Part 2: Solana Fundamentals
Solana is a public, high-speed layer-1 blockchain built to scale while keeping transcations cheap, which has made it an attractive platform for developers of decentralized finance (DeFi), non-fungible tokens (NFTs), gaming, and other Web3 applications.
Founded in 2017 by a team led by former Qualcomm engineer Anatoly Yakovenko, Solana launched its mainnet in 2020. Today, the network can run up to ~65,000 transactions per second (TPS) under ideal conditions, and the average transaction fee is only around $0.00025, making it one of the fastest and cost-efficient blockchains for widespread use.
👉 The original Solana whitepaper
Solana achieves its efficiency by combining two key technologies. It uses Proof of Stake (PoS), where some participants run validator computers and lock up SOL tokens to help secure the network, and Proof of History (PoH), a cryptographic clock that timestamps transactions. Because the network already knows the order of events, validators can verify them much faster. This gives Solana near-instant finality and, in theory, the ability to process tens of thousands of transactions per second.
In Dec. 2024, Solana processed a record 66.9 million transactions in a single day, exceeding the combined volume of all other major blockchains during that period
It is mostly these conditions, together with a vibrant, approachable community, that have brought many builders in the Web3 space towards Solana. In fact, in 2024, the Electric Capital’s annual Developer Report declared it the #1 fastest-growing ecosystem for developers, with key markets being the US, UK, and India. A part of this appeal is also Solana’s use of Rust, a fast-growing programming language for smart contracts, which many developers prefer.
The native cryptocurrency, the SOL token, powers the network. It is used for transaction fees and staking, but also serves as collateral in DeFi protocols, as a medium for micropayments through Solana Pay, and as the base currency for many apps in the ecosystem. A portion of every transaction fee is burned, giving SOL a deflationary aspect tied to network usage. First rising to prominence during the 2021 crypto boom, SOL remains central to both the technical and cultural identity of the chain.
Speaking of culture and community, Solana has managed to forge an image as both innovative and experimental, yet also battle-tested by adversity. Its community shows a blend of humor through the many grassroots meme coins (most notably BONK, branded the “dog coin of the people”) and serious building (high-performance DeFi protocols like Solend and MarginFi, as well as enterprise pilots such as Visa settling USDC payments on Solana).
Some prominent Ethereum developers have even begun collaborating with Solana; for instance, through Neon EVM, a project that lets Ethereum apps written in Solidity run directly on Solana without needing to be rewritten. At the same time, Jump Crypto has been building Firedancer, a new high-performance validator client (software that helps run and secure the network) to boost Solana’s speed and resilience. This cross-pollination suggests Solana earned a degree of respect as a complementary approach rather than just a competitor.
By supporting smart contracts and different kinds of token assets, Solana enables diverse use cases, stretching from DeFi to social dApps, real-world asset (RWA) tokenization, and positive impact. In the past year, it has continued to diversify into domains like decentralized physical infrastructure (DePIN) and gaming.
Solana’s rise has been marked by rapid development, cultural breakthroughs, and the inevitable growing pains of scaling a new network. Here’s how the journey unfolded:
Anatoly Yakovenko published the Solana whitepaper, introducing Proof of History (PoH), a cryptographic clock that gives the network a shared sense of time. It solved a core problem in blockchains: how to order transactions quickly without slow coordination between computers.
The founding team raised seed and Series A funding, securing about $20 million with early backing from investors such as Multicoin Capital. They launched a testnet to trial Solana’s design and introduced eight core innovations, including PoH, Tower BFT (a consensus mechanism for agreeing on transaction order), Gulf Stream (for faster transaction forwarding), and Sealevel (parallel smart contract execution). These features laid the foundation for Solana’s high-performance reputation.
In March, Solana launched its mainnet beta. In September, the decentralized exchange Serum proved Solana could support real-time order books, which were nearly impossible to run directly on-chain on slower blockchains.
The first Solana Foundation hackathon drew hundreds of teams, and the Phantom wallet made onboarding smoother for everyday users. During the NFT boom, Solana became a cultural hub: marketplaces like Magic Eden flourished, and collections such as Degenerate Ape Academy, DeGods, and later y00ts drew global attention. That same year, Solana Labs raised more than $300 million in a round led by Andreessen Horowitz (a16z) and Polychain Capital, giving the project strong institutional backing
Rapid growth tested Solana’s limits. The network suffered several outages, including a 17-hour one in September 2021 driven by bot activity. In mid-2022, a wallet exploit drained about 8,000 Phantom and Slope wallets, though the core blockchain was not breached. The collapse of FTX, one of Solana’s biggest backers through Alameda Research, put further pressure on the ecosystem. But while its reputation took a hit, the chain kept running, and developers pushed upgrades to improve stability.
Momentum returned. The Helium Network migrated to Solana, minting nearly one million hotspot NFTs at minimal cost, a live proof of scalability. Solana Labs rolled out the Solana Mobile Stack and Saga smartphone, aiming to bring crypto apps to mobile. At the same time, Jump Crypto began developing Firedancer, a new validator client written in C++. In demo tests, Firedancer hit 600,000 transactions per second, hinting at Solana’s future scale.
Solana had passed more than a year of uninterrupted uptime, a sharp improvement from earlier instability. The stability encouraged growth across the ecosystem: NFTs kept expanding, and the same low barriers that attracted creators also sparked a wave of memecoins and experimental projects. Some dismissed this as noise, but it stress-tested the network, kept liquidity moving, and reinforced Solana’s image as the go-to chain for fast, playful experimentation. A year-end 2024 report pointed to a major surge in adoption and economic activity on Solana. In Q4 2024, application revenue, sometimes referred to as “Chain GDP”, jumped 213% quarter-over-quarter, rising from $268M to $840M.
At the same time, Firedancer advanced, with demos showing the potential to scale to millions of transactions per second.
By 2025, Solana had moved beyond its early growing pains and established itself as one of the most active ecosystems in Web3. 🌐
Solana’s ability to process transactions quickly and at low cost comes from a set of core design choices that work together. Rather than relying on sharding or separate Layer-2 chains, Solana keeps everything on a single Layer-1 network and pushes performance by optimizing how time, data, and storage are handled.
💡 How a transaction is completed?
When you send a transaction on Solana, it’s automatically picked up by a validator running Solana’s software that checks it against the network rules. Validators take turns producing blocks, so the current block producer groups your transaction together with others. The new block is then shared with the rest of the network, where other validators verify it. Once the network agrees, the transaction is considered final and permanently recorded on the blockchain.
These eight innovations are the backbone of Solana’s speed and throughput:
Together, these systems save time and allow many tasks to run in parallel. Blocks confirm in less than half a second, fees remain under a cent, and by 2025, Solana was handling over 162 million daily transactions, which is more than all other major blockchains combined, while still operating as a single Layer-1 network.
Solana combines Proof of Stake (PoS) with Proof of History (PoH) to reach consensus, the process by which the network agrees on which transactions are valid and in what order. They play different but complementary roles: PoS secures the network and decides who produces blocks, while PoH provides a shared timeline that allows those blocks to be confirmed quickly.
Decentralization Metrics: By the end of 2024, Solana had about 1,400 active validators across 46 countries. No validator controlled more than ~3.2% of the stake, so power was not concentrated in one place. The Nakamoto coefficient (how many validators would need to work together to disrupt the network) was 18, showing greater decentralization than many other blockchains.
Running a validator requires powerful hardware, which can be a barrier for many of us. Solana lets token holders delegate their SOL to validators, allowing anyone to help secure the network and earn rewards without running a validator directly.
When people ask what makes Solana different, the answers usually come down to four things: how fast it is, how well it scales, how little it costs to use, and how much energy it consumes.
Together, these systems save time and allow many tasks to run in parallel. Blocks confirm in less than half a second, fees remain under a cent, and by 2025, Solana was handling over 162 million daily transactions, which is more than all other major blockchains combined, while still operating as a single Layer-1 network.
Now that we’ve covered Solana’s core strengths and infrastructure, the question becomes: how can you actually leverage these tools as an impact builder?
Many impact initiatives start small but aim to serve entire communities. Solana’s capacity means you don’t need to redesign once you outgrow a pilot. In 2023, the Helium Network migrated more than 350,000 IoT hotspots and minted nearly one million NFTs for just over $100. That same throughput could support aid platforms sending payments to hundreds of thousands of households in real time, or education systems issuing millions of certificates on-chain. Builders can plan from day one for projects that reach thousands or millions of users without hitting bottlenecks.
Because Solana combines near-instant settlement with negligible fees, it enables models that were previously too slow or expensive. A donation platform can send thousands of $1 contributions globally without losing them to fees. A microloan system can approve and distribute loans in seconds, not days. Tokenized climate insurance can pay farmers automatically within hours of a drought or flood being detected by satellite data. Reforestation projects can issue digital records for each tree planted at fractions of a cent. These kinds of experiments in regenerative and collaborative finance are already being tested out on Solana.
Solana’s community is very active in backing public-good work. Hackathons like Grizzlython have funded entire climate-focused tracks, and grassroots projects like Sunrise Stake (reforestation through staking rewards) and Coral Tribe (reef restoration tied to NFTs) show how cultural and financial energy flow into impact causes. Builders who engage with the ecosystem can find collaborators, early adopters, and sometimes direct funding. For an impact project, the community is not just a user base but part of the engine that can help it grow.
Winning over NGOs, governments, and donors often requires proof that the technology is credible. Solana now offers strong references. Franklin Templeton launched a tokenized mutual fund on the network, managing millions on-chain. Shopify integrated Solana Pay, letting merchants accept crypto payments instantly and cheaply. And impact-oriented projects like ecoBridge are building ecological credit marketplaces directly on Solana. These examples show that Solana is not experimental infrastructure but a proven foundation used by institutions and innovators alike.
