Crypto for Advisors: Breaking Down Solana

In today’s Crypto for Advisors, Josh Olszewicz from Canary Capital provides a breakdown of Solana - wherever it came from, and what’s happening with the plus today.

Then, Alec Beckman from Psalion answers questions astir Solana’s past and considerations for investors successful Ask an Expert.

– Sarah Morton

Solana’s Rise: Resilience, Regulation, and the Road to Adoption

Solana has emerged arsenic a formidable subordinate successful the blockchain arena, showcasing singular resilience successful the look of important challenges. Despite setbacks specified arsenic the FTX illness and web outages, Solana has rebounded impressively, with its autochthonal token, SOL, experiencing important maturation since its lows successful precocious 2022. The platform's entreaty lies successful its high-speed, low-cost transactions, positioning it arsenic a preferred prime for some developers and users. However, concerns astir centralization persist, stemming from the network's reliance connected a constricted fig of validators and precocious hardware requirements. While Solana operates connected a proof-of-stake statement mechanism, offering scalability and staking yield, the ineligible classification of the SOL token remains a contentious contented successful the United States, with the Securities and Exchange Commission yet to supply definitive guidance.

Amid the planetary disruption of the COVID-19 pandemic, Solana Labs launched the Solana blockchain and its autochthonal token, SOL, successful March 2020. Backed by starring task superior firms including a16z, Jump, Multicoin Capital and Polychain Labs, arsenic good arsenic the now-defunct Alameda Research, the level rapidly differentiated itself done high-speed, low-cost transactions, offering a compelling alternate to bequest Layer 1 protocols specified arsenic Ethereum (ETH), Binance Smart Chain (BNB) and Tron (TRX). Competing platforms, specified arsenic Avalanche (AVAX), Polkadot (DOT), and NEAR Protocol (NEAR), followed aboriginal that year, intensifying the contention for astute declaration dominance.

Solana operates connected a proof-of-stake statement mechanism, which allows users to unafraid the web and enactment successful governance by staking tokens. Unlike Bitcoin’s proof-of-work, proof-of-stake networks specified arsenic Solana trust connected validators — entities entrusted with maintaining the ledger and processing transactions. Solana's governance is partially influenced by stake-weighted voting, akin to a typical democracy, wherever the validators with the astir staked assets wield the astir influence.

Solana’s aboriginal momentum was fueled by endorsements from Sam Bankman-Fried and the now-defunct FTX exchange, which portrayed Solana arsenic a faster and much scalable alternate to Ethereum. Bankman-Fried’s entities invested heavy successful the ecosystem and built important infrastructure astir it. However, the illness of FTX and Alameda Research successful precocious 2022 revealed worldly centralization risks. Both firms held important positions successful SOL, and their bankruptcy triggered a crisp sell-off, raising questions astir token organisation and ecosystem resilience.

In 2023, Solana faced further scrutiny erstwhile the SEC, nether Chair Gary Gensler, identified SOL arsenic a imaginable unregistered information successful lawsuits against Binance and Coinbase. Robinhood subsequently delisted SOL, causing the plus to plummet to an utmost low, which was lone surpassed by the FTX fallout. Nonetheless, SOL appreciated astir 700% betwixt October 2023 and March 2024, reflecting robust retail request and expanding developer enactment contempt regulatory ambiguity.

The regulatory tide began to displacement successful precocious 2024. Robinhood relisted SOL successful November, citing evolving argumentation guidance and lawsuit interest. In aboriginal 2025, the SEC, nether its recently appointed Chair Paul Atkins, dismissed its lawsuit against Coinbase and paused proceedings against Binance. While Solana's classification remains unresolved, the manufacture anticipates a revised model that could let blockchain projects to beryllium deemed "sufficiently decentralized," thereby sidestepping securities instrumentality constraints. The caller support of crypto-based ETFs further signals increasing regulatory acceptance and whitethorn supply a pathway to broader organization involvement.

Despite erstwhile setbacks, Solana has emerged arsenic a starring level for retail activity, peculiarly successful the fast-growing sectors of meme coins and NFTs. Phantom, a self-custody wallet built for Solana, reported 10 cardinal monthly progressive users successful 2024, much than 850 cardinal transactions, and 24 cardinal mobile app downloads. One notable catalyst was the January 2025 motorboat of the TRUMP coin, which coincided with SOL reaching an all-time precocious of astir $300.

Daily Transactions

Source: Bloomberg Terminal

Although web reliability concerns persist, with 7 impermanent blockchain outages since 2020, Solana consistently ranks among the apical blockchains successful presumption of regular progressive users, transaction volume, decentralized speech enactment and interest generation. However, successful decentralized concern and real-world plus applications, Ethereum remains dominant, with Solana inactive trailing successful cardinal metrics, including full worth locked and circulating stablecoins.

Comparison Table

Source: https://www.stakingrewards.com/

From an concern perspective, SOL has historically traded arsenic a high-beta plus comparative to bitcoin, resembling the behaviour of equities specified arsenic Strategy. Since precocious 2024, immoderate firms person begun replicating the Strategy playbook, raising superior to get SOL for their equilibrium sheets. While this whitethorn summation short-term demand, semipermanent efficacy volition beryllium connected sustained web adoption, regulatory clarity and organization trust.

- Josh Olszewicz, portfolio manager, Canary Capital

Ask an Expert

Q. Why are investors funny successful Solana?

Solana stands retired for its precocious speed, debased fees, and increasing ecosystem:

• Performance – Solana tin grip up to 65,000 transactions per 2nd with finality successful seconds, making it perfect for real-time applications specified arsenic trading, gaming, and payments.
• Cost Efficiency – Fees are consistently nether a cent, making it appealing for retail-driven usage cases.
• Ecosystem Growth – Platforms similar Jupiter (DeFi) and Helium Mobile (telecom) are expanding real-world use.
• Big-Name Backing – Partnerships with Visa and Shopify person reinforced Solana’s presumption arsenic a superior layer-1 contender.

With a loyal assemblage and beardown momentum, Solana has emerged arsenic a high-beta play connected blockchain usability and scalability.

Q. What should investors ticker erstwhile evaluating Solana?

Investors should support an oculus connected some method and ecosystem fundamentals:

• Network Stability – Following a past of outages, Solana is introducing Firedancer, a caller validator lawsuit designed to heighten reliability and throughput.
• On-Chain Metrics – Daily progressive users transcend 1 million. DeFi TVL has precocious surpassed $4 billion, driven by beardown NFT volumes and app usage.
• Tokenomics – SOL has a declining ostentation docket and precocious staking information (~70% of proviso is staked).
• Regulatory Momentum – ETF applications from VanEck and 21Shares are pending, and immoderate U.S. support would beryllium a important milestone and make organization inflows to Solana.

Tracking improvement activity, usage, and upgrades is cardinal to knowing Solana’s staying power.

Q. What are the biggest risks of investing successful Solana?

Solana carries precocious upside potential, but besides meaningful risks:

• Past Instability – The web faced aggregate outages betwixt 2021 and 2023, which wounded capitalist confidence. Stability has improved, but remains nether scrutiny.
• Regulatory Pressure – SOL was mentioned successful SEC lawsuits against Coinbase and Binance successful 2023 arsenic a imaginable unregistered security.
• Centralization Concerns – A important information of tokens went to insiders, and the validator acceptable is importantly little decentralized than Ethereum’s.
• Market Volatility – Solana is intimately tied to speculative trends, specified arsenic memecoins and NFT booms, starring to crisp terms fluctuations.
• Institutional Builds – A important summation successful organization gathering is occurring connected the Ethereum blockchain.

For each its innovation, SOL has risks driven by some fundamentals and communicative momentum.

- Alec Beckman, vice president of Growth, Psalion

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