What Is the Significance of the “Solely” from the Efforts of Others Clause in the Howey Test?

The word "solely" is often interpreted broadly by courts to mean "predominantly" or "substantially," not literally. The significance is that if investors' efforts are necessary for the success of the investment (e.g. active participation in a DAO's governance or network maintenance), the asset may not be a security.

However, if the investment's value is primarily driven by the managerial efforts of a centralized team, the "solely" prong is satisfied, and the asset is a security.