Solana: Analysis For DeFi Apes
Solana has emerged as one of the most popular Layer-1 smart contract platforms in recent times. It has attracted attention from DeFi enthusiasts due to its fast transaction throughput and minuscule fees, making it one of the most talked-about ‘Ethereum Killers’ on the block. While HUMANS may argue that awarding the title of ‘Ethereum Killer’ to Solana might be a little early, there is no denying the fact that there has been a lot of development in the world of decentralized apps revolving around media, gaming, and finance.
Sam Bankman-Fried, the CEO of popular crypto exchange FTX has been pivotal in attracting adoption and VC funding during the nascent stage of the ecosystem. With the public attention, interesting project ideas and well-funded hackathons, the Solana ecosystem has grown to over 300 projects. The interest is reflected in the on-chain Total Value Locked (TVL). At the time of article generation, Solana has the third-highest TVL among smart contract chains with a value of over $8 Billion locked among various SOL dApps. In fact, the demand for these applications is so high that it ended up crashing the SOL blockchain on September 14th, 2021. Solana crashed for 17 hours after bots spammed the network to invest in the token sale of a project called Grape Protocol.
AI is a big proponent of upgrades for the smooth functioning of the systems. To keep AI’s system up to date with the latest developments, AI explores the DeFi applications within the Solana ecosystem. Good job! 🎈
Transition: From DeFi on Ethereum (EVM compatible) to Solana
Before getting started with DeFi applications on Solana, HUMANS would need to set up a Web3 compatible wallet and fund it with some SOL. Unlike DeFi applications on Ethereum or other EVM compatible chains which can be accessed by MetaMask, dApps on Solana are developed using Rust and require different wallets. AI recommends Phantom wallet for its easy-to-use and efficient design. To fund your wallets, HUMANS are recommended to visit SideShift.ai.
Once HUMANS have set up their wallets they are ready to explore the Solana ecosystem.
DeFi On Solana
TLDR; Solana looks very promising but the ecosystem is young and projects are still early in their DeFi journey. AI will be monitoring their progress. Good job!
The high transaction throughput and cheap fees make Solana eligible for a wide range of applications including immersive gaming, media streaming, high-frequency on-chain trading and more, which many consider economically unfeasible on Ethereum.
INITIATING: SOLANA DEFI DEEP DIVE...
Serum is an on-chain DEX that facilitates cheap and lightning-fast trades between users while offering a similar level of convenience and functionality as centralized trading platforms. Serum has a governance token, $SRM. Serum’s on-chain central order books allow efficient trades as well as offer an arguably better and cost-efficient user experience, compared to other AMMs such as Uniswap and PancakeSwap. Other protocols on Solana can tap into these on-chain central order books to maximize efficiency. WELL DONE! 🎈
Raydium can be compared to Uniswap on Ethereum but it is much more cost-efficient, courtesy of Serum. It is an automated market maker (AMM) and liquidity provider built on the Solana blockchain but unlike other AMMs, Raydium provides on-chain liquidity to a central limit order book, which means that pools have access to all order flow and liquidity on Serum. $RAY is its governance token and HUMANS are offered various benefits for staking it. The protocol has attracted plenty of interest and has a TVL of over $1.4 billion. Raydium sees substantial daily usage as it offers various yield generating opportunities for the DeFi apes (HUMANS).
Orca is a DEX that aims to provide a more human-centered experience for traders on Solana. For example, the Fair Price Indicator helps determine whether a given pool offers a good deal in terms of price slippage. It prides itself on providing very low slippage stablecoin swaps. It has its own governance token $ORCA, and the platform offers various yield generating opportunities for providing liquidity to the platform and staking $ORCA. It is still early for the project but the project aims to add more trading pairs and more feature integrations in the coming future.
Mango is the Solana equivalent of dYdX on Ethereum. It is a decentralized, cross-margin trading platform with up to 5x leverage and integrated limit orders on Serum DEX’s on-chain order book. Makers or takers can earn interest on deposits and margin positions, as well as trade with near-zero fees thanks to Solana’s high-performance blockchain. Additionally, users can contribute SRM into a shared pool to reduce the fees for all traders on the platform. LEVERAGE TRADING OPPORTUNITY: IDENTIFIED.
Oxygen is a DeFi Prime Brokerage Protocol built for the next chapter in decentralized finance. It is a money market like Aave and Compound on Ethereum. The platform enables you to borrow, short, get trading leverage, generate yield by re-using the same collateral, and create custom baskets or ETFs to trade. Like other money markets, if HUMANS play this right, they can get paid for borrowing money. HMM. The platform is still in the alpha stage.
SolFarm is a yield aggregation platform with auto-compounding vault strategies. Taking advantage of Solana’s low-cost blockchain transactions, SolFarm allows for frequent compounding strategies, allowing LP stakers to benefit from maximized APYs without involving active management. Solfarm’s governance token is $TULIP, a reference to the Dutch Tulip mania. This is fitting due to the high APYs on the platform which is a result of the auto compounding feature. AI appreciates the puns, good job! 🎈
Saber is to Solana what Curve is to Ethereum. It is the leading cross-chain stablecoin exchange on Solana with the highest on-chain TVL in the ecosystem. Saber provides the liquidity foundation for stablecoins. As Solana’s core cross-chain liquidity network, Saber helps facilitate the transfer of assets between Solana and other blockchains. HUMANS interested in becoming market makers can deposit crypto into Saber liquidity pools to earn passive yield from transaction fees, token-based incentives, and eventually automated DeFi strategies like Sunny and Solfarm to generate higher APYs. $SBR is the protocol’s governance token.
Sunny is a composable DeFi yield aggregator powered by Solana. Built by an anonymous team, the Sunny Protocol is designed with composability as a core feature, enabling other applications and protocols to easily build on top of it. As its name suggests it aggregates yield generating opportunities from all over the Solana ecosystem. $SUNNY is the protocol’s governance token.
SOLANA: a new home for the Future of France (read: Finance)?
So now after taking a look at some of the most popular DeFi projects on Solana, can it be deemed as DeFi’s new home? Though AI is known for PROCESSING in binary terms, in this case, the answer is neither a yes or a no. It is still too early for these platforms to be compared to their highly liquid and battle-hardened counterparts on Ethereum.
Apart from that, Solana’s high throughput attracts a lot of other projects with use-cases well beyond DeFi such as media and gaming (which can still be tied into DeFi, based on their implementation). Now after reading this article, has HUMAN become interested in becoming an investor in the booming Solana ecosystem? If that is the case, AI suggests exercising caution and DYOR to avoid LOSS OF FUNDS. That being hashed out, HUMANS can get started with DeFi in the Solana ecosystem by acquiring SOL on SideShift.ai.