Solana (SOL) Explained: The Layer-1 Blockchain Known as the “Ethereum Killer”
- rachelbeautybar
- Aug 20
- 4 min read
Solana is a Layer-1 blockchain designed for speed, scalability, and low-cost transactions. First conceptualized in 2017 and officially launched in 2020 by Solana Labs, the network aims to solve the Blockchain Trilemma — scalability, decentralization, and security.
What makes Solana unique is its hybrid consensus system, combining Proof of History (PoH) with Proof of Stake (PoS). This architecture allows the network to process up to 65,000 transactions per second (TPS) at a cost of just $0.00025 per transaction.
With such performance, Solana quickly became a hub for diverse projects, spanning DeFi, NFT, AI, DePIN, Web3 applications, and the explosive memecoin sector (e.g., WIF, BONK, TRUMP, PENGU).
As of April 2025, Solana has a market capitalization of $55.3 billion (Source: CoinGecko, Updated April 2025), ranking Top 7 among all cryptocurrencies.
History of Solana
Solana was founded by Anatoly Yakovenko, a former Qualcomm engineer specializing in distributed systems. His breakthrough idea was to integrate a cryptographic clock into blockchain, enabling nodes to agree on transaction order without constant communication. This innovation became Proof of History (PoH) — the foundation of Solana’s scalability.
Key Milestones:
2017: Solana Labs established in San Francisco. Initially named “Loom,” later rebranded as Solana (after Solana Beach, California).
2018: Whitepaper released; testnet launched.
2018–2019: Raised over $20M via private sales.
2020: Solana Mainnet Beta launched with the “Tour de SOL” stress-test program.
2021: Ecosystem boom — Solana became the go-to chain for NFT and DeFi projects, earning the nickname “Ethereum Killer.”
2022–2023: Faced network outages and the fallout of FTX collapse, leading to a tough bear market.
2024–2025: Massive comeback — Solana regained momentum with record TVL growth, memecoin frenzy, and institutional interest including VanEck filing for a Solana Spot ETF in 2024.
What Problems Does Solana Solve?
The Blockchain Trilemma is a challenge for every blockchain:
Scalability: handling high throughput without congestion.
Security: keeping the network safe from attacks.
Decentralization: ensuring no single point of control.
Ethereum, while dominant, relies heavily on Layer-2 scaling, and suffers from high gas fees during network congestion. Solana’s approach is to scale directly at Layer-1, offering both speed and affordability without sacrificing usability.
Key Advantages of Solana:
High throughput: Up to 65,000 TPS, compared to Ethereum’s ~15 TPS.
Ultra-low fees: Less than $0.001 per transaction.
Fast finality: Transactions confirmed within milliseconds.
No sharding needed: Solana scales natively with advanced consensus and hardware optimization.
Developer-friendly: Supports Rust, C, and C++, with rich documentation and a thriving dev community.
How Solana Works: Core Innovations
1. Proof of History (PoH)
A cryptographic clock that timestamps transactions, allowing nodes to agree on order without waiting. This dramatically reduces latency and boosts throughput.
2. Tower BFT
An optimized version of Byzantine Fault Tolerance (BFT) consensus, using PoH timestamps to minimize communication overhead between validators.
3. Turbine
A data propagation protocol inspired by BitTorrent — breaks data into smaller packets, ensuring faster distribution across nodes.
4. Gulf Stream
Eliminates mempools by pushing transactions directly to validators, reducing delays.
5. Sealevel
Enables parallel transaction processing, making Solana one of the few blockchains capable of handling multiple smart contracts simultaneously.
6. Pipelining
Like an assembly line, Solana processes transaction steps (signature verification, execution, storage) simultaneously across hardware components (CPU, GPU, SSD).
7. Cloudbreak & Archivers
Cloudbreak optimizes account storage for scalability, while Archivers store historical data, ensuring decentralization and efficiency.
Solana vs Other Layer-1 Blockchains
SOL Tokenomics
Token Name: Solana
Ticker: SOL
Type: Utility, Governance
Total Supply: ~598M SOL
Circulating Supply: ~515M SOL
Max Supply: Unlimited (with controlled inflation)
SOL Use Cases
Pay transaction fees
Staking for rewards and network security
Validator incentives
Governance voting
Token Distribution
(Source: Bitfinex, Updated April 2025)
Community: 34.9%
Seed & Private Investors: ~30%
Team & Founders: ~23%
Foundation & Others: ~12%
Solana Ecosystem Growth
As of 2025, Solana’s ecosystem includes over 500+ active projects:
DeFi: Jupiter, Raydium, Orca
Liquid Staking: Marinade, Jito
NFT/Marketplace: Tensor, Magic Eden
Gaming: Star Atlas, Helium
Memecoins: BONK, WIF, TRUMP, PNUT
On-chain Activity
TVL (Total Value Locked): Peaked at $11.98B (Jan 2025), currently at $6.15B (April 2025) (Source: DefiLlama).
Active Wallets: Monthly active wallets surged from 3.2M (Jan 2024) to 136.6M (Nov 2024) (Source: Token Terminal).
Daily Active Users: ~3.7M addresses per day, surpassing Ethereum and BNB Chain.
A big driver of this growth was pump.fun, a no-code memecoin launch platform, attracting 15M+ users and $611M in revenue (Updated April 2025, Source: Dune Analytics).
Roadmap 2025 and Beyond
Firedancer Validator Client (by Jump Crypto): Improves performance and adds client diversity.
zk-compression: Data compression to reduce on-chain storage costs.
Solana Mobile Stack (SMS): Expanding Solana Web3 experiences on mobile.
Institutional Adoption: ETF filings from VanEck, Fidelity, and Franklin Templeton signal institutional recognition.
Should You Invest in SOL in 2025?
As of April 8, 2025, SOL trades at $107 with a market cap of $55.3B (Source: CoinGecko).
Strengths:
Lightning-fast, low-cost transactions.
Strong ecosystem growth in DeFi, NFT, and memecoins.
Institutional momentum with ETF filings.
Backed by top VCs like a16z, Jump Crypto, Multicoin Capital.
Risks:
Network outages in the past (though improving with upgrades).
Regulatory concerns: SEC once classified SOL as an “unregistered security” (2023).
Competition: Ethereum, Avalanche, Aptos, and others.
Price Forecast (Source: Kraken Research, 2025)
2026: ~$122
2030: ~$149
2040: ~$242
While projections are speculative, they highlight positive long-term sentiment.
FAQs About Solana (SOL)
Is Solana decentralized? Yes, but criticisms remain due to validator concentration. Firedancer aims to improve decentralization.
Can Solana overtake Ethereum? Possibly in some sectors like memecoins, NFT, and social apps, but Ethereum remains dominant in overall ecosystem size.
Does Solana have an ETF? Not yet. VanEck, Fidelity, and Franklin Templeton have filed applications, pending SEC approval.
How to create a Solana wallet? Use Phantom, Solflare, Trust Wallet, or hardware wallets like Ledger. Setup involves creating a password and securely storing a 12-word seed phrase.
Conclusion
Solana (SOL) has evolved from being called a failed “Ethereum Killer” post-FTX collapse to one of the most active and promising blockchains in 2025. With cutting-edge technology, rapid adoption, and growing institutional interest, Solana is proving itself as a serious contender in the crypto world.
Whether Solana can maintain its momentum will depend on scalability upgrades, ecosystem expansion, and regulatory clarity. But one thing is clear: Solana is no longer just a meme — it’s a blockchain powerhouse.
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