Solana has established itself as one of the leading blockchain platforms and a major competitor to Ethereum. The project solves some key problems inherent in Ethereum, such as slow transactions and high gas fees, by combining Proof-of-Stake with a unique feature called Proof-of-History.
This article describes what Solana is, how it works and its improvements and features compared to Ethereum.
What is Solana?
Solana is a decentralized blockchain built for scalable and user-friendly app development. The project was first developed by Anatoly Yakovenko, a former developer at Qualcomm. The Solana blockchain combines Proof-of-Stake with a unique feature called Proof-of-History to validate transactions on the network.
According to the whitepaper, the combination of these two makes it possible to scale the network without losing decentralization, a feat many projects are struggling to achieve. Solana is generally regarded as a long-term rival of Ethereum, considering its similarity to the second largest cryptocurrency and the fact that it is faster and cheaper.
The time taken to settle a transaction on Solana is approximately 400 milliseconds, which is way faster than Ethereum’s transactions. In normal operation, the network sustains 2,000 to 4,000 transactions per second (TPS), with a theoretical maximum of 65,000 TPS. The average transaction fee is just $0.00025, making it over 10,000 times cheaper than Ethereum. These attributes have helped Solana grow to nearly $10 billion in DeFi total value locked (TVL) and close to 3 million daily active wallets in 2026.
Solana experienced several network outages between 2021 and 2022, but has since significantly improved its reliability. The introduction of the QUIC protocol, stake-weight limits, Jito bundles and the Firedancer validator client (built by Jump Crypto) have brought current uptime to approximately 99.9%. The Firedancer client also introduced multi-client diversity, removing the risk of single-client dependency.
SOL is available on:
How Solana works
If you are wondering how the Solana network is so fast and at the same time very cheap, the answer lies in how the network works. This is primarily determined by the consensus mechanism adopted. The network does not use Bitcoin’s Proof-of-Work. Instead, it combines Proof-of-Stake with Proof-of-History in a unique way.
The only difference between this combination and the traditional Proof-of-Stake is that it introduces time (history). This allows the network to use timestamps to put the date and time when a block is validated on such a block. That way, validator sequencing is made easy and they can know their order easily.
This gives Solana an edge over other Proof-of-Stake blockchains where validators have to agree on time. This means nodes have to communicate back and forth until they agree on the time before submitting a block, which is quite demanding and can easily introduce errors.
Another reason for Solana’s superior speed is that several validators can validate a number of blocks all at once. The network’s Proof-of-Stake also does not have steep requirements, and almost anyone can stake. Stakers however have to pay a voting fee of over 1 SOL on a daily basis to participate as a validator.
Solana also has a feature called SeaLevel that lets validators run smart contract codes in a parallel way. This means that the network can process tens of thousands of smart contracts concurrently with no issues of network congestion using as many nodes as are available. This is possible because Solana transactions describe all the states a transaction will read or write while executing.
Solana in 2026: Firedancer and Alpenglow
Two major upgrades are shaping Solana’s future in 2026: Firedancer and Alpenglow.
Firedancer is a completely new validator client built from the ground up by Jump Crypto in C/C++. In testing, its networking layer processed over 1,000,000 transactions per second. A production version is already running on mainnet nodes, providing multi-client diversity for the first time in Solana’s history. This is important because it reduces the risk associated with relying on a single client implementation.
Alpenglow is an overhaul of Solana’s consensus protocol that aims to achieve near-instant finality of approximately 150 milliseconds. Combined with plans to double block space and raise compute-unit limits, these upgrades position Solana to handle high-frequency trading, large-scale stablecoin transfers and other financial workloads at web-scale speeds.
What is SOL and its uses
SOL is the native currency used on the Solana blockchain. It is used to pay for transaction fees and every other activity that requires payment on the network. Solana is unique in that SOL is both inflationary and deflationary.
A portion of transaction fees is burned, causing a reduction of the number of SOL in circulation. Currently, 50% of all transaction fees are permanently burned. At the same time, new SOL is created through staking rewards, which introduces inflation.
Solana has an inflation schedule where staking rewards started at 8% and are designed to decrease gradually until reaching a long-term rate of 1.5%. The initial circulating supply was 500 million SOL, which has increased over time due to staking rewards paid out to validators and delegators.
The Solana ecosystem in 2026
Solana’s ecosystem has grown dramatically and now spans DeFi, NFTs, gaming, payments and institutional finance. Some notable developments include:
- Stablecoins: Solana has become one of the largest carriers of USDC transactions, processing an estimated 50% of all USDC transfers during certain periods in 2025. Western Union announced it will issue a U.S. dollar stablecoin (USDPT) on Solana via Anchorage Digital, targeting launch in the first half of 2026.
- Institutional adoption: JPMorgan executed a $50 million commercial paper trade on Solana. Fidelity has incorporated Solana into its crypto offerings, and banking consortium R3 is using Solana for tokenized assets. Several ETF filings for SOL have been submitted to the SEC.
- Developer community: Over 17,000 active developers are building on Solana, making it one of the most active developer ecosystems in crypto.
How is Solana different from Ethereum?
We’ve seen how Solana and Ethereum are very similar in that they both support smart contracts and decentralized applications (dApps). Now, how are they different from each other?
Consensus mechanism
Ethereum completed its migration from Proof-of-Work to Proof-of-Stake in September 2022 (known as “The Merge”). While both chains now use PoS, Solana adds Proof-of-History to make timestamping automatic on all validated blocks. This means validators don’t need to communicate to agree on the ordering of transactions, resulting in significantly faster block times and lower costs.
Speed and fees
| Metric | Solana | Ethereum |
|---|---|---|
| Block time | ~400ms | ~12 seconds |
| Real-world TPS | 2,000 – 4,000 | ~15 – 30 |
| Average transaction fee | ~$0.00025 | ~$1 – $5 (varies) |
| Finality | ~2 seconds (150ms with Alpenglow) | ~15 minutes |
| DeFi TVL | ~$10 billion | ~$50+ billion |
Programming
Ethereum uses Solidity as its base programming language, designed specifically for smart contract coding. Solana on the other hand uses Rust, a programming language that makes parallelization possible so that validators can all be processing blocks at the same time. This is the secret of Solana being one of the fastest networks available. Solana also supports C and C++ for smart contract development.
Scaling approach
Ethereum and Solana take fundamentally different approaches to scaling. Ethereum uses a modular approach: the main chain handles security and consensus, while Layer 2 rollups (like Arbitrum, Optimism and Base) handle most user transactions at lower cost. This means Ethereum’s ecosystem is spread across many chains.
Solana takes a monolithic approach: all activity happens on a single high-performance chain. This means there is no need to bridge assets between layers, which simplifies the user experience. The tradeoff is that Solana requires more powerful validator hardware, which could limit decentralization compared to Ethereum’s lower hardware requirements.
DeFi ecosystem
Both Ethereum and Solana support DeFi, however, Ethereum’s DeFi ecosystem remains larger and more mature with over $50 billion in TVL across its L1 and L2 networks. Solana’s TVL has grown to approximately $10 billion, making it the third-largest DeFi ecosystem after Ethereum and BNB Chain.
Despite Solana’s relatively newer ecosystem, the project has grown rapidly through hackathons, developer grants and the memecoin/NFT boom of 2024-2025. The network has become especially popular for trading, payments and mobile-first applications thanks to its near-instant confirmation times and negligible fees.
Please note: investing in cryptocurrencies involves risk. Past performance is no guarantee of future results. Never invest more than you can afford to lose.
Table of Contents