Basic Introduction to Solana

Solana is a high-performance open-source blockchain project created by Anatoly Yakovenko in 2017 and launched in 2020. Its core goal is to provide scalable blockchain infrastructure to support applications such as decentralized finance, NFTs, GameFi, etc. The high throughput and low cost characteristics of the Solana ecosystem also make it one of the ideal public chains for DeFi and NFT projects, known as the “Ethereum killer”.

Solana’s technological innovation lies in its unique consensus mechanism. On the one hand, historical proof (PoH) improves transaction sequencing and consensus efficiency by adding timestamps to transactions, creating a verifiable and tamper-proof time series. On the other hand, proof of stake (PoS) allows users to hold and stake SOL tokens, thereby ensuring network security and enhancing decentralization. This high-performance architecture has attracted a large number of users and developers to the Solana network, driving the rapid development of DeFi, NFT, and Web3 ecosystems, and providing new directions for the innovation and application of blockchain technology.

Solana project identity (Image source:https://bitcoinist.com/spot Solana ETFs Galaxy Digital approval odds SEC/)

$SOL Token Functionality

$SOL is the native cryptocurrency of the Solana network, playing multiple roles in the ecosystem and adopting the SPL protocol of the Solana blockchain, similar to the ERC-20 standard on Ethereum, ensuring its compatibility and widespread use within the Solana ecosystem.

The core function of SOL is to pay transaction fees when interacting with the Solana network and executing smart contracts. Due to Solana’s high throughput architecture, the transaction costs are much lower than Ethereum. SOL serves as the network’s fuel, helping users to complete on-chain transactions quickly and cost-effectively.

In Solana’s PoS (Proof of Stake) consensus mechanism, SOL also plays a crucial role. Holders can choose to stake SOL to support network validators (nodes) and enhance the security of the chain. At the same time, stakers can receive SOL rewards, creating an incentive mechanism for a decentralized network. In addition, validators can earn SOL rewards by validating and confirming transactions, further driving the enthusiasm of node operation.

SOL holders can also participate in the governance of the Solana network, including voting on platform upgrades, parameter adjustments, and other important issues. This decentralized governance model allows community members to collectively promote the development of Solana, ensuring the long-term stability and fairness of the protocol.

SOL Token Allocation Structure (Image Source:https://academy.shrimpy.io/post/solana-tokenomics-explained）

$SOL price performance

The cryptocurrency market has seen a bull market cycle in the past half year, driving the price of SOL to a phase high in early January 2025. In February, the market’s risk aversion intensified due to the news of the United States announcing additional tariffs, exacerbating the downward pressure on SOL, which fell below the $140 mark at the end of February. Since early March, the price of $SOL has continued to fluctuate downwards, gradually dropping below $120, hitting a six-month low.

As of March 10 (UTC+0) when this article was written, the latest price of $SOL is $121.11, with a fully diluted market value of $718.9 billion. In the short term, if the price can hold above the support level of $120, there may be a brief rebound. However, if it falls below this level, it may further test the support range of $115 or even $110. From a medium to long-term perspective, Solana remains one of the important ecosystems in the DeFi and NFT sectors.

During 03/04 - 03/10, the trend of $SOL (source of the chart: https://coinmarketcap.com/currencies/solana/)

According to The Block’s report on March 10th, the total transaction fees on the Solana ecosystem decreased by 10% in the past week, and the weekly transaction fees have dropped by 85% from the historical high of 361,000 SOL in the fourth week of January (during the issuance of $TRUMP and $MELANIA meme coins).

As the main revenue and token generation platform for Solana, Pump.fun has also experienced a similar decline. Last week, only 0.89% of Pump.fun tokens were sent to Raydium on average each day, compared to 1.6% in the third week of January, showing a halving decrease.

$SOL price drop analysis

In the past week, the price of $SOL has experienced significant fluctuations. Investors originally expected the Trump administration to announce the establishment of a national-level cryptocurrency reserve, including SOL, ADA, and other mainstream altcoins, at the White House crypto summit on March 7. However, the summit ultimately focused only on stablecoin regulation and loosening crypto regulations, without involving strategic reserve plans. This outcome disappointed the market greatly, leading to a significant downturn in overall crypto market sentiment.

The summit, hosted by the AI ‘Cryptocurrency Tsar’ David Sacks of the Trump administration, was originally seen as a positive signal of US government support for the cryptocurrency industry. However, after the meeting, Sacks quickly clarified that when Trump mentioned BTC, ETH, XRP, SOL, ADA on social media, they were only ‘examples,’ not a sign that the government formally plans to include these assets in its strategic reserves. This statement dashed investors’ expectations, leading to a continuous decline in Solana prices. Currently, most investors are adopting a wait-and-see attitude towards future developments, and it cannot be ruled out that Solana prices may face greater selling pressure in the future.

The AI image of the Trump administration at the White House Cryptography Summit (Image Source: https://www.foxnews.com/video/6369757162112)

In addition to the disappointment in policy expectations, the trading sentiment in the Solana futures market has also significantly weakened. Due to increased market uncertainty, leveraged traders have reduced their bullish positions one after another. As more traders prepare for price declines, bearish sentiment in the market is further strengthened, thereby increasing the downward pressure on the price of Solana. Meanwhile, risk aversion sentiment in the Solana futures market has intensified, leading to increased downward pressure on prices.

$SOL Price Prediction

According to the price prediction model, $SOL is expected to remain in a correction phase during Q2-Q3 of 2025, with prices anticipated to fluctuate between $100 and $160. As market sentiment continues to cool, SOL may enter a long-term downtrend in Q4 2025 to Q1 2026, potentially falling below $100 and eventually consolidating in the range of $60-$90. This scenario is similar to the bear market of 2022-2023, resulting in SOL’s price remaining at lower levels until market sentiment improves..

If the cryptocurrency market can usher in a new bull market after 2026, Solana still has the opportunity to return to the uptrend channel. It is recommended that investors pay attention to the market macro environment, ecological development, and the dynamics of competing public chains in the short term, and manage risks properly.

$Sol price trend prediction (Chart source:https://cryptopriceperdiction-isshiliu.streamlit.app/）

Conclusion

As a high-performance public chain, Solana still has long-term advantages in DeFi and NFT ecosystems, but faces challenges of macro market uncertainty, unmet policy expectations, and declining market liquidity in the short term. The price may remain volatile in Q2-Q3 2025, and may undergo a deeper correction after Q4. In the future, the price trend of $SOL will highly depend on the overall market trend, macroeconomic policies, as well as technological innovation and growth within the Solana ecosystem. Investors need to pay attention to market sentiment changes, key support levels, and risk management to cope with potential market fluctuations.