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What are the main risks of using Solana?

Solana's main risks are network outages, validator concentration, smart-contract exploits, scams, and US legal uncertainty about SOL in 2023 lawsuits.

Vahe HakobyanEditor-in-chief Updated Oct 6, 20263 min readFact-checked

Illustration: World-Crypt

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What are Solana's main risks?Why does Solana go down?How do Solana scams and exploits work?Is SOL a security in the US?FAQ

Key takeaways

Outages have taken Solana offline.
A few validators can affect it.
Bugs and scams put wallets at risk.
The SEC has called SOL an alleged security.

Solana is a public blockchain for smart contracts and apps, and its coin is SOL. Its main risks are outages, validator concentration, exploits, scams, and US legal uncertainty. It launched in March 2020, uses proof of stake, and became an Ethereum rival when NFTs grew in 2021.

What are Solana's main risks?

Solana risks at a glance

Coin: SOL
Launched: March 2020
Known for: Faster and cheaper transactions

Solana's main risks are network outages, congestion, centralization, exploits, scams, and legal uncertainty. High demand has caused outages.

Outages can stop the network.
Congestion can make transactions fail.
A few validators can affect it.
Smart-contract bugs can risk funds.
Fake tokens and phishing target users.

Why does Solana go down?

Validators are concentrated, so a few operators can affect the network. High demand has caused outages. They can delay transactions and prevent you from managing positions in time, so you could lose funds indirectly.

Solana outages from high demand
Date	What happened
14 September 2021	A flood of transactions caused a fork and an outage of about 17 hours.
1 May 2022	The blockchain went offline for roughly seven hours due to bots.
1 October 2022	A consensus bug brought the network down for 6 hours.

How do Solana scams and exploits work?

Smart contracts on Solana can have bugs, and DeFi protocols have been hacked. Fake tokens, rug pulls, and wallet-draining phishing scams target Solana users. In August 2022, the Solana Foundation blamed wallet software from Slope Finance.

Bugs can lock or drain funds.
DeFi protocols have lost funds.
Fake tokens imitate real projects.
Rug pulls take liquidity and vanish.
Phishing drains wallets through fake sites.

Is SOL a security in the US?

US regulators have treated SOL as an alleged security in lawsuits, creating legal uncertainty. In June 2023, the SEC named SOL as an alleged security. The Solana Foundation has denied that SOL is a security.

Frequently asked questions

No. Once a transaction is confirmed, it usually cannot be reversed.

No. Standard Solana wallets are not insured. Exchange reimbursement is not insurance.

Staking does not currently slash principal, but rewards can stop if a validator fails. Some services lock tokens.

Check the mint address and look for a verifiable team. Tokens with no clear team are high risk.

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Written byVahe HakobyanVahe Hakobyan is the editor-in-chief of World-Crypt. He covers bitcoin, markets and regulation, and leads the newsroom that fact-checks every story before it goes live.