What is Solana - History, Overview, Future

Written by
Edward Jones
Updated on
June 15, 2023
8 min read

When you land on CoinMarketCap's page, you immediately see Bitcoin and Ethereum leading the cryptoverse. That said, scroll down and it's an endless cryptocurrency list, more than 8,300 independent cryptocurrency tokens (if you're into numbers). That barely reflects the exponential growth and diversification the crypto marketplace has reported. To fully appreciate this growth, you can explore one token, Axie Infinity. The token is a blockchain-powered and gamified ecosystem where a player community or Lunacia can raise, battle, and trade cute NFT pets called Axies.

In the last two years, we"ve experienced a new crypto bull market driven by Bitcoin's halving event and growing inflation concerns. Within this period, Solana went from a relatively unknown ecosystem to one of the largest in the market. During this crypto explosion, it has become one of the biggest gainers and now has the 5th largest market-cap, valued at more than 50 billion U.S. dollars.

The Solana token (SOL) generates value through a unique Proof-of-History algorithm that enables phenomenal transaction speeds. Solana compared to Ethereum, the number of SOL tokens are finite, and can be staked. The project's growth and tokenomics have attracted some of the biggest names in the cryptosphere to invest in Solana, as well as prominent decentralized application developers. This makes Solana an exciting crypto asset for investors.

In this article, we discuss the factors that drive its success and what you need to know to help you to benefit from its features.

Solana's Appeal

Many factors contribute to Solana's appeal. Alongside its remarkable transaction speeds and other technological innovations, Solana has a unique aesthetic that seems to extend to every facet of its network.

For someone new to the crypto space, the way a project brands itself has enormous influence in it's appeal. A project that's well-branded is worth a lot to the first-time retail investor, and Solana has a sense of consistency to its style that makes it unique amongst the most successful projects on CMC.

Solana is more than just a blockchain network - it has the qualities of a successful brand too. Every token and decentralized application (dApp) built on the Solana blockchain reflects a similar aesthetic to Solana itself. Still, before exploring the qualities that make Solana unique, it's important to have an understanding of how the project began.

Solana logo

Origins of Solana

Solana's original whitepaper was created by Anatoly Yakovenko in late 2017. As a former programmer for the wireless technology company, Qualcomm, he"d been experimenting with a different method of timekeeping on the blockchain.

Soon after, his former colleague, Greg Fitzgerald, joined him. He helped to release an open source whitepaper implementation on GitHub. Stephen Akridge, another former colleague from Qualcomm, redirected signature verification to a separate graphics processor to help the network save energy. This would end up playing a fundamental role in blockchain development.

As the project continued to grow, three more people joined Yakovenko, Fitzgerald, and Akridge to form a company called Loom. When another blockchain project with a similar name began making waves, Loom rebranded itself to Solana Labs.

The name was an homage to a beach north of San Diego, where the team members used to surf while employed at Qualcomm. Ultimately, the project would become more evocative of that beach than its name alone.

Solana's release on the mainnet happened in early 2020. The substantial portion of the project's development took place during crypto winter in 2018 and the following year. This gave Yakovenko and his team plenty of time to fully explore the significance of Solana without having to compete against competitors in the bull market.

Upon its public release, Solana's native token was valued at less than a dollar. Yet, as the market began to wake-up, it wasn't long before SOL became one of the highest-performing tokens in the crypto space. To understand this success, let's now take a look at the qualities that make Solana desirable for users and investors.

The Network's Impressive Speed

In the first episode of the Solana Podcast, Fitzgerald makes a parallel between the team's shared love of extreme sports and the Solana network's lightning-fast processing speeds. Said to be capable of 50,000 transactions-per-second (TPS), Solana pushes blockchain transactional power to a limit not seen by cryptocurrencies in the past.

Attribute comparison table of Solana, Binance Smart Chain, and Ethereum ecosystems. Tables shows Solana has 50000 transactions per second compared to 100 and 15 transactions per second for Binance Smart Chain and Ethereum respectively. Table also shows a negligible transaction fee for Solana compared to Binance Smart Chain and Ethereum. Additionally Solana transaction latency is shown as being 0.4 seconds, far lower than the other blockchains show. Finally the number of validators for Solana is 594, 21 for Binance Smart Chain, but over 11 thousand for Ethereum

For context, before it's upgrade to the lightning network, Bitcoin was essentially capable of 7 TPS and had an average transaction confirmation time of ten minutes. Ethereum is quite a bit faster, with 25 TPS and an average transaction confirmation time of six minutes. Ethereum is also experimenting with new technology. Yet even after it's upgrade, the network's speed will still be far slower than Solana.

Sending tokens between a decentralized exchange (DEX) and my browser wallet, transactions consistently took less than 20 seconds. This included trades, deposits, and withdrawals.

Transactions on the Solana network are inexpensive. That attracted Ethereum users, since Ethereum transaction fees are staggeringly high. Solana isn't perfect, and there are notable cases of the network experiencing congestion due to traffic. We'll explore that later in the article.

Proof-of-History: Solana's Keystone

The most important feature of Solana's recent success is the network's transaction validation method. Solana is the first network to use Proof-of-History (PoH), the keystone mechanism in Yakovenko's original whitepaper.

Blockchains rely on certain computers to approve transactions within the network. These computers must agree for a transaction to be valid. This internal consensus mechanism versus approval by an external authority is what makes blockchains decentralized.

Before Solana, two primary consensus mechanisms exited: Proof-of-Work (PoW) and Proof-of-Stake (PoS). Though both systems are fairly similar, you can spot some notable differences.

Bitcoin uses PoW where computers compete to solve a complicated math equation. The first node to solve it gets to validate the transaction. In return, the successful computer gets a reward for 'mining" new tokens on the blockchain. One downside that got massive attention is the substantial amount of electricity miners use to validate transactions.

PoS came after PoW and uses a random node selection for validating transactions. The mechanism supports staking in return for profits. Atomic Wallet makes staking easy. It's possible to stake a wide variety of tokens and we will go through this later in the article.

Technically, Solana combines both consensus mechanisms. It randomly selects staked nodes to validate transactions. What makes Solana different is its timekeeping mechanism, the heart of PoH.

It works by assigning a leader node to generate the entire PoH statement versus trusting a transaction's timestamp. The network then positions subsequent nodes behind the leader node and refer to its timekeeping as they process transactions across the network.

Solana Labs likens PoH to a dripping faucet. Each drop represents a single timeblock, with the pattern remaining consistent since it relies on a single source, the leader node. This saves energy since it avoids constant node communication which uses more energy.

Tower Byzantine Fault Tolerance (BFT)

A second unique quality in Solana is the system's adaptation of Byzantine Fault Tolerance (BFT). Practical BFT (or pBFT) is the method of a distributed computer system to make decisions despite the existence of potentially malicious nodes in the blockchain. These nodes could disrupt the entire system if they send incorrect information or simply fail.

pBFT's goal is to construct a unified strategy for the system to protect itself from these potentially malicious nodes. For most blockchains, the method of pBFT involves waiting for nodes to send enough information before a decision is able to be made regarding the consensus - this is often a time-consuming process. Tower BFT is Solana's adaptation of the system designed to work in-sync with the timekeeping capabilities of PoH.

An image depicting a signal tower is depicted beside text that read "Tower BFT - A PoH-optimized version of PBFT." Tower BFT is one the primary security mechanisms for the Solana ecosystem.

The Tower BFT mechanism is able to rely on the conception of time put forward by the leader node. Therefore, it's able to understand the context of the entire PoH system by using a single file instead of waiting for every single node to communicate first. Ultimately, the use of PoH speeds up many of the processes in the blockchain.

In the end, the technical qualities that make Solana unique are designed to help the network scale. Additional blocks of information (transactions) are easily added to the network with total efficiency.

Solana's Ecosystem

Solana's ecosystem began to take form soon after the project's release to the public. From its recognizable aesthetic to the rapidly growing number of protocols built on its blockchain. Solana has become one of the fastest growing projects in the crypto space.

The Solana aesthetic likely draws influence from the project's namesake and seems to encapsulate the emotion and feeling of the team spending time at the beach north of San Diego. The style is also reminiscent of the 1980s, which is when the founders of the project grew up.

Solana draws on its token collection it built on its blockchain. At its high, Samoyedcoin (SAMO) had a market capitalization of more than 500 million dollars. The meme token's website features a Samoyed dog in front of a Solana-inspired background. Moonlana (MOLA) is another meme token that borrows from the same aesthetic. Tokens on the Solana blockchain also have utility, like the DEX, Raydium (RAY), dApp for online dating, Soldate, and the block explorer, SonarWatch (SONAR).

Though you'll find many more projects using the Ethereum blockchain, Solana's ecosystem is growing at a remarkable pace. In November 2021 (less than two years after Solana's public release), 350 projects had been built on the Solana blockchain. Together, they help create a network that feels bigger than Solana or the SOL token alone.

A chart showing different components on the Solana ecosystem. This was created in June by @Solanians (Twitter). New projects are frequently released on the Solana blockchain, so the information can become out-of-date quickly.

Perhaps the best way to get a feeling for Solana is to experience the official website. The site's UX is easy to use and has the same seamlessness as other project aspects. The website displays the information in a user-friendly way. You also can easily navigate between the block explorer, general information, and the website's community section. The blog is regularly updated and features images that are reminiscent of the same graded style as other ecosystem parts.

Solana's Current Challenges

Although it can process thousands of TPS, Solana has run into a number of hiccups when pushed beyond a certain point.

Grape Protocol hosted an Initial DEX Offering (IDO) on Raydium on the 14th of September 2021. The system became overrun with transactions which caused a number of validators to crash. When the system was forced to shut down, Solana was processing more than 400,000 TPS.

The system remained offline for 17 hours, freezing billions of dollars in investor's funds. As Solana's timekeeping mechanism is isolated to the leader node, the validators couldn't do their job and shut down as well.

There are other notable instances of the Solana blockchain experiencing overwhelm. Regardless, it demonstrates the fallibility of the Solana network and the fact that the blockchain isn't decentralized yet.

Another token, Cardano (ADA) is essentially the opposite of Solana in terms of a project. The intention of both projects has been to improve upon the Ethereum blockchain. Yet, unlike Solana, Cardano has been slower in its release as a functional network. Cardano's blockchain is backed by academic research and there's a level of perfection to its proofs.

Despite this, the smart contract for Cardano has only recently been made available. As of January 2022, there are no available dApps on the Cardano blockchain. On the other hand, Solana has hundreds of protocols built on its blockchain, yet it continues to experience issues related to scaling due to imperfections in the project's code.


Solana's utility token is simultaneously inflationary and deflationary. The supply is able to grow as SOL is offered as a reward for staking. The current Solana circulating supply is 308.3 million tokens. Each year, the inflation rate is reduced until it settles to what is described as Solana's 'long-term inflation rate of 1.5%. After that, SOL will likely be able to maintain a fairly stable total supply, as transaction fees cancel out the 1.5%.

SOL's price was less than $2 at the beginning of 2021. By April, the price had increased by nearly 20x. After cooling down in the summer, SOL had another run from $30 in August to $190 in September. SOL reached its all-time-high in November at $260. Since then, the price has been moving downward to another consolidation zone. At the New Year, SOL is currently worth $168.

A graph (from CoinMarketCap) depicting the price (USD) of SOL over time.

Solana reached a peak in early November, around the same time that Bitcoin achieved its all-time-high (ATH) of around $69,000. Since finding its place on CMC's top cryptocurrencies, SOL has continued to mirror the price movements of Bitcoin.

That said, it's a significant event when a token breaks out of Bitcoin's domain. This could be a strong possibility for Solana if it continues as a technological trailblazer. For weeks at a time, ETH has decoupled from Bitcoin. Perhaps SOL will in the near future.

With so many emerging projects and the experimental state of blockchain technology, it's difficult to predict which projects will have the most success in the future. There is a certain shadow, Yet, that has been following Solana since the project's initial release on the main net.

Hidden Wallet; A Controversy?

Soon after Solana's public release, a hidden wallet surfaced with over 13 million SOL. At the time, this exceeded the token's entire circulating supply. The project had recently gotten criticism for its difficult to use block explorer which led investors and community members to ask questions.

The team behind Solana issued a public statement on Telegram, summarizing the situation. They mentioned the discovered wallet belonged to a market maker (sometimes known as a liquidity provider).

In an additional message, Yakovenko apologized for the confusion. He then announced the network would burn the SOLs from the wallet within 30 days. The cryptospace reacted with mixed emotions - some appreciated the transparency and anticipated the positive effect the burn would have on Solana's price. Others weren't as easy to forgive and felt unsure about what they considered as deception from Solana Labs.

Following the transaction history, it seems Solana ultimately burned more than 11 million tokens. In response to the confusion, the Solana Foundation initiated an airdrop for early traders of the token. Despite all these attempts, some people are still convinced Solana had shady dealings. A user on Reddit made a post describing the situation and detailing the order of operations. As an investor, it's important to do your own research (DYOR) and to come up with your own opinion on the controversy.

Ultimately, Solana is a refreshing phenomenon in the crypto world. It's lightning-fast speeds allow for smooth transactions and have been a fertile ground for many important projects.

It would"ve been a lucrative decision to invest in Solana in late 2020 or early 2021. As the project is fairly well established, the decision to invest or not is personal.

To make your decision, you"d also want to know what the future holds for Solana.

Solana's Future

Solana's future is looks bright. Ethereum has around 5,000 software developers working on the project. Yet Solana is converting these developers from Ethereum and other projects daily. This is all thanks to the lower gas fees, faster transaction speeds, and desirable tokenomics.

At present, Solana is directly competing with Cardano for market capitalization. That said, it's only a matter of time until is surpasses it. Solana has support from big investors and has an inside edge with scaling and transaction speeds. Most people know the rule to 'follow the big money" and this is what's happening. First, the software developers who establish the ecosystem, then the institutional and retail investors.

Currently, Solana is onboarding new projects to make up over 350 dApps that use the ecosystem. That said, it still suffers from performance bottlenecks due to scaling issues attributed with its success. It's working to fix these challenges by March-end and come out of beta. This is all thanks to their growing developer pool.

Solana's price may reach between $3000 to $5000 within the next 5 years. This is based upon its growth, market share, and the entire cryptosphere's adoption rate. In more heavily conservative models, this price target may be pushed out to 2030. No matter what, the project has significant upside potential.

When you take all this into account, Solana is gearing up to be Ethereum's main contender in the next few years.

Final Thoughts

Solana, as an ecosystem, is soaring along with its market-cap as this bull rull continues. The finite number of tokens along with excellent transaction speeds, and its ability to be staked makes it an interesting asset in the crypto market. It's likely to be a good time to invest in this emerging project along with many others. For an easy platform to store and stake your tokens, remember to check-out solana wallet.


What is the Solana project about?

Solana is a decentralized blockchain with incredibly fast transaction speeds. It uses a novel Proof-of-History mechanism to approve transactions and process information. The network's native token, SOL can be staked and is used to pay transactions fees.

What are Solana's most important features?

The consensus mechanism Proof-of-History (PoH) is probably the most important feature of Solana. It serves as the foundation to the blockchain and the reason Solana is so fast (capable of thousands of TPS), scalable, and energy efficient. It could also be argued that Solana's ecosystem is one of the project's most important features.

How much is Solana's value expected to increase?

At the start of 2021, Solana was less than $10 a token. Almost a year later, one SOL is valued at $180 and it has the fifth highest market capitalization on CoinMarketCap. SOL reached its all-time-high of $260 in November 2021 and currently seems to be in a consolidation phase.

What is SOL?

SOL is Solana's native token - it is used to pay transaction fees and to stake on the Solana blockchain. There are more than 300 million SOL in circulation.

Where can I buy SOL?

You can purchase SOL on major exchanges like Coinbase and Binance. It's also available to purchase through Atomic Wallet. You'll find a number of smaller exchanges where SOL is available as well.

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