What Is Solana (SOL)?




Solana is a blockchain platform designed to host decentralized, scalable applications. Founded in 2017, it is an open-source project currently run by Solana Foundation based in Geneva, while the blockchain was built by San Francisco-based Solana Labs.1

Solana is much faster in terms of the number of transactions it can process and has significantly lower transaction fees than rival blockchains like Ethereum. The cryptocurrency that runs on the Solana blockchain—also named Solana (SOLUSD) and using the ticker symbol SOL—soared almost 12,000% in 2021 and at one point had a market capitalization of over $66 billion, making it the fifth-largest cryptocurrency by this measure at the time.2

Despite its popularity, SOL did not escape the cryptocurrency bloodbath of 2022. By Oct. 3, 2022, SOL had dropped to about $11.71 billion in market capitalization. It also fell to ninth place in market capitalization.3 Learn more about Solana and what makes it unique among thousands of imitators.

KEY TAKEAWAYS

  • Solana is a blockchain platform designed to host decentralized, scalable applications.
  • Solana can process many more transactions per second and charges lower transaction fees than rival blockchains like Ethereum.
  • Solana is a proof-of-stake (PoS) blockchain but improves on it with a mechanism called proof-of-history (PoH), which uses hashed timestamps to verify when transactions occur.4

Proof-of-History Concept

Solana co-founder Anatoly Yakovenko published a white paper in November 2017 describing the proof-of-history (PoH) concept. PoH is a proof for verifying order and passage of time between events, and it is used to encode trustless passage of time into a ledger.1

In the white paper, Yakovenko notes that blockchains that were then publicly available did not rely on time, with each node in the network relying on its own local clock without knowledge of any other participants' clocks in the network. The lack of a trusted source of time (i.e., a standardized clock) meant that when a message timestamp was used to accept or reject a message, there was no guarantee that every other participant in the network would make the exact same choice.1