What is Solana? 

• Solana is a blockchain network designed to power fast, affordable, and seamless digital interactions for everyday users. 
• It is the fourth-largest cryptocurrency by market capitalization.
• Its native token, SOL, enables cost-efficient transactions, from sending payments to accessing decentralized applications (dApps).
• From managing finances to running AI-driven solutions, Solana is built to support applications that demand speed and scalability. 
• With transaction costs just a fraction of those on other networks, Solana ensures that users can interact with cutting-edge technologies without the barriers of slow speeds or high fees.
• To find out how Solana works, read our primer.

The Birth of Solana: The Era of High Performance

‍In late 2017, a Dropbox software engineer called Anatoly Yakovenko published a whitepaper draft detailing a method to automate blockchain transaction ordering to deliver fast transaction speeds and settlement times. Anatoly wanted to replicate the cellular network optimizations he worked on at his previous company, Qualcomm. He teamed up with former Qualcomm colleagues Greg Fitzgerald, and, Stephen Akridge, to start the company that would eventually become Solana Labs, Inc., which launched in 2020.

‍Solana’s Product-Market Fit 

‍Solana’s product-market fit is centered around its ability to provide a high-performance, scalable blockchain solution that meets the demands of both decentralized finance (DeFi) applications and broader Web3 ecosystems. 

‍Faster, Cheaper

‍Ethereum and Solana have very similar ecosystem structures and utility, which makes them fierce competitors, especially since Solana was founded right after Ethereum’s first bull market. Ethereum’s expensive transactions discourage many developers, which created an opportunity for Solana. In many instances in 2024, Solana (#4 by market cap) surpassed its fierce rival, the second-largest cryptoasset, by number of active users and trading volume on its decentralized exchanges – and there is more room to grow. 

_{Figure 1: Comparison: Ethereum vs. Solana}

^{Sources: Etherscan, Solana Explorer, Beaconcha.in, Solana Compas, DeFi Llama, Coingecko, Token Terminal.}

^{*There are 30 million additional users on Ethereum’s Layer 2s, platforms that allow transacting on Ethereum without paying high fees. These platforms settle these transactions on behalf of Ethereum and pay fees back to the network.} 

‍Crossborder Payments 

Around 800 million people worldwide send money to their families across borders. In its traditional form, that process can be plagued with many obstacles, like high transaction fees and long settlement times. People are moving away from traditional to alternative venues for cross-border remittance. As shown in Figure 2, the circulating supply of stablecoins on Solana has now crossed the $10B milestone. 

_{Figure 2: Stablecoin Circulating Supply on Solana}

^{Source: 21co on Dune Analytics}

Traditional venues of the internet realized the growth potential. 

• August 2023: Visa partnered with Solana to enhance cross-border payments by expanding its stablecoin settlement capabilities to leverage Solana’s high-performance infrastructure.
• April 2024: Stripe began accepting Solana-based USDC payments, reflecting the increasing recognition of Solana as a reliable and efficient settlement layer.
• May 2024: PayPal launched its USD stablecoin PYUSD on Solana, utilizing the protocol’s Token Extensions to support features like Confidential Transfers. This innovation enables transaction amounts to remain private while keeping other details visible for regulatory purposes. Since its launch, over $30 billion worth of PYUSD has been transferred, showcasing strong demand for stablecoins within the Solana ecosystem.

Opportunity for Institutional Applications

‍Solana’s ability to handle a large number of transactions with minimal latency and cost has positioned it as a leading contender in the race to power the next generation of decentralized applications, catering to both retail users and institutional needs.Although Ethereum still leads in its robust security, which has made it the go-to marketplace for institutions, Solana is in the process of becoming Nasdaq on the blockchain. 

_{Figure 3: DEX Volume on Solana vs Ethereum and others}

^{Source: 21Shares, Artemis, Coingecko, Nasdaq}

In July 2024, it was the first time institutional players chose Solana’s network, including the debut of a Hamilton Lane credit fund, along with the Brevan Howard Master Fund and Blackrock ICS Money Market Fund. These funds launched on Solana through Libre, a tokenization-focused startup and joint venture between hedge fund Brevan Howard’s WebN Group and financial services giant Nomura’s Laser Digital.

‍Opportunity for Retail Applications

‍Solana now supports over 400 applications, projects, and developer tools, all benefiting from its high-speed transaction capabilities and loyal user base. Its dApps have seen impressive adoption and fee growth, occasionally surpassing Ethereum during peak times. Thanks to its efficient design, Solana has become the top network for on-chain trading. On the weekend before the inauguration of the new U.S. administration, users transferred over $80 billion on decentralized exchanges (DEXs) built on Solana, which handled nearly 75% of all volumes across its major competitors.

_{Figure 4: Decentralized Exchange Volume on Solana in 2024}

^{Source: 21Shares, Artemis}

Solana prioritizes user experience. In 2023, it launched its first mobile phone, the “Solana Saga,” an Android smartphone for users eager to seamlessly access blockchain technology using their mobile devices.

Launching in 2025, with 40,000 already pre-ordered, Solana’s new Seeker phone boasts these standout features:

• Seed Vault: a password-storage solution that securely stores private keys and seed phrases, enhancing the security of digital assets while making it easier for users. 
• Solana Mobile Stack (SMS): a toolkit for developers to build mobile-first decentralized applications (dApps).

Beyond Finance – Introduction to DePIN 

‍Short for Decentralized Physical Infrastructure Network, DePIN has the potential to disrupt existing infrastructure models across a broad range of areas. It is an umbrella term for networks that leverage blockchain technology to decentralize control and ownership of physical infrastructure in the real world, such as data storage networks, energy grids, and even supply chain management.

Solana’s accessibility and developer community have made it a hub for DePINs, including Helium 5G. Initially launched in 2013 as a centralized network, Helium shifted to a decentralized model in 2017, incentivizing individuals to host nodes with cryptocurrency rewards. After migrating to Solana in April 2023, Helium introduced a $20 unlimited 5G plan in the US, expanded to Mexico with Telefónica, and partnered with Google for Pixel 8 integration.

_{Figure 5: Total Helium Mobile Subscribers NFTs}

^{Source: Helium Foundation on Dune Analytics}

‍Diversification of the utility of any blockchain is as important as diversifying a portfolio. Having more applications on Solana beyond finance is vital for its sustainability as more users interact with Solana’s interface to monetize or gain access to a broad suite of infrastructure tools ranging from telecom services to hardware resources. 

‍Conclusion

‍Solana’s innovative, high-performance blockchain has seen exponential growth, with over 100 million monthly active users, over 400 applications, and over $11.8 billion in assets locked across its ecosystem. Alleviating concerns about its decentralization and past outages, the network has matured, with more than 5,000 developers worldwide, ensuring robust decentralization and security. Solana’s lightning-fast transactions and low fees continue to attract developers and users alike, positioning it as a cornerstone of blockchain innovation. With scalability and adoption accelerating, Solana is primed to play a pivotal role in shaping the blockchain landscape over the next decade.