SOL is the native cryptocurrency of Solana, a Layer 1 blockchain that supports smart contracts and dApps. Users can earn SOL by contributing to the network by being a node or validator. ^[1]

Token Allocation

The initial distribution of SOL was as follows: Seed Sale was allocated the largest percentage at 15.86%, followed by the Founding Sale at 12.63%, and the Validator Sale at 5.07%.The Strategic Sale was allocated 1.84%, while the Public Auction Sale was allocated 1.60%. The team and foundation were allocated an equal percentage of 12.50%, while the Community Reserve was allocated the highest percentage at 38.00%.^[1]

Funding

Solana conducted five rounds of funding, with four of them being private sales. In 2019, three of the sales were held, which led to the team securing $20 million in capital from investors such as Multicoin Capital, BlockTower Capital, and Rockaway Ventures. The number of tokens that were sold during these private sales was not disclosed. The funds raised were allocated towards engineering and project management, according to an official statement. ^[2]

In 2020, the team conducted their fourth sale through a public auction on CoinList, which helped them raise $4 million. ^[2] The initial coin offering (ICO) took place from March 16th to March 24th of 2020 with a total of $25 million raised. ^[5]

Utility

Staking

The Solana blockchain utilizes a Proof-of-Stake mechanism to safeguard its network and verify fresh blocks in the chain. When users stake their SOL tokens as part of this process, they earn newly issued SOL rewards. ^[2][3][4]

The staking process involves delegating tokens to validators who process transactions and maintain the network. This model incentivizes both token holders and validators to work together and share risks and rewards. Validators can earn more rewards with the more stake they receive, and they may compete with other validators by offering lower commission fees to attract more stake. However, there is a potential risk of losing tokens through slashing, which involves the removal of a portion of a validator's delegated stake in response to malicious behavior. This loss of future rewards for the validator encourages network security and performance. ^[6]

dApps

The Solana ecosystem, allowing individuals to pay for various products and services. For instance, SOL is used to pay for trading fees on decentralized exchanges like Raydium. Additionally, all Solana NFTs are denominated in SOL. ^[2][4]
A dApp is a decentralized application, or app that uses smart contracts. Any crypto program — like a marketplace, blockchain game, or tool used for DAO governance — is a dApp.