What is Solana? How the high-speed chain works and why institutions use it

Solana launched its mainnet in March 2020 with a simple and contested thesis: a blockchain can be fast and cheap enough for trading, payments and consumer apps without splitting activity across separate chains. Ethereum chose to keep its base layer conservative and push most activity to rollups. Solana chose to make the base layer itself as fast as the hardware allows. That decision explains nearly everything about the network, from why it became the home of memecoin trading and tokenized equities to why it has been criticized for demanding validator hardware and for its outage record.

How Solana is built

Most blockchains process transactions one after another. Solana’s runtime, Sealevel, requires every transaction to declare in advance which accounts it will read and write, so transactions that touch different accounts can run in parallel across many CPU cores. A cryptographic clock called Proof of History timestamps events so validators agree on ordering without constant back-and-forth messaging. Leaders are scheduled ahead of time, producing a new block roughly every 400 milliseconds. Fees are split into a tiny base fee and an optional priority fee, and because congestion is priced per account rather than across the whole network, a popular token launch raises costs for the accounts involved rather than for every user. The trade-off is that validators need high-end servers and fast connections, which raises the cost of participating and is the core of the decentralization critique.

SOL: fees, staking and supply

SOL is used to pay fees and to stake. Validators and the delegators who stake with them earn newly issued SOL plus fees. The issuance schedule began at 8 percent a year in 2021 and declines by 15 percent each year until it reaches 1.5 percent; in 2026 it is running a little under 4 percent. Half of every base fee is burned, while priority fees go to the block producer. A majority of the circulating supply is staked, and native staking has yielded roughly 5 to 7 percent, with liquid staking tokens such as JitoSOL adding a share of maximal extractable value (MEV) tips on top. A March 2025 governance proposal to make issuance respond to how much SOL is staked, SIMD-0228, drew wide debate but did not reach the supermajority needed to pass, so the fixed schedule remains in place.

Reliability and the client question

Solana’s history includes several network halts, most notably a roughly 17-hour outage in September 2021, a string of incidents in 2022 and a roughly five-hour halt in February 2024. Each required validators to coordinate a restart. A contributing factor was that almost every validator ran the same software, so a single bug could stop the chain. Two efforts address that. Firedancer, an independent validator client written from scratch by Jump Crypto, has run in hybrid form (Frankendancer) on mainnet since 2025, and the fully independent version is in early production with a gradually growing share of stake. Alpenglow, the largest consensus change in Solana’s history, replaces the existing TowerBFT voting with a new protocol called Votor, targets finality of about 100 to 150 milliseconds instead of several seconds, and removes the separate vote transactions validators currently pay for. It went live on testnet on September 22, 2026. Core developers have said publicly they will not rush it to mainnet; the next mainnet feature activation window opens on November 9, 2026, which is not a confirmed Alpenglow date.

Where institutions show up

US spot Solana ETFs began trading in late October 2025 under the SEC’s generic listing standards, led by Bitwise’s BSOL, and unlike the first Ether ETFs they were able to stake from launch. By the end of August 2026 the category held roughly $1.5 billion, with BSOL alone above $1 billion. Grayscale, Fidelity, VanEck, 21Shares and Morgan Stanley also run products. On-chain, Solana holds more than $16 billion of stablecoins, including USDC and USDT, alongside newer issuers such as Western Union and SoFi, and over $4 billion of other tokenized assets from managers including BlackRock, Ondo and Securitize. Solana carried an estimated 97 percent of on-chain tokenized equity trading volume in the first half of 2026. Public companies such as Forward Industries have also built SOL treasuries, holding and staking SOL on their balance sheets in the same way Strategy holds bitcoin.

Risks and open questions

Four issues deserve scrutiny. First, reliability: Solana has been stable since early 2024, but a consensus change as large as Alpenglow carries execution risk, which is why developers are moving slowly. Second, decentralization: hardware requirements and stake concentration among large operators and liquid staking providers remain higher than on Ethereum. Third, activity quality: a large share of Solana’s volume has come from memecoin speculation, which is cyclical, and MEV practices such as sandwich trading have drawn criticism and attempts at mitigation. Fourth, much of the tokenized-asset total is held rather than actively lent or used as collateral, so headline figures overstate economic use. SOL is also a volatile asset whose ETF and treasury demand can reverse.

Why it matters

Solana is the clearest test of whether a single fast base layer can win the markets that care most about speed and cost: trading, payments and tokenized securities. Its adoption by ETF issuers, stablecoin issuers and asset managers shows that institutions are willing to use it. Whether it keeps that position depends less on raw throughput than on the unglamorous work now under way: a second independent client, faster and simpler consensus, and a record of staying online.