Solana was one of the top-performing altcoins during the recent bull market, jumping over 3,700% from its bear market low in December 2022 to its latest all-time high in January 2025 (though in March 2025, it also pulled back over 60% as the broader market fell).
Now, traders interested in capturing its price movements can do so through a spot Solana exchange-traded product (ETP).
Let’s explore the potential advantages and disadvantages of this new product.
What is Solana?
First, let’s review some background on what Solana is and how it works.
Solana is a blockchain network that was founded in 2020 by software engineer Anatoly Yakovenko and entrepreneur Raj Gokal. Like the Ethereum network, it enables third-party developers to create smart contracts, DeFi apps, and other crypto-related apps using its infrastructure.
Considered one of the most popular altcoins, Solana was the 5th largest cryptocurrency by market cap on January 19, 2025, the day of its most recent all-time high, clocking in at $121 billion compared to bitcoin’s $2 trillion and ether’s $386 billion. The Solana token, which appears on platforms under the ticker $SOL, has an unlimited maximum supply.
Unlike the Bitcoin and Ethereum networks, Solana prioritizes processing speed. Whereas Bitcoin processes roughly 250 transactions per minute on average, and Ethereum processes roughly 800, Solana processes 60,000. It’s able to achieve this through a unique consensus mechanism, which we’ll discuss below.
Potential advantages and disadvantages of Solana
What supporters like:
- Efficiency and cost-effectiveness. In addition to the fast transaction processing speeds mentioned above, Solana also has significantly lower transaction fees on average compared to those of Bitcoin and Ethereum. This has helped it attract a thriving developer ecosystem, even though it’s 5 years younger than Ethereum.
- Proven use cases. Thus far, Solana has become a popular blockchain for memecoins, NFT, and decentralized exchange developers. Some of 2025’s hottest memecoins by market cap were built on the Solana network.
- Unique consensus mechanism. Solana achieves its speed by using 2 innovations to validate its transactions. The first is Proof of History (PoH), which creates a tamper-proof record of transactions using timestamps. The second is a consensus mechanism called Tower BFT, which combines these timestamps with stakers to complete validations.
What skeptics are hesitant about:
- Relatively high degree of centralization. Solana’s blockchain is validated by a smaller group of participants when compared to many other blockchains. Critics argue this makes it more vulnerable to being taken over by a single entity. In general, decentralization improves blockchain security.
- Questions regarding reliability. Solana is notorious for its history of network outages. For example, in September 2021, it experienced an outage lasting 17 hours. However, the development team has made efforts to improve its operating reliability. As of late 2025, its most recent outage was over a year ago (February 2024, during which it stopped operating for 5 hours).
- Heavy competition from new blockchains. While Solana remains a top 10 cryptocurrency by market cap, some critics believe other blockchains are catching up. There are a plethora of new blockchains that challenge Solana’s speed and efficiency, which could eat into its market share in the long run.
What is a spot Solana ETP?
Like spot bitcoin and ether ETPs, a spot Solana ETP aims to track the price of a cryptocurrency—in this case, Solana. It holds Solana as its underlying asset, and can be bought and sold on select traditional brokerage platforms in the same way you would a stock. Like with other crypto ETPs, note that by buying a spot Solana ETP doesn’t give you direct ownership of Solana. Instead, you’re buying a derivative that tracks the price of Solana.
What is staking and how does it work with spot Solana ETPs?
When you stake a digital asset, you voluntarily lock up an amount of your holdings for a predetermined period of time until you choose to unstake. During this time, you can’t sell or transfer your assets. In exchange, you receive rewards, which are often paid out in the same asset you’re staking.
Some Solana ETPs participate in staking activities. In this context, staking means the ETP issuer stakes a portion the underlying Solana held in the fund. In exchange, income generated from the staking rewards are reinvested into the fund, increasing the NAV (net asset value) of your holdings. For example, say you have $100 worth of a spot Solana ETP and you choose to participate in staking, which generates $5 in net rewards. The $5 is added to the NAV of your holdings, meaning you now hold $105 worth of the spot Solana ETP.
Note that most staking providers also charge staking fees. These fees are deducted from your staking rewards before the rewards are added to your NAV.
Potential advantages and disadvantages of a spot Solana ETP
As is the case with all crypto ETPs, a spot Solana ETP may make it easier for investors to gain exposure to Solana’s price movements. Those who aren’t familiar with the nuances of crypto cybersecurity may find the process required to safely buy spot Solana overwhelming. The ETP, in contrast, allows investors to simply log in to a familiar brokerage account, buy the number of shares they want, then log off. All subsequent cybersecurity needs are then managed by their brokerage platform.
The trade-off is that the ETP doesn’t give investors access to many of Solana’s core functions. Investors won’t be able to use their assets to interact with applications in the Solana ecosystem, or vote on actions in the Solana community. And while crypto trades 24/7, the ETP only trades during traditional market hours. If Solana’s price experiences a large fluctuation during the weekend, you won’t be able to sell your holdings until the stock market opens on Monday.
Finally, investors should consider that the ETP may not track Solana’s price perfectly, as management fees, rebalancing costs and delays, and other ETP-specific factors may be involved.
What to consider with spot Solana ETPs
The ETP is an undeniably convenient way to get exposure to Solana’s price movements. But investors should also keep in mind that it’s not the same as buying spot Solana, for the reasons mentioned above. Make sure you’re comfortable with the trading limitations (like not being able to buy and sell on the weekend) before proceeding.
In general, remember that Solana and other cryptocurrencies are highly volatile and may be more susceptible to market manipulation than other securities. Note that crypto holders do not benefit from the same regulatory protections applicable to registered securities, and the future regulatory environment for crypto is currently uncertain.