What is Solana (SOL)?

Solana is a single high-throughput blockchain that does its execution in one place rather than farming it out to rollups. Where Ethereum keeps its base layer cheap to verify and pushes activity upward, Solana asks more of its validators — better hardware, more bandwidth — and in exchange gives users sub-second confirmation and fees measured in fractions of a cent, with no bridging between layers.

The mechanism that makes this work is Proof of History, which is often misdescribed as a consensus algorithm. It is not. It is a verifiable clock: a continuously hashed sequence that timestamps transactions before consensus runs, so validators do not have to negotiate what happened first. Removing that negotiation is where most of the speed comes from.

Firedancer, and why it is the most important thing here

Until recently Solana ran on essentially one validator implementation. A bug in it was a bug in the whole network — which is the honest explanation for most of the outages. Firedancer, built by Jump Crypto from scratch in C, is an independent second client. It spent over 100 days on testnet producing more than 50,000 blocks without a major incident and reached mainnet in December 2025; by early 2026 more than 20% of active validators were running it.

The headline number attached to it is a million transactions per second, which is a laboratory figure and not what the network does. The real value is client diversity: a defect in one implementation no longer stops the chain. That is the fix for Solana's actual historical weakness, and it is worth more than the throughput claim.

• Gas for every transaction, at fees low enough that applications can do things — on-chain order books, frequent updates — that would be uneconomic elsewhere.
• Staking, either by running a validator or delegating, which secures the chain and pays around 6%.
• Collateral and quote asset across Solana DeFi, where Jupiter, Raydium and the perpetuals venues are concentrated.
• The settlement layer for consumer applications — payments, NFTs, the Seeker phone — that need speed and cheapness more than they need maximal decentralisation.

Solana versus Ethereum

They made opposite bets and both are still live. Solana chose one fast chain and accepted heavier validator requirements. Ethereum chose a cheap-to-verify base layer and moved execution to rollups, accepting fragmentation and bridging friction. For a single application that needs latency, Solana is the better environment today. For total value settled and institutional willingness to hold the asset, Ethereum is still ahead. Solana's bet is that users care about experience more than architecture; the evidence so far is mixed and trending its way.

SOL has no supply cap. New tokens are issued to stakers on a disinflationary schedule that began at 8% annually and steps down roughly 15% each year toward a 1.5% terminal rate. Half of every transaction fee is burned, which offsets some issuance but nowhere near all of it at current volumes.

So SOL is inflationary, and unusually for crypto, honestly so — the schedule is published and has run to plan. The practical consequence for a holder is that not staking means being diluted by everyone who does. That is a design choice, not an accident: it is how the network pushes participation up.

SIMD-0228 and what the vote revealed

In March 2025 Multicoin Capital proposed SIMD-0228, replacing the fixed schedule with a market-driven one that would have cut inflation below 1% at then-current staking levels. It failed: 61% in favour against a 66% supermajority requirement.

It is the most instructive governance event in Solana's history. A clear majority wanted lower issuance and could not get it, because validators — who are paid by issuance and who hold a large share of voting weight — were not unanimous. If you are modelling SOL's supply, note that the schedule is defended by the people it pays.

The FTX overhang, largely resolved

A substantial block of SOL sat on the FTX estate's balance sheet and was distributed through bankruptcy proceedings at steep discounts to buyers with lockups. Those unlocks dominated supply anxiety through 2024 and 2025 and are now mostly behind the market — a real risk that was correctly identified and has largely passed, which is worth saying because most identified risks are not.

Staking SOL means delegating to a validator, which keeps the tokens in your wallet and puts them behind that validator's stake weight. Yields run roughly 5–7%: Bitwise's BSOL fund reported 6.42% gross and 6.04% net in May 2026, which is a reasonable proxy for what a delegator actually receives.

There is no slashing implemented on Solana today. A bad validator costs you missed rewards rather than principal — a materially gentler failure mode than Ethereum's, and one worth understanding rather than assuming.

Unstaking waits for the end of the current epoch, about two to three days. Liquid staking tokens — jitoSOL, mSOL and others — let you avoid the wait and use the position elsewhere, at the cost of a fee and a receipt token that can trade below par when you most want to sell it.

Staking ETFs

Six US spot staking SOL ETFs exist, including Bitwise's BSOL, Grayscale's GSOL and the REX-Osprey SSK, with more than $638m in combined assets in early 2026. They pass the staking yield through net of fees, inside a brokerage account, with no wallet and no epoch mechanics — and with a fee that eats part of a yield that is itself partly compensation for dilution.

The outage record, and what has actually changed

Solana suffered repeated full or partial halts between 2021 and 2023 — a network stopping for hours, which is the thing a blockchain is not supposed to do. The causes varied but the pattern did not: one client implementation, heavy load, a defect that took everything down together.

Firedancer is the structural answer and it is now real rather than promised. The fair assessment is that the specific flaw behind those outages has been addressed and the network has a materially different risk profile from the one it had in 2022. The fair caveat is that Firedancer is a young codebase running a fifth of the validators, and client diversity reduces correlated failure without eliminating it.

Hardware requirements and validator economics

Running a Solana validator costs more than running an Ethereum one, so there are fewer of them and they cluster with professional operators and data centres. That is the price of the throughput, and it is a real centralisation pressure rather than a talking point.

Dilution if you do not stake

Issuance goes to stakers. Hold SOL without staking and you are paying for everyone who does. SIMD-0228 showed that lowering this requires a supermajority that the people receiving the issuance can block.

Concentrated activity

A large share of Solana's transaction volume has come from memecoin trading and the bots around it. That is genuine usage generating genuine fees, and it is also the most cyclical demand in crypto. Reading Solana's activity charts without separating that from durable application use will mislead you in both directions.