What Solana actually is

Solana is a public blockchain designed to process a very large number of transactions quickly and cheaply. Like Ethereum, it supports smart contracts, small programs that run on the network and carry out agreements automatically. Developers use it to build trading platforms, payment apps, games and digital collectibles.

It was created by Anatoly Yakovenko, a former engineer who first described the idea in 2017, together with Raj Gokal. The network went live in 2020, and its native currency is SOL.

What makes it different

Most blockchains are limited by how fast they can agree on the order of transactions. Solana tries to solve this with a technique called proof of history, which timestamps events so that validators do not have to spend as much time coordinating. It combines this with proof of stake, so validators put up SOL as a deposit to help secure the network.

The result is a network that can handle many transactions at a time and charges very low fees for each one. That makes it attractive for apps that need lots of small transactions, such as payments and trading.

What SOL is used for

  • Fees. Every transaction costs a small fee, paid in SOL.
  • Staking. Holders can stake SOL with validators and earn rewards for helping to run the network.
  • Applications. Many apps and tokens built on Solana use SOL as part of how they work.

The dividend question

SOL does not pay a dividend. Staking can generate rewards, but they are not dividends. The rate depends on how much SOL is staked, rewards come as more SOL whose price can move sharply, and staking carries its own risks. Treat them as a possible extra, not as a steady income stream.

Unlike a company share, SOL has no profits or cash flow behind it. Its price reflects demand for the network and the token.

What to keep in mind

  • High volatility. Prices have dropped sharply in the past. In 2022, the collapse of the FTX exchange, a major supporter of the ecosystem, hit the price hard.
  • Reliability. The network has suffered outages in the past, which is a risk for apps that depend on it.
  • Competition. Ethereum and many other blockchains compete for the same developers and users.
  • Supply. There is no fixed maximum supply, so new tokens are issued over time.
  • Regulation. Rules for tokens and staking vary by country and keep changing.

Quick take

Solana is a fast, low-fee blockchain platform with its own token. It is a speculative technology bet, not an income investment, and it cannot replace a dividend portfolio.