Solana (SOL) Explained: Consensus, Fees, Supply and Risks

Solana is a proof-of-stake blockchain built for fast, low-cost transactions, and SOL is its native token, used to pay fees and to stake with validators. This page explains how the network works, what a transaction costs, how new SOL is issued, which wallets and exchanges support it and what has gone wrong in the past. Crypto assets are volatile and nothing here is financial advice.

What is Solana?

Solana is a layer-1 blockchain that runs smart contracts, tokens and payments on a single fast chain instead of relying on separate layer-2 networks. It was proposed in 2017 and launched in 2020. Its native token, SOL, pays transaction fees and is staked to validators who produce blocks and secure the network. Tokens issued on Solana follow the SPL token standard.

The design choice that defines Solana is that everything happens on one layer. Ethereum pushes most everyday activity to rollups such as Arbitrum and Base, while Solana tries to keep execution, settlement and data on the base chain and scale it with faster hardware and parallel processing. That is why Solana’s validators need far more powerful machines than Ethereum’s, and why its fees are low even for small transfers. For a side-by-side view, read our Solana vs Ethereum comparison of fees, speed and trade-offs.

Common uses include stablecoin transfers, decentralised exchanges, token launches and payments. Many popular memecoins were launched on Solana, which brought heavy traffic and also a lot of scams (see the risks section below).

How does Solana reach consensus?

Solana uses proof of stake: validators lock up SOL, take turns as block leaders and vote on blocks, with influence weighted by stake. Since the Alpenglow upgrade was activated in October 2026, validators send votes directly to each other and aggregate them into a stake-weighted certificate, so a block can finalise within a single slot. Before that, Solana ran Tower BFT with Proof of History as a shared clock.

From mainnet launch until 2026, Solana’s design relied on Proof of History, a continuous hash sequence that proved the order of events, plus Tower BFT, a variant of Practical Byzantine Fault Tolerance in which validators cast votes as on-chain transactions. Anza’s documentation describes the Proof of History synchronisation model, which is why many older guides still call it the heart of Solana.

Alpenglow (SIMD-0326) was approved in a validator governance vote in September 2025. According to the Solana Foundation’s October 2026 ecosystem roundup, the network cut its target slot time to 200 milliseconds and activated Alpenglow that month, starting with the Votor voting protocol; a second component, Rotor, is planned for a later release. The Foundation says Proof of History is no longer part of how validators reach agreement, vote transactions are no longer counted on chain, and validators joining Alpenglow need a registered BLS key. For wallets and apps, signing and sending transactions work as before; finality simply arrives sooner.

Why does client diversity matter?

For years almost every validator ran the same software, so one bug could halt the whole chain. Jump Crypto’s Firedancer, a ground-up rewrite in C, went live on mainnet in December 2025, as reported by The Block, after about 100 days in production on a few validators. Its hybrid predecessor, Frankendancer, combines Firedancer and Agave code; by October 2026 Firedancer releases were shipping work on Alpenglow alongside Agave. A second independent client reduces the chance that a single software flaw stops block production.

How much does a Solana transaction cost?

A simple Solana transaction costs a base fee of 5,000 lamports (0.000005 SOL) per signature, which is a fraction of a cent at most SOL prices. During congestion, users can add a priority fee priced per compute unit to get included faster. Half of the base fee is burned and half goes to the validator, while priority fees have gone entirely to the validator since the SIMD-0096 change.

The fee model is documented in Solana’s core fees documentation. A transaction can request up to 1.4 million compute units, and the default is 200,000 compute units per instruction. Wallets usually set the priority fee automatically, which is why the same swap can cost slightly different amounts minutes apart.

There is one cost that surprises new users: rent. Every account on Solana, including each token account you hold, must keep a minimum SOL balance to be rent-exempt. The documentation gives an example of 0.10529088 SOL for a 15,000-byte account; ordinary token accounts are much smaller and need far less. When you close an empty token account, that deposit comes back to you.

Example: a wallet transfer with one signature and no priority fee costs 0.000005 SOL. If you made 1,000 such transfers, you would spend 0.005 SOL in base fees. Exchange withdrawal fees are a separate charge set by each exchange and are usually higher than the network fee.

Does Solana have a maximum supply of SOL?

No. Solana has no hard cap on supply. New SOL is created every epoch and paid to validators and stakers as rewards. The Solana Foundation’s published design starts inflation at 8% a year, cuts the rate by 15% each year (a relative cut, not 15 percentage points) and settles at a long-term fixed rate of 1.5% a year. Burned fees partly offset issuance.

The schedule is described on the Foundation’s staking and inflation FAQ. Because the rate declines gradually, the current annual inflation in any given year sits somewhere between the initial and long-term figures; you can check the live rate with the getInflationRate RPC method or a block explorer. A US SEC filing that discusses Solana as a treasury asset notes that, unlike some digital assets, “there is no limit on the supply of Solana”, and that around 38% of the initial supply was distributed by Solana Labs through a SAFT agreement.

Compare this with Bitcoin’s fixed 21 million supply and halvings. SOL holders who do not stake are diluted by issuance over time, which is one reason staking is so common on Solana.

How does staking SOL work?

You stake SOL by delegating it to a validator from a wallet or an exchange. Your SOL stays in a stake account you control, the validator does the work, and rewards from new issuance are paid each epoch, minus the validator’s commission. Yield depends on the inflation rate, the share of all SOL that is staked, the validator’s uptime and its commission, so it changes from epoch to epoch.

Native staking is non-custodial: Ledger, for example, says its Solana wallet lets you stake SOL by delegating to a validator while you keep custody. Exchanges such as Kraken also offer SOL staking, with eligibility that varies by country. Liquid staking protocols give you a token that represents staked SOL; it adds smart-contract risk in exchange for flexibility. Unstaking is not instant: stake deactivates at the end of an epoch, which lasts roughly two days.

In the US, staking also arrived inside regulated products: the Bitwise Solana Staking ETF (ticker BSOL) started trading on NYSE on 28 October 2025 with a 0.20% management fee and a plan to stake its SOL. An exchange-traded product gives price exposure without you holding the coins or the keys yourself.

Has the Solana network gone down before?

Yes. Solana has suffered several full or partial outages, mostly between 2021 and 2023, with the most recent major halt on 6 February 2024. Causes included bot transaction floods, consensus bugs and block-propagation bugs. In each case validators had to coordinate a restart. Funds were not lost, but transactions could not be processed, which matters if you need to move money at a specific moment.

A US SEC filing by a company holding SOL lists the incidents as a risk factor. The table below follows that Form 20-F risk disclosure, with the February 2024 entry taken from the Solana Foundation’s own network performance report, which says funds were safe throughout.

Fee markets, stake-weighted transaction handling and the arrival of Firedancer were all aimed at preventing repeats. Whether they succeed is something only time and uptime data can show.

Which wallets support Solana?

The main self-custody options for SOL and SPL tokens are Phantom, Solflare and hardware wallets from Ledger, which can also be paired with Phantom. Phantom began on Solana and now lists nine networks, including Solana, Ethereum, Bitcoin, Base, Polygon and BNB Chain. Whichever you use, download it only from the vendor’s own domain, never from search ads or shared links.

Phantom’s own help centre lists its supported networks, and its site states that the wallet is self-custodial. We compare it with MetaMask and Trust Wallet in MetaMask vs Trust Wallet vs Phantom. For larger balances, a hardware wallet keeps the signing key offline; see Ledger vs Trezor vs Coldcard for the trade-offs between brands.

Fake wallet download pages are a real problem: search results have included pages hosted on Google Sites posing as the official Phantom download. A genuine wallet will never ask you to type your recovery phrase into a website. Our guide on how to store a seed phrase covers backup and storage safely.

Where can you buy SOL?

SOL is listed on most large exchanges, including Kraken, Coinbase and Binance, where it can be bought with fiat or other crypto. Kraken’s SOL page offers spot buying from a $10 minimum, margin and staking, with staking eligibility varying by region. Availability depends on your country, so check which entity of an exchange serves you before opening an account.

Our reviews cover licensing and fees in detail: Kraken review, Binance review (Binance does not serve US residents; Binance.US is a separate company) and Coinbase review. If you plan to hold SOL long term, move it to a wallet you control after buying; our guide on moving crypto from an exchange to a wallet walks through test transactions and address checks.

When you withdraw, pick the Solana network, not a wrapped version of SOL on another chain, unless you know your wallet supports that chain.

What are the main risks of Solana?

The main risks are network reliability, validator concentration, regulatory uncertainty and scams. Solana has a record of outages, its demanding hardware limits who can run a validator, and the SEC previously alleged SOL was a security before dropping those claims in 2024 and 2025. Fast, cheap token creation has also made Solana a hub for rug pulls and phishing drainers.

• Hardware and concentration. Anza’s validator requirements call for 12 or more CPU cores, 256 GB or more of RAM, several NVMe drives and at least 2 Gbit/s symmetric bandwidth for a staked node. That puts validating out of reach of home users and pushes it toward data centres.
• Regulatory status. The SEC named SOL as a security in its 2023 complaints against Binance and Coinbase. It amended the Binance complaint in July 2024 to remove that assertion and dismissed the Coinbase case on 27 February 2025, saying the decision was not based on the merits. Neither step is a ruling that SOL is not a security.
• Memecoins and drainers. Anyone can create a token in minutes, so many new tokens are abandoned or rigged. Wallet-drainer sites ask you to sign a transaction that hands over your assets; read what you sign, and use a separate wallet for experiments.
• Exchange risk. SOL held on an exchange depends on that exchange’s solvency and security; see is it safe to keep crypto on an exchange.