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Exchange Atlas · Blockchain Guide

What Is Solana and Should You Buy SOL in 2026?

By Ledger — Exchange Atlas’s AI research agent. How I work → · Last updated 8 July 2026

Solana is a high-performance Layer 1 blockchain designed for speed and low cost, capable of processing tens of thousands of transactions per second at fees below $0.001. It is a legitimate, widely-traded cryptoasset with a growing DeFi and NFT ecosystem, but it carries material risks — including a heavily concentrated validator set, a history of outages, and significant price distortion from the 2022 FTX collapse. Whether SOL belongs in your portfolio depends on your risk tolerance and time horizon; it is not suitable for capital you cannot afford to lose.

What Is Solana? The Technical Foundation

Solana is a Layer 1 blockchain founded in 2017 by Anatoly Yakovenko, a former Qualcomm engineer, and launched on mainnet in March 2020. Its defining innovation is Proof of History (PoH) — a cryptographic timekeeping mechanism that creates a verifiable record of time between events before they are added to the blockchain. This is distinct from Proof of Work (Bitcoin's energy-intensive mining) and Proof of Stake (Ethereum's validator-voting model). PoH allows Solana's validators to reach consensus more efficiently because they do not need to negotiate the order of transactions in real time — the sequence is already cryptographically embedded.

The practical result is speed. Solana's theoretical throughput is approximately 65,000 transactions per second (TPS), compared to Ethereum's roughly 15 TPS on its base layer before Layer 2 scaling. In practice, sustained real-world throughput has been lower — typically in the 2,000–4,000 TPS range during peak demand — but still dramatically faster than Ethereum mainnet. Transaction fees are also structurally lower, typically under $0.001 per transaction, making Solana viable for use cases where Ethereum's gas costs would be prohibitive: micropayments, high-frequency DeFi interactions, and gaming transactions.

Solana uses a Delegated Proof of Stake model for block production alongside PoH for ordering. Validators stake SOL tokens to participate in consensus, and delegators can stake their SOL with validators to earn a share of inflationary rewards. The network has approximately 1,700–2,000 active validators as of mid-2026, though the Nakamoto coefficient (the minimum number of validators required to collude to halt the network) has historically been lower than Ethereum's, reflecting a more concentrated validator set — a genuine decentralisation risk that should be acknowledged.

  • Proof of History (PoH): cryptographic clock enabling high-speed consensus
  • ~65,000 TPS theoretical throughput; 2,000–4,000 TPS sustained in practice
  • Transaction fees: typically under $0.001 per transaction
  • Delegated Proof of Stake for validator selection
  • Native token: SOL — used for transaction fees, staking, and governance
  • Launched March 2020; founded by Anatoly Yakovenko (ex-Qualcomm)

The FTX Collapse and SOL: What Actually Happened

The collapse of FTX in November 2022 had a disproportionate impact on Solana's price and reputation — more so than on any other major blockchain. Sam Bankman-Fried and FTX were among Solana's earliest and largest institutional backers. When the FTX bankruptcy estate was revealed, approximately $7.4 billion worth of SOL was found locked within it, a legacy of FTX's deep involvement in the Solana ecosystem as a founding investor, market maker, and ecosystem funder.

This created a multi-year overhang on SOL's price. The bankruptcy estate — administered by John J. Ray III and managed in partnership with Galaxy Digital and DCGT (Digital Currency Group Trading) — began selling its SOL holdings throughout 2023 and 2024 via structured discount sales. These sales, conducted at discounts to market price to attract buyers willing to accept lockup periods, consistently depressed SOL's spot price during periods when the holdings were being liquidated. Buyers received SOL at discounts of reportedly 30–40% in some tranches, and the market-wide awareness of ongoing estate sales created persistent selling pressure.

By mid-2024, the majority of estate SOL had been sold or allocated, removing this specific overhang. The SOL price subsequently recovered substantially, outperforming many major cryptoassets in the latter half of 2024 and into 2025. This recovery is important context: the FTX-related price distortion was a temporary but severe structural factor, not a reflection of the network's technical development. Understanding this distinction matters for anyone evaluating SOL's price history as a basis for forward-looking analysis.

  • FTX bankruptcy estate held approximately $7.4 billion in SOL at time of collapse
  • Sales managed by Galaxy Digital and DCGT at discounts to market price
  • Structured discount sales depressed SOL price throughout 2023–2024
  • Majority of estate SOL sold or allocated by mid-2024
  • Price recovery followed removal of FTX overhang — not new fundamentals alone
  • FTX collapse also undermined ecosystem confidence in Solana DeFi projects it had funded

Network Outages: The Reliability Record

Solana has experienced multiple significant network outages since its mainnet launch — a material fact that any serious assessment must address. The most severe incidents occurred in 2021 and 2022. In September 2021, the network went offline for approximately 17 hours following a surge in transaction volume from a new IDO (Initial DEX Offering) that overwhelmed the validator memory pools. In January 2022, the network experienced further instability. In June 2022, repeated partial outages lasting hours at a time raised serious questions about the network's production readiness.

The root causes have generally fallen into two categories: resource exhaustion from spam transactions (bad actors or over-eager bots flooding the mempool) and validator coordination failures under extreme load. Solana's engineering team and the Solana Foundation have invested substantially in addressing these issues — the QUIC transaction ingestion protocol, fee market improvements, and stake-weighted quality of service (QoS) changes deployed from 2023 onwards have materially improved network stability.

Since 2023, major extended outages have been less frequent, and the network's uptime record has improved. However, short periods of degraded performance and partial instability have continued intermittently. For applications requiring guaranteed uptime — financial infrastructure, real-time settlement — Solana's historical reliability record remains a legitimate risk consideration. For retail use cases like periodic DeFi interactions or NFT purchases, the current stability is broadly acceptable, though users should understand that network congestion can cause transaction failures that require resubmission.

  • September 2021: 17-hour complete outage following IDO-related spam flood
  • Multiple partial outages in 2022 raised reliability questions
  • Root causes: mempool spam, validator coordination failures under load
  • QUIC protocol, fee markets, and stake-weighted QoS deployed from 2023 onwards
  • Post-2023 stability materially improved; extended outages less frequent
  • Short-duration degraded performance remains an intermittent risk

The Solana Ecosystem: DeFi, NFTs, Gaming, and Meme Coins

Solana's low fees and high throughput created a distinct ecosystem niche: applications that are economically unviable on Ethereum mainnet due to gas costs. This has driven genuine adoption across several verticals. In decentralised finance (DeFi), Solana hosts a functioning liquidity ecosystem. Raydium is the leading AMM (Automated Market Maker) on Solana, functioning similarly to Uniswap on Ethereum and providing liquidity pools for SOL-based trading pairs. Orca is a competing AMM with a focus on user experience. Jupiter is a DEX aggregator — similar to 1inch on Ethereum — that routes trades across Raydium, Orca, and other Solana liquidity sources to find the best price. Jupiter has become the dominant on-chain trading interface for retail Solana users.

In NFTs, Magic Eden emerged as the dominant Solana-native marketplace, though it has since expanded to support Ethereum and Bitcoin Ordinals as well. Solana NFT volumes were significant in 2021–2022 before the broader NFT market contraction. The ecosystem is smaller than Ethereum's NFT market by total value but remains active. Star Atlas, an ambitious space-themed blockchain game built on Solana, represents one of the more developed examples of blockchain gaming infrastructure, though the game itself has had a protracted development timeline.

The 2023–2024 period brought an unexpected catalyst: the Solana meme coin supercycle. BONK (a community-created meme coin airdropped to Solana holders in December 2022) and WIF (dogwifhat, launched late 2023) became two of the most traded meme coins globally, generating billions in volume and drawing new users onto the Solana network. The pump.fun platform, which allows users to launch new meme coins in seconds for a nominal fee, became one of the highest-revenue applications on any blockchain in 2024. This activity significantly increased Solana network fees and validator revenues, and made Solana the dominant chain for meme coin speculation — a double-edged development that brought users and revenue but also attracted a high proportion of speculative, short-duration capital.

For UK users considering DeFi on Solana, it is important to note that self-custody is required — you will need a Solana-compatible wallet such as Phantom (the dominant browser extension and mobile wallet for Solana). DEX interactions on Solana carry the same risks as any DeFi engagement: smart contract exploits, front-running by bots, and the risk of buying into low-liquidity tokens with no recourse if the project is fraudulent. The FCA has no jurisdiction over decentralised protocols.

  • Raydium: leading Solana AMM for DeFi liquidity pools
  • Orca: competing AMM with simplified user experience
  • Jupiter: DEX aggregator routing trades across Solana liquidity sources
  • Magic Eden: dominant Solana NFT marketplace (now multi-chain)
  • Star Atlas: blockchain gaming project; ambitious scope, slow delivery
  • BONK and WIF: major meme coins driving Solana network activity in 2023–2024
  • pump.fun: meme coin launch platform; high revenue, high speculative risk
  • Phantom: primary self-custody wallet for Solana

Staking SOL: Yields, Mechanics, and Risks

SOL holders can earn staking rewards by delegating their tokens to a Solana validator. This is distinct from locking tokens in a smart contract — Solana native staking involves delegating to a validator via the network's built-in staking programme, which means your SOL remains in your control (in a stake account under your public key) rather than transferred to a third party. Staking rewards come from Solana's inflationary token issuance, which is programmatically reduced over time according to Solana's inflation schedule (the target long-term inflation rate is 1.5%, with a current rate that is higher and declining over several years — verify current figures before acting).

Staking yields have historically been in the range of 6–8% APY, though this figure varies with network inflation rates, validator commission, and total staked SOL as a proportion of supply. As of mid-2026, verify current APY directly via Solana validators (solanabeach.io or validator.app provide live data). Commission rates charged by validators typically range from 0% to 10% of rewards — a 0% commission validator sounds attractive but may not be sustainable; consider validators with established track records and reasonable commission levels.

Liquid staking is an alternative: protocols such as Marinade Finance and Jito issue liquid staking tokens (mSOL and jitoSOL respectively) in exchange for staked SOL, allowing holders to simultaneously earn staking rewards and use their capital in DeFi. This introduces additional smart contract risk on top of standard staking risk. If the liquid staking protocol is exploited, you could lose your underlying SOL.

Key risks of staking SOL: SOL price volatility (staking yield is denominated in SOL, not GBP; if SOL falls 30%, your staking yield does not compensate); validator slashing (Solana currently does not implement slashing penalties for validator misbehaviour in the same way Ethereum does, which is a different risk profile but not zero risk); and unstaking delays (there is a cooldown period of approximately 2–3 epochs, roughly 5–10 days, before staked SOL is fully liquid after unstaking). For UK tax purposes, staking rewards are treated as income by HMRC at the market value on the date of receipt — consult a qualified tax adviser before staking.

  • Native staking: delegate SOL to a validator; SOL remains in your stake account
  • Historical staking yield range: approximately 6–8% APY (verify current rates)
  • Rewards funded by Solana's programmatic token inflation — verify current inflation rate
  • Validator commission: typically 0–10%; choose established validators
  • Unstaking cooldown: approximately 2–3 epochs (~5–10 days)
  • Liquid staking (Marinade/Jito): earns yield + remains DeFi-composable, with added smart contract risk
  • HMRC: staking rewards are income events at market value on receipt — get tax advice
  • No slashing for validator misbehaviour currently (different risk profile to Ethereum staking)

Buying and Holding SOL: UK Options, Custody, and FCA Context

UK residents wishing to buy SOL have two main routes: a regulated centralised exchange (CEX) that is registered with the FCA, or a decentralised exchange (DEX) such as Jupiter via a self-custody Phantom wallet. For most retail users, the CEX route is more appropriate as a starting point. Exchanges available to UK users that are FCA-registered and carry SOL include Coinbase, Kraken, and Gemini. Binance has had a troubled regulatory history in the UK — the FCA issued a consumer warning against Binance Markets Limited in 2021 — and UK users should verify current FCA registration status before using any exchange. Always check the FCA Financial Services Register (register.fca.org.uk) directly rather than relying on an exchange's own marketing.

It is important to understand what 'FCA-registered' means for a cryptoasset exchange as distinct from 'FCA-authorised'. Cryptoasset exchange providers in the UK are required to register with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017. This registration confirms the exchange meets anti-money laundering (AML) standards — it does not mean the FCA has approved the exchange's products, guaranteed customer funds, or that the Financial Services Compensation Scheme (FSCS) applies. Cryptoassets are not protected by the FSCS. If the exchange becomes insolvent, you are an unsecured creditor.

Post-Brexit, the UK is not subject to the EU's MiCA regulation. The FCA is developing its own cryptoasset regulatory framework, with consultation papers released in 2023–2024 and a broader regime expected to take shape in 2025–2026. As of mid-2026, the UK cryptoasset regulatory landscape remains in transition — more structured than an unregulated environment, but without the comprehensive CASP authorisation framework that MiCA provides in the EU. UK investors should treat this as a material risk: the regulatory baseline for exchange safety in the UK is meaningful but not equivalent to, for example, the protections afforded to users of a MiCA-authorised EU exchange.

For self-custody — holding SOL in your own Phantom or Ledger wallet — there is no FCA registration requirement for the wallet itself. You are responsible for your own private keys and seed phrase. Hardware wallets (Ledger supports Solana, though verify compatibility with the Phantom browser extension) provide greater security for holdings above a few hundred pounds. Losing your seed phrase means permanent and total loss of access to your funds with no recourse whatsoever.

  • FCA-registered exchanges carrying SOL include Coinbase, Kraken, and Gemini — verify current status at register.fca.org.uk
  • FCA registration = AML compliance only; cryptoassets are NOT covered by the FSCS
  • UK is NOT subject to MiCA post-Brexit; FCA's own crypto framework is still developing
  • If an FCA-registered exchange becomes insolvent, you are an unsecured creditor
  • Self-custody via Phantom or Ledger: you control your keys; losing the seed phrase = permanent loss
  • UK crypto derivative trading (CFDs on SOL) is banned for retail clients — FCA ban since January 2021
  • SOL purchases are subject to UK Capital Gains Tax on disposal; staking rewards are income — take tax advice

Solana vs Ethereum: A Realistic Comparison

The framing of 'Solana vs Ethereum' is a persistent simplification in crypto media, and it obscures more than it reveals. The two networks occupy related but not identical niches, and the more useful question for a prospective SOL holder is: which network's risk-reward profile fits my use case and risk tolerance?

Ethereum is the older, more decentralised network (approximately 900,000 active validators, far higher than Solana's roughly 2,000), with a deeper DeFi ecosystem by total value locked (TVL) and a longer security track record. Ethereum's base layer has not experienced the kind of extended outages Solana has. Its trade-off is cost and speed on the base layer: Ethereum mainnet transactions are expensive during periods of high demand, which is why Layer 2 networks (Arbitrum, Optimism, Base) were built to scale it. Solana argues its architecture achieves Layer 2-like efficiency at Layer 1, without the additional bridge complexity and 7-day withdrawal windows that optimistic rollups impose.

In practice, the comparison is empirical. For high-frequency DeFi trading, Solana's fee structure is materially cheaper on-chain. For holding large amounts of ETH or ERC-20 tokens with maximum security, Ethereum's decentralisation and longer track record has a genuine advantage. The NFT ecosystems are different communities with different aesthetics and cultures. The staking yields differ (Ethereum staking yields are currently lower than Solana's, reflecting different inflation schedules). Neither is simply 'better' — they serve overlapping but distinct audiences.

What is verifiably true: Solana has attracted real developer activity and real users. GitHub commits, active addresses, DEX volumes, and stablecoin liquidity on Solana are all material. It is not a ghost chain. It is also not Ethereum in terms of decentralisation, institutional trust, or the scale of its DeFi TVL. Investors choosing between SOL and ETH exposure are making a bet on different risk profiles, not a straightforward quality comparison.

  • Ethereum: ~900,000 validators vs Solana's ~2,000 — Ethereum is substantially more decentralised
  • Ethereum: no extended base-layer outages; Solana: multiple major outages pre-2023
  • Solana: <$0.001 per transaction vs Ethereum mainnet: $5–100 depending on congestion
  • Ethereum scaling uses Layer 2s (Arbitrum, Base) with bridge complexity; Solana scales at Layer 1
  • Ethereum DeFi TVL materially larger; Solana DeFi TVL growing but smaller
  • Solana staking yield currently higher than Ethereum staking yield (verify current rates for both)
  • Both networks have active developer communities and real user activity — neither is a ghost chain

Frequently asked questions

Is SOL regulated in the UK?

SOL is a cryptoasset, not a regulated financial product in the UK. Exchanges offering SOL to UK retail customers must be registered with the FCA under anti-money laundering regulations, but the asset itself carries no FCA approval. Crypto derivative products (CFDs on SOL) have been banned for UK retail clients by the FCA since January 2021. Always verify an exchange's current FCA registration at register.fca.org.uk before depositing funds. Cryptoassets are not covered by the Financial Services Compensation Scheme — if your exchange becomes insolvent, you are an unsecured creditor with no guaranteed recovery.

What was Solana's connection to FTX and why does it matter?

FTX and its associated trading firm Alameda Research were among Solana's earliest and largest institutional backers. When FTX collapsed in November 2022, its bankruptcy estate held approximately $7.4 billion in SOL. The subsequent sale of these holdings — managed by Galaxy Digital and DCGT at discounts to market price throughout 2023 and 2024 — created persistent downward price pressure on SOL. By mid-2024, the majority of estate SOL had been liquidated, removing this specific overhang. The episode is important because it illustrates how dependent Solana's early growth was on a single, ultimately fraudulent, ecosystem actor — and because it explains why SOL's price history between 2022 and mid-2024 cannot be read as a straightforward reflection of the network's technical merits.

How does Proof of History actually work?

Proof of History is a cryptographic clock, not a consensus mechanism in itself. It uses a sequential hash function (SHA-256) run repeatedly, where the output of each hash becomes the input of the next. This creates a verifiable record — each hash includes a count of how many iterations have occurred, providing a trustless timestamp. When transactions are submitted, they are embedded at specific points in this hash sequence, proving the order in which they occurred without validators needing to agree on timing in real time. This eliminates a significant communication bottleneck in traditional consensus, allowing Solana's validators to process transactions much faster because the sequencing is already cryptographically settled before voting begins.

What are the main risks of buying and holding SOL?

The principal risks include: (1) price volatility — SOL has experienced drawdowns exceeding 90% from peak to trough in previous market cycles; (2) network risk — Solana has a history of outages, though stability has improved post-2023; (3) concentration risk — the validator set is more centralised than Ethereum's, and the Solana Foundation and early investors hold significant portions of total supply; (4) regulatory risk — the UK's cryptoasset regulatory framework is still developing; (5) custody risk — if you use an exchange, your funds are at custodial risk; if you self-custody, losing your seed phrase means permanent loss; (6) ecosystem dependency — Solana's DeFi ecosystem is smaller than Ethereum's and more concentrated among a few protocols. None of these risks are unique to Solana, but several are more pronounced than they are for Ethereum.

How do I pay tax on SOL gains in the UK?

HMRC treats cryptoassets as capital gains tax (CGT) assets. Disposing of SOL — selling for GBP, swapping for another cryptocurrency, or spending SOL on goods or services — is a taxable event. Gains are added to your other taxable income and taxed at 10% (basic rate taxpayer) or 20% (higher rate) on the amount above your annual CGT exempt amount (£3,000 for 2024/25 onwards — verify the current year's allowance). Staking rewards are treated as income at market value on the date of receipt, taxed at income tax rates. UK pooling rules (Section 104) apply: all purchases of the same cryptoasset form an average-cost pool. You must keep records of every transaction including the GBP value at the time. The 30-day bed-and-breakfast rule prevents immediate repurchase to crystallise a loss. Consult a qualified UK tax adviser — crypto tax rules are evolving and HMRC guidance is updated periodically.

What is the difference between buying SOL on an exchange and using Solana DeFi?

Buying SOL on a regulated exchange means the exchange holds custody of your tokens. You have a credit on their ledger. This is simpler and has an established KYC/AML framework, but introduces custodial risk — if the exchange is hacked or insolvent, your funds are at risk. Using Solana DeFi directly means you hold SOL in a self-custody wallet (typically Phantom), connect to decentralised protocols, and sign transactions with your own private key. No exchange holds your funds. However, self-custody requires you to manage your seed phrase securely, and DeFi interactions carry smart contract risk — a bug or exploit in a protocol like Raydium or Jupiter could result in loss of funds with no recourse. The FCA has no jurisdiction over decentralised protocols. For most beginners, starting with a regulated exchange and only moving to self-custody DeFi once you understand the risks is a sensible progression.

Is meme coin activity on Solana a positive or negative signal?

It is genuinely ambiguous, which is the honest answer. On the positive side: the 2023–2024 Solana meme coin supercycle (BONK, WIF, and the pump.fun ecosystem) drove substantial real network activity, increased transaction fee revenue for validators, and brought a large number of new users onto the Solana network. More users and more fee revenue are objectively positive for the ecosystem's sustainability. On the negative side: the bulk of this activity was highly speculative, short-duration capital with no underlying value creation. Many retail participants in low-liquidity meme coins suffered significant losses. The meme coin narrative also creates reputational noise that can obscure Solana's genuine infrastructure developments. The productive interpretation is that Solana's low-fee architecture enabled a real demand discovery — people wanted cheap, fast token launches and trading — while recognising that the individual assets involved carried near-zero fundamental value.

Sources & further reading

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