Solana (SOL)

Solana: what it is and what it’s used for

Solana is a public blockchain developed by Anatoly Yakovenko and a team with roots in telecom and chip engineering, launched in March 2020. The SOL coin powers everything on this network. You’ll need SOL for every transaction, even when you’re just transferring a dollar-pegged stablecoin, whether you’re moving, swapping, or making a payment.

Why use Solana? Its technology is built for applications that have to process lots of small, rapid transactions. This is why you’ll find decentralized exchanges, NFT marketplaces, payment apps, games, and wallets that can swap tokens in seconds. Stablecoins like USDC and USDT also circulate on Solana. Some users move dollars between wallets just to avoid the higher fees attached to Ethereum transfers. (If it’s not clear to you how a coin differs from a token, there’s a breakdown in our article on coins versus tokens.)

Solana enters direct competition with Ethereum. You’ll see them compared frequently. Both try to solve the same problems but take different approaches, and in the next section, you’ll see where those methods line up, and where they diverge.

The mechanics: proof of stake and Solana’s proof of history

Solana relies on proof of stake for security. Validators must lock up SOL, their own or coins delegated by others, and that commitment allows them to propose and approve blocks. No mining takes place like it does on Bitcoin; the difference is detailed in our explanation of proof of work and proof of stake.

But Solana also brings something unique: proof of history. It acts as a cryptographic clock for every transaction, creating a clear timeline that all validators can verify. This means there’s no drawn-out process confirming the order of transactions, letting blocks arrive in just fractions of a second. Solana doesn’t add more layers or split activity, it runs everything on a single chain, and to do that, validators are asked to use quite powerful hardware.

This comes with trade-offs. Running a validator isn’t as accessible as on other blockchains because of its hardware requirements, and the network experienced a handful of outages between 2021 and 2024. When that happened, block production would pause until validators worked together to restart things. To make the system less reliant on one program, Jump Crypto created a second validator client called Firedancer.

Unlike Bitcoin, which is limited to 21 million coins, SOL doesn’t have a strict supply limit. New coins enter circulation as staking rewards, gradually decreasing over time. The smallest unit is a lamport, one billionth of a SOL, so you aren’t forced to buy in large chunks.

What affects Solana’s price

During the last year, SOL’s price changed by -51.46%; in the most recent 30 days, it moved -20.90%. The range for the past year runs from 62.18 USD up to 194.07 USD.

Most movement comes from four influences. The broad crypto market is the first: SOL often mirrors Bitcoin, but sharp moves are amplified both ways, it can drop faster when the market turns risk-off, but also recover faster. Next, direct activity on Solana itself matters. Each app launch, token listing or uptick in on-chain trades creates more demand for SOL, as fees are settled in it.

Network news is another factor. Announcements of upgrades usually lift confidence, while technical disturbances or outages can weigh heavily, at least for a time. Rules set by regulators about whether and where exchanges can offer SOL also play a part. And don’t forget, new SOL created as staking rewards enters the market, some of which may be sold right away.

While no indicator will let you catch every move before it happens, you can often explain a sharp price shift. Take a moment to see if Bitcoin changed direction first, if anything significant just happened on-chain, or if thin trading made for a jumpy day.

Buying Solana: your costs and steps

To purchase SOL, you’ll open an account on an exchange, verify your identity, add funds and then place your order. That ID verification, see our piece on KYC checks, usually wraps up in minutes, though it might take longer in rare cases. Sending money by bank transfer is normally the least expensive, but it’s not the fastest; card deposits are instant, though they cost a bit extra.

The price you see when you buy isn’t the whole story. Your total cost is spread over three main charges. There’s the spread, which is the gap between the quoted buy and sell prices. If you use instant purchase, the spread is often wider than when placing a standard trade. The trading fee depends on whether you’re placing a maker or taker order. Lastly, you pay a withdrawal fee when sending SOL out to your own wallet. Setting a limit order, described in this article, is worth learning about, it can cut your effective fees.

Your exchange choices include Kraken and Coinbase, which accept clients from a broad set of countries. Bitvavo and Bitpanda both focus on Europe and euro payments. You’ll find our Kraken vs Coinbase if you’re comparing the first two. The table above goes beyond headline charges and compares what you actually receive after every cost is taken out. We detail how these comparisons are made on our How we compare page.

Always check the SOL withdrawal fee before placing your order. Instead of being a percentage, exchanges charge a set amount per withdrawal.

Where to store SOL: exchange or your own wallet

Once you’ve bought SOL, it'll be credited to your exchange account. That simplifies trading, and security is managed for you. But you need to trust the exchange’s solvency and defenses, as they control the private keys. If you want to weigh this against storing SOL yourself, look at our guide to custodial and non-custodial wallets.

When you use your own wallet, you’re holding the keys. Phantom and Solflare are two popular software wallets built for Solana’s features, while hardware wallets such as Ledger also support SOL, keeping your keys off the internet. No matter which you choose, treat your seed phrase with real care: whoever knows it can use your coins, and there’s no reset button if you lose it. Write it down on paper, not on a device or in the cloud, and see why seed phrases matter for peace of mind.

If this is your first withdrawal from an exchange, move a small test amount first. Always double-check the entire wallet address and make absolutely sure you’ve selected the Solana network. Sending SOL to an incompatible network can be a costly mistake, and the section on wrong network transfers walks you through what happens if you get it wrong.

You also have the option to stake your SOL, through your own wallet or via an exchange, and receive staking rewards. Unstaking is not immediate: you’ll need to wait until the current epoch finishes, usually a couple of days. For what that involves, you’ll find more in our guide to staking.

Risks and tax: what to know up front

Crypto assets like SOL can be very volatile. Prices may drop sharply at any time, so you should only commit funds you’re comfortable seeing lose value. Please see this page as general information, not investment advice.

Some risks are particular to Solana. The network has been affected by outages, showing block production can pause. The active token market brings its own hazards, scams include counterfeit tokens appearing in wallets, malicious connection prompts, and lookalike sites. Don’t approve wallet actions you can’t clearly understand. Our crypto scams warning list can help you spot classic patterns.

Tax rules depend on where you live, and details matter. In many countries, converting or selling SOL, exchanging for another crypto or spending it are all treated as taxable events, and staking rewards may count as income from the moment you receive them. To keep records straight, write down the amount, date and price for every transaction. Read up on taxable events and staking reward rules so you can discuss points specific to your situation with a professional.