem: Hosts a diverse range of DeFi platforms, NFT marketplaces, and Web3 applications.

• Parallel Transaction Processing: Unlike Ethereum’s sequential transaction model, Solana’s sea level allows simultaneous execution, enhancing network efficiency.

With a continuously expanding ecosystem, Solana is rapidly transforming the blockchain landscape.

How Did Solana Start?

The Solana blockchain was founded in 2017 by Anatoly Yakovenko, a former engineer at Qualcomm. His vision was simple: Solve blockchain scalability issues without compromising security or decentralization.

With a background in distributed systems, Yakovenko introduced proof of history (PoH) as a revolutionary way to improve transaction speed and reduce the reliance on traditional time synchronization methods.

The Solana network officially launched its main net in March 2020, offering a solution for high-speed and low-cost transactions — and it has become the most widely adopted blockchain network today. Its ability to process transactions at unprecedented rates attracted developers and projects looking for alternatives to Ethereum’s congested and expensive network.

Solana's rapid rise was driven by its technology advantages and strong backing from investors and the crypto community. Today, Solana supports a thriving ecosystem of decentralized finance (DeFi), NFTs, and Web3 applications, establishing itself as a crucial player in the blockchain space.

How Does Solana Work?

Unlike Bitcoin’s Proof of Work (PoW) and Ethereum’s Proof of Stake (PoS) mechanisms, Solana combines PoW with PoS to enhance efficiency and scalability. This hybrid approach allows the network to operate faster and at a lower cost than many competitors.

Proof of History (PoH)

PoH is Solana’s breakthrough innovation. The system operates as a decentralized clock to apply timestamps to transactions before blockchain additions. The network operates more efficiently because nodes can verify transactions without extensive communications, resulting in fast processing and high-speed operations.

Traditional blockchains require nodes to agree on transaction order before validation, causing bottlenecks.

PoH timestamps transactions before they reach the consensus mechanism, ensuring rapid processing and seamless ordering.

Proof of Stake (PoS)

Solana’s network with both Proof of History (PoH) and Proof of Stake (PoS) to achieve its security operations. Network validators need to stake SOL crypto tokens to become eligible for transaction verification responsibilities. Network security and decentralization become stronger when validators stake higher amounts, which correspondingly improves their chances of becoming validators.

Sealevel Parallel Processing

Sealevel is Solana’s transaction execution engine, allowing multiple smart contracts to run in parallel, unlike Ethereum, which processes transactions one at a time. Solana can handle thousands of smart contract executions simultaneously.

This hybrid consensus model enables Solana transactions to be processed at speeds exceeding 65,000 TPS, making it one of the fastest public blockchains available today.

What Is SOL Crypto?

SOL crypto functions as the native cryptocurrency of the Solana blockchain to operate and maintain its network components. 

SOL acts as a utility token after design which enables the functioning of transactions and rewards network validators while executing smart contracts within the Solana network:

• Transaction Fees: The cost of conducting transactions on Solana exceeds only $0.01, which makes this blockchain one of the most affordable in terms of transaction fees.

• Smart Contracts and dApps: SOL crypto serves as the primary digital resource for developers who seek to deploy decentralized applications (dApps), including NFT marketplaces and DeFi protocols.

• Governance and Network Upgrades: Holders of SOL crypto have the right to vote on network upgrades alongside protocol changes and new feature updates.

• Liquidity and Market Activity: The cryptocurrency SOL stands as a leading token in market activity because it serves as a transaction hub involving DeFi protocols and Web3 and NFT functions.

SOL serves as the essential network asset that powers the Solana network development through its expanding role in DeFi and its increasing popularity among users.

Supply and Inflation Model

The total supply of SOL tokens is restricted to 511 million, yet the current floating supply has already exceeded 400 million SOL. Transacting on Solana causes a certain percentage of fees to burn, which decreases the overall quantity of SOL tokens, thus creating deflationary conditions. Through its economic mechanism, the platform controls both inflation levels and preserves value reliability.

As Solana’s ecosystem expands, SOL remains a fundamental asset driving the network’s growth and adoption.

The Solana Ecosystem and Its Use Cases 

The Solana network is home to a thriving ecosystem that spans multiple industries, including DeFi, NFTs, gaming, and Web3 applications.

Decentralized Finance (DeFi)

Solana has established a growing presence in the DeFi market through various key projects, including:

• Serum: A decentralized exchange (DEX) offering fast and low-cost trading.

• Raydium: A liquidity provider that enhances trading efficiency.

• Mango Markets: A decentralized trading platform for margin trading and lending.

Non-Fungible Tokens (NFTs)

The Solana NFT marketplace is booming thanks to low Solana transaction fees and fast minting speeds. Popular platforms include:

• Magic Eden: The largest Solana NFT marketplace.

• Solanart: A platform featuring exclusive NFT collections.

Web3 and Gaming

The Solana blockchain is also driving innovation in Web3 gaming and metaverse projects, with platforms like Star Atlas and Aurory leading the change.

Are There Risks of Solana?

Despite its impressive growth, Solana’s scalability comes with some challenges:

• Network Outages: Solana has experienced multiple outages due to increased transaction loads.

• Centralized Concerns: The Solana validator network is smaller compared to Ethereum’s, raising concerns about decentralization.

• Security Risks: Some Solana DeFi projects have been targeted by hacks and exploits.

How To Buy Solana (SOL)

Want to invest in Solana? You can purchase SOL on major exchanges — like Gemini. Gemini is a full-reserve and highly-regulated cryptocurrency exchange and custodian, and we prioritize the security of your assets. Available in 70+ countries with multiple charting types, watchlists, and price alerts, we make it easy for you to start (or continue) your crypto journey. 

Here’s how to buy Solana with Gemini:

1. Create an account on a cryptocurrency exchange.

2. Verify your identity (KYC) to enable trading.

3. Deposit funds (USD, EUR, or crypto) into your exchange account.

4. Buy SOL using market or limit orders.

5. Withdraw SOL to a secure wallet for long-term storage. To secure your SOL crypto, you can choose from either hot or cold wallets. 

What Is the Future of Solana?

The upcoming Solana mobile phone, Saga, represents the most awaited innovation because it will bring crypto wallets together with dApps and DeFi functionality for mobile users since its planned launch in late 2024. Solana experiences fast growth in its DeFi and NFT sectors through new lending services, enhanced metaverse solutions, and cross-chain functionalities.

Network stability is enhanced by developers who work to simplify validator registration processes and decrease hardware admission requirements while implementing fee protocols to stop network blockages. Solana’s security enhancements are a strategic investment to defend against DeFi attacks so the blockchain maintains its position as one of the leading competitors. 

Ongoing developments at Solana establish it as an innovative platform that moves towards faster and more accessible decentralized operations.

Sign up with Gemini today and be a part of the next generation of blockchain innovation. Start your Solana journey with Gemini now.