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What is Solana? What you need to know about the decentralised blockchain, NFT marketplace and its SOL token

By Ankish Jain

Edited by Vanessa Kintu

11:00, 20 November 2022

Solana logo on smartphone with graph in the background
Solana is a blockchain-based platform for hosting decentralised apps – Photo: sdx15 / Shutterstock

This year has been a gloomy period for the cryptocurrency industry as numerous renowned and long-standing projects have announced insolvency.

Due to liquidity concerns, cryptocurrency exchange FTX (FTT) became the latest victim of the downturn when it filed for Chapter 11 bankruptcy protection on 11 November.

The collapse of FTX had a cascading effect on the crypto market, with the prices of numerous currencies falling to fresh lows. Bitcoin (BTC) reached a new 52-week low of $15,682 on 9 November, a level not seen since November 2020.

Similarly, on 14 November, the price of Solana (SOL), a layer one blockchain platform, fell to a 52-week low of $12.25 due to significant sell-off pressures. On 17 November, SOL was trading at $14.24, down over 95% from its all-time high of $260.06 on 6 November 2021.

Solana (SOL) live price chart

What lies ahead for Solana in these turbulent times? Will it succumb to the persisting bearish circumstances, or will it recover? But first, let’s understand what Solana is.

What is Solana and how does it work?

Solana is a blockchain-based platform for hosting decentralised apps (dApps). Officially launched in 2020, it is an open-source project managed by the Solana Foundation in Geneva, while Solana Labs developed the blockchain in San Francisco.

Solana intends to boost throughput beyond what is generally achievable by popular blockchains while maintaining cheap costs.

How does Solana work? Solana employs a revolutionary hybrid consensus architecture that incorporates a one-of-a-kind proof-of-history (PoH) algorithm. This is a version of a proof-of-stake (PoS) based consensus mechanism.

Theoretically, the network can execute over 710,000 transactions a second without the requirement for scaling solutions. Solana’s third-generation blockchain architecture allows smart contracts to support a variety of decentralised finance (DeFi) applications and non-fungible token (NFT) exchanges.

Solana Pay, a free-to-use payments platform, enables retailers to accept direct client payments over the Solana network. Stablecoins, such as USD coin (USDC), meant to maintain a consistent price, are used for transactions. Solana Pay allows companies to avoid paying high transaction costs.

Solana competes with Ethereum (ETH), Cardano (ADA) and other layer-one platforms by offering quicker transactions and reduced costs.

However, Solana’s speed comes at a cost: the criteria for validators (computers that assist operate the Solana network) are pretty stringent. Although, in theory, anybody can operate a validator node on the blockchain, the prohibitive expense of constructing, managing and maintaining such a computer discourages many users. 

This makes the network less decentralised since more power is concentrated in fewer individuals’ hands.

What is Solana coin used for? SOL is the Solana network’s native utility and governance currency. SOL coin serves a crucial role in the operation and maintenance of the Solana ecosystem.

Solana compensates validators and delegators with a share of freshly minted SOL and transaction fees depending on their staked tokens, the inflation rate, and the volume and complexity of network transactions.

SOL also functions as a governance token, allowing holders to vote on future upgrades and governance initiatives proposed by the Solana community.

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SOL coin price history

According to ICO Drops, SOL’s initial coin offering (ICO) was completed in March 2020 at $0.22 a token and successfully raised $25.66m. According to CoinMarketCap, SOL has generated a return on investment (ROI) of 6,375% for its early investors.

Based on the Solana coin price history, its value increased by more than 801% between 11 May and 1 September 2020, from $0.5363 to $4.78. On 24 December, SOL dropped to $1.20. The coin closed the year at $1.53.

2021 was a watershed year for the cryptocurrency industry as several coins gained mainstream acceptance and achieved unprecedented highs. The Solana cryptocurrency was no exception. It soared from $1.50 on 1 January to $49.5 on 2 May, a phenomenal increase of 3,200%.

However, the market slumped late in the second quarter due to China’s ban on cryptocurrency trading and mining and Elon Musk’s announcement that BTC payments for Tesla vehicles would no longer be accepted due to rising environmental concerns. Consequently, the value of various currencies decreased, and the market lost impetus for some time.


0.11 Price
+0.270% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872


3,131.17 Price
+0.390% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00


0.48 Price
+5.860% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168


369.20 Price
+5.680% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

During this period, the Solana cryptocurrency saw significant selling pressure. It fell to $23.44 on 21 July, a decrease of nearly 53% from its May high.

Not long after, however, the coin exhibited large positive momentum. On 6 November, it achieved a new all-time high of $260.06, an 1,010% increase from the July low. It closed 2021 at $172.7.

The cryptocurrency market had a negative start to 2022, which intensified in May 2022 when Terra-UST collapsed. The lack of momentum saw the price of SOL fall to $28.18 on 14 June, an 89% decrease from its all-time high. 

After reaching a new low in June, the Solana coin traded in a stagnant market with no noticeable price change.

In November 2022, the price of the SOL token plunged from $33.78 on 5 November to $12.25 on 14 November amid FTX's bankruptcy news, representing a new 52-week low.

As of 17 November, SOL was trading at $14.30 and had a market capitalisation of $5.13bn, making it the 13th biggest cryptocurrency by market cap.

Solana news and price drivers

Solana has undergone several important milestones lately. Here is a quick recap of some crucial news pieces.

Massive decline in TVL values

At their height, in November 2021, dApps held more than $10bn on the Solana network. High-flying supporters like Sam Bankman-Fried, the founder of the FTX crypto market, drove its popularity.

According to DeFi LIama, the total value locked (TVL) has plummeted to a little over $300m, as of 17 November, with FTX declaring for Chapter 11 bankruptcy.

Given his significant support for the network, the downfall of FTX founder Samuel Bankman-Fried reflected broader negative opinion against Solana.

Collaboration with Beeple

In November 2022, Solana revealed that Beeple, one of the world’s most inventive NFT artists, would collaborate with Solana and showcase the future of broadcasting with immersive 3D NFTs.

Stephen Hess, co-founder and CEO of Metaplex Studios, made the announcement during Solana’s Breakpoint conference in Lisbon, Portugal. Metaplex Studios is driving the Solana NFT standard.

100 billion transactions landmark

According to an official announcement, in September 2022, the total number of Solana network transactions crossed the 100 billion mark.

According to Solana's blockchain explorer statistics, the network has already executed 115.25 billion transactions and averages 2,825 transactions per second.

The bottom line

Solana is regarded as one of the world’s quickest blockchains. It has also solved numerous fundamental obstacles to mainstream cryptocurrency adoption.

Additionally, Solana’s blockchain is at the forefront of NFT transactions. Solana features many NFT marketplaces, including Metaplex, Solanart and Magic Eden. 

Solana’s adaptability and cheap costs appeal to NFT traders, and the blockchain is giving Ethereum a run for its money in terms of NFT transactions.

However, the price of SOL has been somewhat unstable over the last several months and has been declining thus far in 2022.

When looking for Solana forecasts, it’s important to remember that analysts’ and algorithm-based expectations can be wrong. They are based on technical analysis and historical price action. Past performance is no guarantee of future results.

It’s essential to conduct your own research before trading. Remember that your decision to trade depends on your expertise in the market, the spread of your portfolio and how comfortable you feel about losing money. You should never trade or invest money that you cannot afford to lose.


How many Solana coins are there?

According to CoinMarketCap, SOL has a total supply of 533.6 million tokens, of which 362.3 million were in circulation as of 17 November.

Who created Solana?

Solana was established in 2017 by Anatoly Yakovenko and officially debuted in 2020. Solana Labs is a crucial contributor to the Solana blockchain. The Solana Foundation also funds it, a Swiss-based non-profit focused on community development and fundraising.

What makes Solana unique?

Solana is distinctive because of its low-cost and rapid execution of crypto transactions. This high speed is made possible by its proof-of-history (PoH) consensus process.

Markets in this article

Bitcoin / USD
57907.90 USD
298.5 +0.520%
Cardano / USD
0.41458 USD
0.01509 +3.810%
Ethereum / USD
3131.17 USD
12.23 +0.390%
Solana / USD
140.1842 USD
2.0989 +1.530%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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