Introduced in 2017, the Solana platform is a network that aims to offer speed and efficiency, often drawing comparisons to traditional payment rails like Visa. SOL aims to help with the transaction-to-transaction operations of the network, and it is used to pay transaction fees and for securing the blockchain through staking.
The project is supported by some of the largest names in both crypto and venture capital, which has made it one of the most popular cryptocurrencies by market cap since 2021—notwithstanding some turbulence along the way.
With regards to tokenomics, the Solana developers released an initial supply of 500 million SOL at launch. All the tokens allocated to investors and the development team were vested by January 2023. While there is an inflationary mechanism that guides a steady release of new tokens, there is no fixed maximum supply. The initial inflation rate was set at 8%, and the project’s stated goal is to decrease this rate over time to 1.5%. This aspirational, long-term inflation rate is slightly lower than the United State Federal Reserve’s goal for inflation of the US dollar (2%).
SOL Price Charts
SOL was valued just under $1 when it was introduced in 2020, and it broke that level only a few months later.
The token’s volatility has historically been a function of the community’s faith in the project, which has swelled with adoption and been tested by network outages and concerns about the security of the chain.
Long-term traders of SOL sometimes lament their trouble trading the token based on chart trends (technical analysis), as some “macro” events have not been easily predictable, like the collapse of FTX, an early backer of the project. However, as with other large-cap cryptocurrencies, traders have sought to leverage short- and medium-term trends to attempt more profitable trades.
SOL Price and its History
SOL’s first year was relatively quiet—at least with regards to its price. Though the project underwent active development during that time, SOL’s ascension to cryptocurrency’s top-10 did not start until 2021. This was helped thanks to crypto-wide movements like non-fungible tokens (NFTs), with projects like y00ts and DeGods garnering particular attention on Solana.
SOL peaked with the rest of the market in November 2021 before losing approximately 97% of its value in the following year. SOL’s 2021-2022 course was notable because its gains and losses far outpaced most of the other large market cap coins like BTC and ETH.
The yearlong crash in SOL’s price from around $260 to $8 was accelerated by two main issues. First, the network experienced multiple outages during that time—lasting up to around 2 days—which shook the confidence of much of the community in Solana as a reliable blockchain network. Second, a significant portion of Solana’s funding came from Sam Bankman-Fried and his now-defunct companies, FTX and Alameda Research. Millions of SOL were held by FTX and Alameda. This close relationship and image of centralization also contributed to pushing SOL’s price down.
Still, SOL has recovered relatively well after the initial shocks of these events, and through 2023-2024 it regained much of its price and climbed into the top 5 cryptocurrencies by market cap.
How to Buy SOL
You can buy Solana on Bitstamp. Sign up for a Bitstamp account and start trading SOL today!
Conclusion
- SOL is the native token of the Solana ecosystem, providing utility in the form of facilitating transaction fees and staking.
- The inflationary nature of SOL’s tokenomics means that it does not have a fixed total supply like some other cryptocurrencies (like BTC), but this inflation is set to be controlled tightly over time.
- SOL has been as volatile as other cryptocurrencies—or more—at least partially because of historical network outages and exposure to FTX at the time of its collapse.