What Is Solana? How It Works and How It Compares to Ethereum

Solana is a public, proof-of-stake blockchain built to process thousands of transactions per second for a fraction of a cent each. Its native token, SOL, pays transaction fees and is staked to secure the network. If you have asked “what is Solana?”, the short answer is: a fast, low-cost alternative to Ethereum for apps, payments and trading, which trades some decentralization and has a history of outages in exchange for speed.

Solana was designed by Anatoly Yakovenko, who described its core idea in a 2017 whitepaper. Its main network went live in beta in March 2020. Since then it has become one of the largest smart contract platforms by users and trading activity, and the main home of memecoin trading.

This guide explains how Solana works, what Proof of History is and why it was retired as the network’s clock in 2026, what fees actually cost, the outage record, how staking works, and how Solana compares with Ethereum.

What Is Solana? The Short Version

Solana is a layer 1 blockchain, meaning it runs its own network of validators and settles its own transactions rather than relying on another chain. Like Ethereum, it runs smart contracts (Solana calls them programs): code stored on the blockchain that executes automatically when someone sends it a transaction. That lets developers build exchanges, lending markets, games, payment apps and token launchpads on top of it.

What sets Solana apart is its design philosophy. Ethereum keeps the base layer conservative and pushes most activity onto separate layer 2 networks. Solana tries to make one single chain fast enough for everyone, by asking validators to run powerful hardware and by processing many transactions in parallel.

• Native token: SOL, divisible into one billion lamports (1 lamport = 0.000000001 SOL).
• Consensus: proof of stake, with validators voting on blocks weighted by the SOL staked to them.
• Block time: roughly 400 milliseconds for most of Solana’s history, cut to about 200 milliseconds in stages completed in October 2026, according to the Solana Foundation.
• Programs: usually written in Rust and run by the Solana Virtual Machine (SVM).

Who Created Solana? A Brief History

Anatoly Yakovenko, a former Qualcomm engineer, published the Solana whitepaper in November 2017. It proposed Proof of History, a way for a blockchain to keep time without validators constantly messaging each other. Yakovenko co-founded Solana Labs in 2018 with Raj Gokal and other former Qualcomm and Dropbox engineers. The name comes from Solana Beach, California.

Key milestones:

• March 2020: mainnet beta launches. The “beta” label stayed for years, a signal that the software was still maturing.
• 2022: several more outages, and the collapse of FTX, whose founder had been one of Solana’s most prominent backers. SOL fell sharply that year.
• 2023 to 2024: recovery driven by new apps, stablecoin payments and a memecoin boom. Projects such as Helium and Render moved to Solana, and PayPal’s PYUSD stablecoin launched on it in 2024.
• September 2024: Frankendancer, an early version of the independent Firedancer validator client, goes live on mainnet.
• October 2025: spot Solana exchange-traded funds begin trading in the US.
• October 21, 2026: the Alpenglow consensus upgrade activates, replacing the original voting system.

Today, development is spread across several organizations: the Solana Foundation (a Swiss non-profit), Anza (which maintains the main Agave validator client), and Jump Crypto (which builds Firedancer).

How Does Solana Work?

Every blockchain has to answer three questions: who gets to add the next block, how everyone agrees it is valid, and how fast the network can process transactions. Solana’s answers combine a few ideas.

Proof of stake and leader rotation

Solana uses proof of stake (PoS): validators lock up SOL, and their influence is proportional to the stake they control, including SOL that ordinary holders delegate to them. If you want the background, see our comparison of proof of stake vs proof of work.

Time is divided into slots, and a schedule decided in advance assigns each slot to a leader: one validator responsible for producing that block. Validators with more stake get more leader slots. Because the schedule is public, transactions go straight to the upcoming leader instead of waiting in a shared pool (a mempool), as on Ethereum and Bitcoin.

Slots are grouped into epochs of 432,000 slots. Staking changes, rewards and the leader schedule update at epoch boundaries, which historically came about every two days.

Proof of History: Solana’s original clock

Proof of History (PoH) was Solana’s founding idea. A leader continuously ran a hash function (SHA-256) in a chain, feeding each output into the next input. Because each step depends on the previous one, the sequence cannot be computed in parallel, so the number of steps proves that a certain amount of time passed. Inserting a transaction into that sequence stamped it with a verifiable position in time.

The benefit: validators could agree on the order and timing of events without exchanging many messages, which kept slots short. Proof of History was never a consensus mechanism on its own. It was a clock that worked alongside proof of stake voting (a system called TowerBFT).

Alpenglow: the 2026 consensus overhaul

On October 21, 2026, Solana activated the first phase of Alpenglow, the biggest change to its consensus since launch. Its voting component, Votor, replaced TowerBFT. Validators now send votes directly to each other and aggregate them into certificates instead of submitting votes as on-chain transactions.

According to the Solana Foundation’s Alpenglow page, two things changed for users and node operators:

• Finality (the point at which a transaction cannot be reversed) targets roughly 150 milliseconds, down from about 12.8 seconds under TowerBFT. The 150 ms figure is a target, not a guarantee.
• Proof of History no longer paces block production. Votor’s timeouts and certificates now do that job. PoH remains important history, but it is no longer the network’s heartbeat.

A second phase, Rotor, is planned to replace Turbine, the system that spreads blocks across the network, but had not been scheduled as of October 2026. Because Alpenglow is days old at the time of writing, treat early performance claims with caution and watch how it behaves over the coming months.

Parallel execution with Sealevel

Ethereum’s virtual machine processes transactions one at a time. Solana requires every transaction to declare in advance which accounts (pieces of on-chain state) it will read or write. Transactions that touch different accounts can then run at the same time on different CPU cores, a runtime called Sealevel. A token swap on one exchange and an NFT transfer elsewhere do not wait for each other.

The trade-off is that when thousands of users all want the same account, for example during a hyped token launch, those transactions cannot be parallelized and compete for the same “hot” state.

Solana Speed and Fees: What Transactions Actually Cost

Solana’s marketing once cited theoretical figures of 50,000 to 65,000 transactions per second (TPS). Real-world throughput has been far lower, typically in the low thousands of TPS including validator votes, and lower still if you count only user transactions. Since Alpenglow removed votes from the ledger, older TPS charts that counted vote transactions are not directly comparable. Check a live explorer such as Solana Explorer or Solscan for current figures.

Fees are where Solana stands out. Every transaction pays a base fee of 5,000 lamports per signature (0.000005 SOL). Half of the base fee is burned and half goes to the validator. Users can add an optional priority fee to get ahead in busy periods, calculated as a price per compute unit (a measure of how much processing the transaction needs) multiplied by the compute units requested. Priority fees go entirely to the validator.

For comparison, fees on Ethereum’s main layer vary with demand and can range from cents to several dollars; see our guide to Ethereum gas fees.

Solana’s Outage History and Firedancer

Speed has come with reliability problems. Solana has suffered several full network halts, where block production stopped and validators had to coordinate a restart:

Fixes since then include fee markets that price congestion locally, a more resilient networking protocol (QUIC), and stake-weighted quality of service, which gives staked validators guaranteed bandwidth to the leader. The Solana Foundation said in 2026 that the network had kept producing blocks without a full halt since February 2024. Individual apps, wallets and RPC providers (the servers apps use to read and send data) can still go down even when the chain itself keeps running.

Why Firedancer matters

For years almost every Solana validator ran the same software, so one bug could stop the whole network. Firedancer is an independent validator client written from scratch by Jump Crypto in C, designed for very high throughput. A hybrid version, Frankendancer, went live on mainnet in September 2024, and the fully independent client was running on mainnet by December 2025.

Client diversity matters because if two different codebases must both fail for the network to halt, outages become much less likely. As of mid-2026, though, full Firedancer still secured only a minority of stake, so the benefit is partial.

What Is Solana Used For?

Solana’s low fees make it practical for activity that would be too expensive on Ethereum’s main layer. The main categories:

• Trading and DeFi: decentralized exchanges and aggregators such as Jupiter, Raydium and Orca, lending protocols and perpetual futures markets.
• Stablecoins and payments: USDC, USDT and PYUSD all run on Solana, and payment companies use it for low-cost transfers. Learn how these tokens hold their value in our stablecoin guide.
• Memecoins: token launchpads on Solana made it the center of memecoin trading in 2024 and 2025. Most of these tokens lose nearly all their value; read what a memecoin is before touching one.
• NFTs and digital collectibles: Solana introduced “compressed NFTs” that let projects mint millions of items for small total cost.
• DePIN (decentralized physical infrastructure networks): projects such as Helium (wireless coverage) and Render (GPU computing) use Solana to coordinate payments to people who provide real-world hardware.
• Tokenized assets: some issuers have put tokenized money market funds and other real-world assets on Solana.

Popular wallets include Phantom, Solflare and Backpack. Always check which network a deposit address belongs to; tokens sent to the wrong chain can be lost.

The SOL Token and Solana Staking

SOL has three jobs: paying transaction fees, being staked to secure the network, and serving as the main trading pair across Solana apps.

Supply and inflation

SOL has no maximum supply. New SOL is created as staking rewards on an inflation schedule that started at 8% a year in early 2021 and falls by a set percentage each year toward a long-term floor of 1.5%. Validators have voted on proposals to speed up that decline, so check the current rate on a staking dashboard rather than relying on an old figure. Burned base fees partly offset new issuance.

How staking SOL works

You do not need to run a validator to stake. You delegate SOL to a validator from your wallet, and you keep custody of it. Rewards are paid each epoch, minus the validator’s commission (its cut of the rewards). Our guide to crypto staking covers the general mechanics.

• Native staking: you create a stake account and delegate it. Unstaking takes effect at the end of the current epoch, so your SOL is not instantly available.
• Liquid staking: you deposit SOL into a protocol and receive a token (such as JitoSOL or mSOL) that represents your staked SOL plus rewards and can be traded or used in DeFi. This adds smart contract risk.
• Exchange staking: convenient, but the exchange controls your coins and usually takes a larger cut.

Staking rewards are not free money. A large part of the yield comes from new issuance, which dilutes holders who do not stake. In the US, the IRS treats staking rewards as taxable income when you gain control of them; rules differ by country.

Solana vs Ethereum: Key Differences

Solana and Ethereum are the two largest smart contract platforms, and they take opposite approaches to scaling. For a deeper look at Ethereum itself, read our Ethereum guide.

The core trade-off: Solana offers a faster, cheaper single-chain experience but asks more of validators, which makes running one costlier and concentrates the network among fewer, better-resourced operators. Ethereum spreads validation across far more participants and moves most activity to layer 2s, which makes the base layer harder to capture but fragments users across many networks. Neither design is objectively better; they suit different priorities.

Risks of Solana to Understand

• Price volatility: SOL fell more than 90% from its 2021 peak to its late-2022 low. Large drawdowns can happen again.
• Technical risk: Alpenglow is a brand-new consensus system. New code carries the risk of new bugs, even after audits and testnets.
• Centralization: high hardware costs limit who can run a validator, and a large share of stake sits with a relatively small number of operators and a few data center providers.
• Client concentration: most stake still ran on one client family in 2026, although Firedancer is reducing this.
• Ecosystem risk: a big share of Solana activity has come from speculative memecoin trading, which can dry up quickly and attracts scams.
• Regulatory risk: rules for crypto assets, staking and the products built on Solana continue to change in the US, UK and EU.

Before buying any SOL, decide how much you could afford to lose entirely and store it securely, ideally in a self-custody wallet you control. Our crypto hub has more beginner guides.

Bottom Line

Solana is a high-speed proof-of-stake blockchain that keeps fees at fractions of a cent by running one fast chain on powerful hardware and executing transactions in parallel. Its original Proof of History clock made that speed possible, and the 2026 Alpenglow upgrade now aims for near-instant finality. The costs are a record of outages through early 2024, a more demanding validator setup than Ethereum, and heavy reliance on speculative activity. If you use or hold SOL, understand those trade-offs, keep your position size modest, and follow how Alpenglow and Firedancer perform over time.

Sources

• Solana – Solana: A new architecture for a high performance blockchain (whitepaper)
• Solana – Alpenglow
• Solana – Fees on Solana
• Solana – Staking on Solana
• Firedancer – Independent Solana validator client
• Ethereum.org – Proof-of-Stake (PoS)
• Ethereum.org – Gas and Fees