Building Block: Solana

Building Block: Solana

Zach Pandl

Last Updated: 10/29/2025 | 6 min. read

Overview

Solana is a high-performance smart contract blockchain that stands out for the depth and diversity of its on-chain activity.

Solana is a component of the Smart Contract Platforms Crypto Sector, along with Ethereum, BNB Chain, Tron, Cardano, Sui, and other networks. Among this group, Solana stands out for the depth and diversity in its on-chain activity. Today it’s the category leader in terms of users, transaction volume, and transaction fees.[1]
Smart contract blockchains are networks that host applications, and Solana is home to industry-leading applications across an impressive range of functions, decentralized finance, consumer/social apps, and physical infrastructure projects.
Solana has managed to stand out in a competitive market by offering fast and cheap transactions, by creating a compelling new-user experience, and by fostering a dedicated community of developers and users.
The Solana network produces new blocks every 400 milliseconds, and transactions can be considered final in about 12–13 seconds.[2] In addition to high throughput, transaction costs have remained relatively low: users have paid an average transaction fee of just $0.02 year to date.[3]
The Solana network also stands out for novel applications of the technology, including a Web 3.0-ready mobile phone (Solana Mobile), a payments application (Solana Pay), and “token extensions” that can bring additional functionality to standard Solana tokens (e.g., related to confidentiality).

Token

The SOL token is a digital commodity that helps operate the network and provides investment access to potential growth in the Solana ecosystem. The SOL token is used for powering decentralized applications, paying transaction fees, providing network security via staking, and facilitating network governance.

Use Cases

Decentralized Finance (DeFi): Automated market makers, lending and borrowing platforms, asset management software, and payments
Decentralized Physical Infrastructure: Applications related to mobile hotspots (Helium), video transcoding (Render), and data scraping (Grass)
Consumer Applications: Memecoin launchpads, non-fungible tokens, marketplaces, and community engagement tools

Investment Thesis

Smart contract platform tokens like SOL are digital commodities that offer utility in the context of their networks, plus the possibility of additional financial returns (e.g., staking rewards). Like other smart contract platform tokens, the investment thesis for the SOL token centers on potential growth in the size of the Solana network. If the Solana network grows over time — if it hosts more users, processes more transactions, and earns more fees — investors can anticipate a rising SOL price, in our view.

We believe the following conditions may contribute to future growth:

Diverse on-chain economy: Today Solana is the leading smart contract platform blockchain in terms of users, transaction volume, and transaction fees — arguably the three most important measures of blockchain activity.
Meaningful Revenue: Although there’s variation over time, the Solana ecosystem (including the Layer 1 blockchain and its hosted applications) earns about $425 million in fees per month — or more than $5 billion annualized.[4]
Developer community: Today there are more than 1,000 full-time developers working on Solana and its applications, and the number of Solana-focused developers has grown faster than any other smart contract platform over the last two years.[5] This human capital could contribute to ongoing innovation over time.
Competitive Advantages: Solana's high performance, fast transactions, and low fees — all combined with its user-friendly interface — provide a more seamless experience for both developers and users.

[1] Source: Artemis, Coin Metrics, FTSE/Russell, Grayscale Investments. Assets based on FTSE/Grayscale Smart Contract Platforms Crypto Sector. Network activity based on daily averages from January 1, 2025 through September 30, 2025. Data as of September 30, 2025. Ranking by transactions excludes Internet Computer (ICP), which counts queries as transactions.

[2] Source: Chainspect.app.

[3] Source: Coin Metrics, Grayscale Investments. Data as of September 30, 2025.

[4] Source: Token Terminal. Based on median monthly ecosystem fees over the 12 months ending September 30, 2025.

[5] Source: Electric Capital. Data as of September 30, 2025.

Related Content

Building Block: Sui
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Building Block: Bittensor
8/16/2024
Ethereum: The OG Smart Contract Blockchain
3/20/2025

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