Solana (SOL) Explained: Everything You Need to Know Before You Buy
Every Wednesday we break down a different cryptocurrency in detail, because the goal isn't to chase tickers — it's to actually understand what you own. This week: Solana. Like stocks fall into sectors such as pharmaceuticals, technology, or energy, cryptocurrencies fall into categories too. Solana's category is layer 1: a blockchain launched in 2020 that uses proof of history alongside proof of stake.
One Chain Doing Every Job
The simplest way to understand Solana is to compare it to Ethereum. Both are blockchains that run programs, but they scale differently.
Execution is doing the work — processing transactions, running computation, matching orders. Settlement is making it final, where the transaction becomes irreversible on the ledger.
Ethereum scales outward. Rollups and layer 2s handle much of the execution while Ethereum's layer 1 acts as the settlement layer. That's a simplification — Ethereum can do both on the same layer — but it's the general shape of it. L2s have grown popular not just for speed but for cost, since many users share the expense.
Solana does both execution and settlement on its own layer 1. One chain, every job. Some argue Ethereum is slow; others argue that slowness is the price of security. Chains built for raw speed tend to run into different problems, which brings us to Solana's history.
Proof of History, and a Bumpy Timeline
In 2017, a Solana engineer published a paper on proof of history. His observation: the slowest part of a blockchain isn't processing transactions — it's getting thousands of computers to agree on what order things happened in. Proof of history is essentially a clock. Agree on the ordering first, then handle consensus. Proof of stake still provides the security, with validators staking SOL, the same way Ethereum does.
The timeline matters:
- 2017 — proof of history whitepaper
- 2020 — network goes live
- 2021 — explosive growth, and the first outages
- 2022 — FTX collapse hits the price hard (a backer problem, not a network problem)
- 2022–23 — repeated halts, five significant outages
- 2024 — last major incident
- 2025 — spot ETFs approved
Fire Dancer is the upcoming upgrade, aiming to cut finality from roughly 13 seconds to milliseconds. If you had to name Solana's single goal, it's probably speed.
The Numbers: Cheap, Fast, and Heavily Speculative
Average fees sit around a quarter of one hundredth of a cent. Throughput runs roughly 600 to 1,100 transactions per second in practice, versus Ethereum's 15 to 20. Cumulatively the network has processed over 400 billion transactions with about 2.2 million daily fee payers.
Ethereum holds around 53% of all DeFi total value locked; Solana sits near 7%. But in April 2026, Solana's DEX volume ran roughly $11 billion against Ethereum's $7 billion weekly — more trading, far less capital, and far lower revenue per transaction. Roughly a third of every dollar swapped on decentralized exchanges across all chains flows through Solana. Stablecoin supply sits near $15 billion, almost three times the chain's DeFi TVL — money parked in wallets, not deployed.
The ecosystem isn't only speculation: Jupiter dominates DEX aggregation, Kamino handles lending and derivatives, Phantom is the dominant wallet, Helium runs decentralized wireless, and Pyth and Render cover data and AI. But a large share of historical transaction counts came from memecoin activity — nearly 12 million tokens created on Pump.fun alone since 2024, most of which went to zero.
If you want to buy altcoins on MEXC with low spot fees, that's one route for exposure to layer 1 tokens — just separate the speculative tokens from the ones with actual usage. Since SOL is a proof-of-stake asset, it's also worth understanding how staking rewards and token emissions work before you assume yield is free money.
Judging It Before You Buy
Four questions I apply to every crypto: Does it earn? Yes, modestly — cheap fees, huge volume. Does the earning reach the token? Partly, through fee burns and staking rewards. Is the burn bigger than issuance? Not currently; supply is still growing. And how does it perform against Bitcoin? That's homework worth doing yourself. Pulling up the SOL/BTC pair and comparing crypto performance on price charts tells you more than a dollar chart alone. Toggle TVL between USD and SOL so you're reading token counts, not price moves — the same discipline applies to reading market cap as a signal for realistic upside.
The bear case is real: one chain, one point of failure, outage history, thin base-layer monetization, expensive validator hardware, and Ethereum's L2s closing the speed gap. The bull case is onboarding — millions of wallets already in use.
If you want to work through these evaluations with other investors each week, join the community at skool.com/crypto-profit, where we break down a new cryptocurrency every Wednesday and share the research templates we use.
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