What is Solana (SOL)

Solana is an open-source, high-performance layer-1 blockchain designed to support decentralized applications (dApps), DeFi, NFTs, etc.

It combines Proof of Stake (PoS) with a novel mechanism called Proof of History (PoH) in order to enable very high throughput, fast finality, and low fees.

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Token: SOL — what it does & how it's used

Native token of Solana. Used for:

1. Paying gas fees for transactions and smart contract interactions.

2. Staking: SOL holders can stake (or delegate) SOL to validators, who process transactions and secure the network. Validators (and delegators) earn rewards.

3. Governance / incentives (indirect): SOL also plays a role in securing the network, aligning incentives, etc.

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Tokenomics & Supply Mechanics

There is no fixed maximum supply of SOL.

Circulating supply as of early/mid 2025 is in the hundreds of millions of SOL (≈ 540-590 million SOL) depending on source.

Inflation & emission:

At launch, inflation was ~8% annually.

The inflation rate decreases over time: about 15% every 2 years until it stabilizes at a long-term rate of ~1.5%.

Burning mechanism: a portion of transaction fees get burned (i.e. removed from supply), which gives some deflationary pressure. Typically, 50% of the fees are burned, the rest goes to validators.

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Technology & Performance

Some of the key innovations and technical components: Proof of History (PoH), Tower BFT (a variant of Byzantine Fault Tolerance adjusted to use PoH timestamps), SeaLevel (parallel transaction execution), Turbine & Gulf Stream (for efficient transaction propagation), etc.

Throughput: Solana is capable of very high transaction-per-second (TPS) rates. In many benchmarks, far higher than many older blockchains.

Low fees: transactions on Solana are usually very cheap, which is one of its major selling points.