DeFi (decentralized finance) has become one of the core driving forces of the blockchain industry, attracting a large number of users and capital. With the continuous development of blockchain technology, different public chains have formed their own unique DeFi ecosystems under their specific technical architectures and market demands.
Solana: The fast-rising DeFi star
According to Messari's Q1 2024 report, Solana's DeFi trading volume continues to grow, with average daily spot DEX trading volume increasing 319% month-on-month to $1.5 billion. In particular, trading in Memecoin, led by SLERF and BOME, has driven this growth. Solana has become a gathering place for retail and Memecoin traders, and its extremely low transaction fees and fast final status confirmation enable DeFi protocols to provide users with a silky user experience that other blockchain networks cannot support. Against the backdrop of steady growth in SOL prices, Solana's total locked value (TVL) has also grown to $4.311 billion. Like other public chains, Solana's TVL is mainly contributed by DEX, LST, lending platforms, and Perps.
Decentralized Exchange (DEX)
Decentralized exchanges are generally single-chain and developed around a certain ecosystem. This is especially true for non-EVM Layer 1 chains such as Solana.
Raydium
Raydium allows anyone to create a pool and guide the liquidity of tokens. This feature has enabled Solana to launch a large number of meme coins, and once made Raydium the preferred DEX for meme coin issuance. It also makes Raydium's TVL the first in the Solana ecosystem, with a TVL of approximately US$965 million and a 24-hour trading volume of approximately US$1.162 billion.
However, with the rise of meme platforms represented by Pump.fun (Blinks/Moonshot), which gradually replace Raydium in launching projects, more memes will be launched through other platforms instead of Raydium, and Radyium's influence will gradually decline. If the meme platform builds its own DEX, this will have a greater impact on Raydium.
Jupiter
As a liquidity aggregator, Jupiter will find the most favorable price route among all major DEXs and AMMs on Solana, minimizing slippage and transaction fees, making the trading process more efficient and user-friendly.
Jupiter is both the leading DEX platform in the Solana ecosystem and a decentralized perpetual contract trading platform where users can take long or short positions with up to 100x leverage. Users can participate as traders or liquidity providers. When traders seek to open a leveraged position, they borrow tokens from the pool. In return, liquidity providers earn fees from these leveraged trading activities, as well as borrowing fees and swap gains. As a JLP holder, you will receive 75% of the fees generated by perpetual trading transactions. This money is reinvested directly into JLP, increasing the price of JLP and promoting the continued compounding of earnings and returns.
Simply put, buying JLP has a better performance than stablecoins in a slow bull market, with an APR of 31%, and JLP does not require active "staking" of tokens or "harvesting" of income. This is directly reflected in the price of the currency, from 1.5 U in December 2023 to 3.1 U now.
With the popularity of Solana memes, Jupiter announced the launch of a MEME market discovery tool APE on July 4. The platform has two core functions. The first core function is to discover the latest tokens. APE will constantly refresh the 100 latest tokens of Orca, Raydium and Meteora. After clicking on a specific token, there will be detailed token inspection results, especially RUG risk screening.
The trading volume of Perp DEX on Solana is mainly guided by various active points programs. It can be said that the number of points is an important boost to user transactions. Jupiter's points system, calculated at 0.8 U, users can get at least 960 U. At TGE, all users who have used Jupiter were rewarded with 200 $JUP, which is also counted after swapping once, and is worth about 80 U, which is a big hair this year and will be a great help in attracting users in the future. The closest is the second round of voting ASR staking voting rewards from July to September, and the next jup airdrop will be in January-February next year.
Orca
With the slogan "DEX for people, not programs", it has long been at the forefront of Solana DEX and has a centralized liquidity active market-making function similar to Uniswap V3 - Whirlpools.
Under the new model, LPs can choose to concentrate liquidity within a certain price range. Liquidity is no longer evenly distributed on a curve from 0 to positive infinity. Instead, it can encourage the main liquidity to be concentrated in the middle of the market price where transactions are most frequent, greatly improving the efficiency of capital utilization and obtaining more market-making profits.
ORCA is the top DEX in the Solana ecosystem. As the leading DEX of the leading public chain, ORCA's FDV is only 268 million US dollars. Orca's FDV also shows the bubble situation of other chains and other DEXs.
Liquidity Staking (LST)
Users on Solana do not have a strong demand for liquidity staking, mainly because Solana has no minimum staking requirement and the price of SOL is relatively low, which greatly reduces the threshold for becoming a validator.
Jito (JTO)
Jito launched an airdrop points program in September 2023 and quickly became the leading project in the field after Lido withdrew from Solana. JTO's TVL is $1.705 billion, making it the project with the highest TVL in the Solana ecosystem. Jito SOL's staking APY is currently 8.26%, which is divided by Solana's staking yield and MEV revenue.
The airdrop qualification of JitoSOL users is determined by the ranking of Jito Points Program. Only JitoSOL users with points equal to or exceeding 100 points are eligible for the airdrop, and finally ten levels of allocation criteria are determined.
As can be seen from the figure, the lowest tier can get 4941 Jito. Based on the first day's 2.13 U, the lowest tier can get 10524 U.
Get JitoSOL by staking SOL, and each JitoSOL will accumulate 1 point per day. Lending is 1.5 points per JitoSOL, providing liquidity in any JitoSOL/xSOL pair is 1.5 points per JitoSOL, providing liquidity in any JitoSOL/xSOL pair is 2.5 points for JitoSOL/SOL LP, and 3.5 points for JitoSOL/USDC (and other volatile pairs like JitoSOL/UXD and JitoSTOL/stETH).
Marinade
Jito focuses on liquidity staking, while Marinade’s native staking is more popular and has a higher APY, which makes Marunade a leading project in the ecosystem with a locked-in amount of $1.413 billion. Although it has a similar locked-in amount to Jito, its market value and FDV are dozens of times different because Marinade is not as well-known as Jito, which also shows that $MNDE has certain potential.
BlazeStake
BlazeStake's TVL is the second largest LST project in the Solana ecosystem, at about $275 million. The current estimated staking APY is 7.06%, slightly lower than Jito. The FDV is $6.87 million, compared to Jito's $2.387 billion. On the one hand, there is room for growth, and on the other hand, the ecosystem is still dominated by memecoin players, who need high APY to compete with top projects for users.
Because the article will not contain investment advice and specific project recommendations, we will publish more project research on SOLANA ecosystem liquidity staking on Twitter @MetaHub_ZH.
Borrowing
Save
Save (formerly Solend, because it later supports SUI) is an algorithmic decentralized protocol for lending on Solana. Lending has proven to be key to the DeFi ecosystem. Current lending products are generally slow and expensive, but on Solana, Save can scale to be 100 times faster and 100 times cheaper.
In November 2022, an oracle attack on the stablecoin USDH occurred. The isolated pools of The Stable, Coin 98 and Kamino were all affected, resulting in $1.26 million in bad debts, which Save compensated in full. It is not difficult to see from the incident that the oracle is important to the DeFi ecosystem. Before the launch of PYTH, the Solana ecosystem did lack a secure and fast oracle infrastructure.
Later, Save adopted the PYTH oracle, which is similar to the Solana version of Chainlink, to provide price data and market data for blockchain projects. It provides "mission-critical" price data, providing data for various asset classes (such as cryptocurrencies, foreign exchange, commodities, and stocks) in a secure and zero-latency manner.
From the current perspective, on the one hand, the Solana ecosystem’s demand for lending is not high, and considering the security issues that have occurred before, there are very few lending products in the Solana ecosystem. The new lending agreement Marginfi is about to be launched soon, which is also worth looking forward to.
Derivatives
Derivatives are financial contracts that derive value from underlying assets and are used to manage risk and speculate on future market trends. In addition to Jupiter, which has already been mentioned, there are also multiple derivatives protocols such as Drift, Flash Trade, and Zeta.
Before the FTX incident, Mongo had always been at the top of the list. With the SEC accusing Avraham Eisenberg of manipulating the MNGO tokens to be offered and sold as securities on the crypto platform Mango Markets, Eisenberg was sent to prison on criminal charges, and the platform's locked-in volume was close to zero. The platform's current locked-in volume is around $15 million, slightly lower than Flash Trade, while Drift, which currently tops the list, has a TVL of around $3.8 billion, 25 times the current Mongo TVL, and even surpassed Mongo's peak of $2 billion.
Drift
Drift, which has a TVL of 360 million US dollars, is an integrated DEX with multiple functions such as pre-market trading, 20x leverage, and mortgage lending.
The project is backed by cryptocurrency-focused investment firm Multicoin Capital, which led a $3.8 million seed funding round for the DEX in October 2021.
The Drift protocol is currently running its v2, a sequel to the project’s v1, which provides enhanced liquidity, market making, and collateralization to improve the trading experience.
When the protocol released Drift v2 last year, it added that Drift v1 attracted more than 15,000 cumulative users and transaction volume exceeded US$10 billion within six months, which shows Drift’s popularity and ability to attract money.
Flash Trade
A decentralized spot and futures exchange focused on the Solana network, featuring low transaction fees and minimal impact on price.
Flash Trade has a unique multi-asset pool system, the first of its kind on Solana, and uses an innovative NFT structure to increase user engagement and account functionality.
Flash Trade is unique in its pool-to-peer trading model, which ensures zero price impact and optimal trading conditions. Liquidity providers are rewarded by charging transaction fees.
In addition, Pyth oracle and backup oracle system are used for dynamic pricing to ensure high uptime of the system. By adding NFT, the platform further gamifies the transaction process and encourages users to participate more.
The good user experience + pool-to-peer + NFT gameplay attracted $17 million in TVL, which is also quite impressive.
Zeta Markets
Zeta Markets is a DeFi derivatives platform that aims to democratize derivatives trading by providing liquid, undercollateralized derivative options and futures trading to individuals and institutions alike. The platform offers two core products: DEX (decentralized derivatives exchange) and FLEX (options minting and auction base layer that enables any protocol to leverage options). Their mission is to simplify the derivatives trading experience so that anyone can hedge, speculate, and have a say in market movements.
The operation page looks simple and smooth, the K-line chart is connected to Tradingview, and the token is expected to be airdropped. No wonder it has a TVL of tens of millions.
PYTH
Blockchain oracles are the bridge between blockchain and the real world. Blockchain itself is closed and deterministic, and it can only process and store transactions and events that occur within it. However, the execution of many smart contracts depends on data and events outside the blockchain, such as stock prices, weather conditions, sports results, etc. Oracles obtain these external data and transmit them to the blockchain securely and reliably, so that smart contracts can make conditional judgments and perform related operations based on these data. Oracles can be applied to products such as financial derivatives trading, risk management, insurance claims, supply chain management, etc. It not only increases the value of blockchain technology, but also promotes the widespread application of blockchain technology in all walks of life.
As the leading oracle on the Solana chain, Pyth has many innovations compared to the old-fashioned Chainlink. The data update speed of Pyth is faster and more stable. Now it can be applied not only to the Sol chain, but also to other blockchains. Its future and development space are huge.
Conclusion
As the Solana ecosystem continues to grow, more and more DeFi products are emerging on its platform, such as the recent launch of the prediction market BET. These DeFi projects not only enrich Solana's ecology, but also provide users with more financial tools and choices. Recently, many new DeFi products with potential have been launched. From the perspective of Solana's current DeFi product ecology, it is indeed a big piece of cake. Mature products certainly have advantages and have established a strong user base and market trust, but emerging products have invested a lot of resources in user interface design, user education and community building, which has lowered the user's threshold for use. Through carefully planned brand building and marketing activities, they can also quickly attract a large number of users and get a share of the pie. In the future, with the emergence of more innovative products, Solana's DeFi ecosystem will become more prosperous and diversified.
In the next issue, you can try to look at the unissued coin projects. If you want to see a detailed interpretation and market action of a specific product, please leave a message on Twitter @Metahub_zh.
