What Is Solana (SOL)? Speed, Staking and Why It Rivals Ethereum
Solana is one of the fastest blockchains in existence. Learn what it is, how it works, why it competes with Ethereum, and what risks UK investors should know.
Solana is a blockchain platform designed for speed. While Ethereum processes around 15-30 transactions per second, Solana is theoretically capable of 65,000 transactions per second. That gap explains why Solana has become one of the most important blockchain platforms in the world.
In 2026, Solana hosts billions of dollars in DeFi protocols, the majority of the NFT trading volume that remains active, and a growing ecosystem of consumer applications. SOL, its native token, is consistently one of the top 5 cryptocurrencies by market cap.
This guide explains how Solana works, what it is used for, and the genuine risks that UK investors should weigh before getting involved.
A Brief History of Solana
Solana was founded by Anatoly Yakovenko, a former Qualcomm engineer, who published the Solana whitepaper in 2017. The mainnet launched in March 2020.
Solana rose to prominence in 2021 during the bull market, when its speed and low fees made it an attractive alternative to Ethereum, whose gas fees had become extremely expensive. At its peak in November 2021, SOL traded at around $260.
In 2022, Solana suffered a significant blow when FTX — the now-bankrupt crypto exchange — collapsed. Sam Bankman-Fried had been one of Solana’s biggest advocates, and FTX held large quantities of SOL. The price fell from around $160 to under $10.
The recovery has been dramatic. By early 2024, SOL had reclaimed $200. By 2025, the launch of the Solana MEME coin supercycle — driven partly by the launch of TRUMP coin on Solana — pushed the network to record transaction volumes. As of May 2026, SOL trades at approximately $180.
How Solana Works: Proof of History
Solana’s key technical innovation is called Proof of History (PoH). Understanding it helps explain how Solana achieves its speed.
Most blockchains slow down because nodes need to agree on what time it is before they can agree on the order of transactions. This consensus process takes time.
Solana’s Proof of History creates a cryptographic clock — a verifiable sequence of events that timestamps every transaction before it is included in a block. Because the ordering is already agreed upon before the consensus step, validators can process transactions much faster.
Solana combines Proof of History with Proof of Stake for security. Validators stake SOL to participate, and are selected to produce blocks based on the amount they have staked. Bad actors who try to cheat lose their staked SOL.
This combination allows Solana to achieve sub-second transaction finality — most transactions are confirmed in under 400 milliseconds.
What Is Solana Used For?
Solana’s speed and low fees (typically under £0.001 per transaction) make it suitable for applications that would be impractical on Ethereum at its base layer.
Decentralised exchanges: Jupiter, Raydium, and Orca handle billions of pounds in trading volume monthly. The speed of Solana makes limit orders and complex trading strategies possible in ways that Ethereum’s base layer cannot match.
NFTs: Magic Eden, the largest NFT marketplace by volume in 2023-2024, is built primarily on Solana. The low fees mean minting and trading NFTs costs pennies rather than pounds.
Payments: Visa has piloted using Solana’s blockchain for settling USDC payments. The speed and cost of Solana make it one of the most practical blockchains for real-world payment settlement.
Meme coins: Solana became the dominant platform for meme coin launches in 2024-2025, largely driven by the Pump.fun platform which allows anyone to launch a token in seconds. Millions of tokens have been launched, most worthless, but the activity drove enormous transaction volumes.
DeFi: Marinade Finance, Jito, and other protocols allow users to stake SOL and earn yields. Lending platforms allow borrowing against SOL holdings.
Staking Solana: How to Earn Passive Income
SOL holders can stake their tokens to earn rewards. The current staking yield on Solana is approximately 7-8% per year, though this changes based on network parameters.
There are two main ways to stake SOL:
Native staking: You delegate your SOL to a validator using a Solana wallet like Phantom or Solflare. Your tokens remain in your wallet (you keep custody) and you earn rewards proportional to the validator’s performance. Unstaking takes 2-3 days.
Liquid staking: Protocols like Marinade and Jito give you a staked SOL token (like mSOL or jitoSOL) that represents your staked position. This token can be used in DeFi applications while still earning staking rewards. More complex, but more capital-efficient.
UK HMRC treats staking rewards as income — taxable at your marginal Income Tax rate when received. The cost basis of the staked tokens resets at the value on the day of receipt.
The Risks of Solana
Solana has experienced more outages than any other major blockchain. Between 2021 and 2023, the network went offline multiple times — sometimes for hours — due to bugs and network congestion. Validators have improved since then, and the network has been more stable in 2024-2025, but the history is worth noting.
Centralisation concerns are also relevant. Solana requires powerful hardware to run a validator node, which means the validator set is smaller and potentially more centralised than Ethereum’s. The Solana Foundation has also been criticised for holding large reserves of SOL and having significant influence over the network’s direction.
The FTX collapse demonstrated how external events can catastrophically affect SOL’s price. The token’s recovery was impressive, but it was also a reminder of how sentiment-driven this market is.
Solana vs Ethereum: Which Should You Choose?
These are not mutually exclusive. Many crypto users hold both ETH and SOL for different reasons.
Ethereum has stronger decentralisation, a larger developer ecosystem, and is the foundation of the majority of DeFi by value locked. Its Layer 2 networks (Arbitrum, Optimism, Base) have addressed the speed and cost issues that once made Solana more attractive.
Solana is faster at the base layer, cheaper, and has a thriving consumer application ecosystem. Its user experience — fast transactions, cheap fees, consumer-friendly wallets — is genuinely better for everyday users.
For UK investors, both assets are speculative with significant price volatility. Neither is suitable as a core savings vehicle. If you are considering either, only invest what you can afford to lose entirely.
This article is for educational purposes only and does not constitute financial advice. Cryptocurrency investments involve significant risk. Always do your own research.
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