Solana is a popular blockchain that supports decentralized applications and tokens. Launched in 2020, the network is frequently pitched as a leading alternative to the high fees and slow transaction times that have sometimes plagued market leader Ethereum. Solana claims to be capable of processing transactions 4,000 times faster than Ethereum.
Those pitches are often made by venture capitalists, who flooded the project, helmed by former Qualcomm employee Anatoly Yakovenko, with over $300 million in 2021. The cash jolt helped Solana’s native currency, SOL, rise to highs of $78 billion in June of that year.
Solana has since its inception relied on the environmentally-friendly proof-of-stake technique to verify transactions on its blockchain and, like Ethereum, users pay transaction fees in its native currency.
Solana is not compatible with popular Ethereum wallets like MetaMask, and instead relies on its own network of wallet makers. Popular choices include Solflare and Phantom. It also has a lively NFT scene, hosting projects like Solana Monkey Business and the Degenerate Ape Academy.
Solana’s market cap lags behind Ethereum by several hundred billion dollars, and its price is far more volatile. Most of the venture capitalists and investors that boosted the coin in the bull run of 2021 went quiet while its market cap fell from $78 billion in June of that year to $13 billion a year later.
The blockchain also suffered several crashes and outages that shut down the blockchain for hours at a time. A bug in June 2022 brought down the blockchain for four hours, and in September 2021 a popular DeFi protocol switched off the network for almost 18 hours.
Solana took a bigger hit than most other cryptocurrencies following the November 2022 collapse of FTX because many people regarded the project as intertwined with the exchange’s disgraced founder, Sam Bankman-Fried. Since then, Solana’s founders have stated repeatedly that the blockchain can flourish on its own. By mid-2023, Solana appears to have largely recovered from the scandal, and its token price has climbed.
Go deeper:
Solana white paper—Anatoly Yakovenko
See also:
What is DeFi?
What is Ethereum?
What is cryptocurrency?
Try it:
Solscan—Solana’s blockchain explorer
Phantom—A popular Solana wallet