Solana Decentralized Finance Ecosystem: Main Products and Development Trends

The Messari Q1 2024 report shows that the DeFi trading volume on Solana continues to rise, with an average daily spot DEX trading volume increasing by 319% month-on-month to $1.5 billion. This growth is mainly driven by Memecoin trading, such as SLERF and BOME. Solana has become the preferred platform for retail and Memecoin traders, providing users with a smooth experience due to its extremely low transaction fees and fast confirmation times. Against the backdrop of a steady rise in SOL prices, Solana's total locked value (TVL) has grown to $4.311 billion. Similar to other public chains, Solana's TVL mainly comes from DEX, LST, lending platforms, and perpetual contract trading.

Decentralized Exchange (DEX)

Decentralized exchanges typically operate around specific ecosystems, especially for non-EVM Layer 1 chains like Solana.

| Project | TVL (in hundred million USD) | Circulating Market Cap (in hundred million USD) | FDV (in hundred million USD) | 24h Trading Volume (in hundred million USD) | |---------|-----------|------------|-----------|---------------| | Raydium | 9.65 | 4.58 | 9.65 | 6.50 | | Jupiter | 5.96 | 11.72 | 86.82 | 8.18 | | Orca | 2.36 | 1.07 | 2.68 | 5.96 |

Raydium

Raydium allows anyone to create pools and provide token liquidity, which has led to a large number of meme coins being launched on Solana, making Raydium the preferred DEX for meme coin issuance at one point. Its TVL is approximately $965 million, with a 24-hour trading volume of around $1.162 billion, ranking first in the Solana ecosystem.

However, with the rise of Meme platforms represented by Pump.fun, Raydium's influence in project initiation may gradually decline. If Meme platforms build their own DEX, this will have a greater impact on Raydium.

Jupiter

Jupiter, as a liquidity aggregator, searches for the best price routes across all major DEXs and AMMs on Solana, minimizing slippage and trading fees, while enhancing trading efficiency and user-friendliness.

Jupiter is not only a leading DEX platform in the Solana ecosystem, but also has a decentralized perpetual contract trading platform that supports up to 100x leverage for long and short positions. Users can participate as traders or liquidity providers. JLP holders can earn 75% of the fees generated by the perpetual exchange, and these fees are directly reinvested into JLP, increasing the price of JLP and enabling yield compounding.

In the meme craze of Solana, Jupiter launched the MEME market exploration tool APE, helping users discover newly launched tokens and providing detailed risk screening.

Orca

Orca promotes itself with the slogan "DEX for people, not programs" and has long been a leader among Solana DEXs. It features a concentrated liquidity market-making mechanism called Whirlpools, similar to UniswapV3, which allows LPs to concentrate liquidity within specific price ranges, enhancing capital utilization efficiency.

As the top DEX in the Solana ecosystem, Orca's FDV is only 268 million USD, which appears relatively conservative compared to other chains and DEXs.

Liquidity Staking (LST)

Solana users do not have a strong demand for liquid staking, mainly because Solana does not have a minimum staking requirement, and the relatively low price of SOL lowers the threshold for becoming a validator.

| Project | LST | APY | TVL (in hundred million USD) | Circulating Market Cap (USD) | FDV (USD) | |------------|---------|------|-----------|-----------|------------| | Jito | JitoSOL | 8.26% | 17.05 | 295 million | 2.374 billion | | Marinade | mSOL | 7.44% | 14.13 | 27.41 million | 1.01 hundred million | | BlazeStake | bSOL | 7.06% | 2.75 | Unlock amount unknown | 6.83 million |

Jito (JTO)

Jito launched an airdrop points program in September 2023 and quickly became the leading project in this track. The TVL of JTO is 1.705 billion USD, ranking first in the Solana ecosystem. The current staking APY for JitoSOL is 8.26%, which includes Solana staking yield and MEV revenue sharing.

The eligibility for JitoSOL users to participate in the airdrop is determined by the ranking of the points program, which has ten levels of allocation standards. The lowest tier can receive 4941 Jito, calculated at a minimum of 10524U based on the first day's rate of 2.13U.

Marinade

Marinade is more popular in native staking, with a higher APY and a locked amount of 1.413 billion dollars. Although it has a similar locked amount to Jito, the market cap and FDV differ by several times, indicating the potential growth space for $MNDE.

BlazeStake

BlazeStake is the second largest LST project in the Solana ecosystem, with a TVL of approximately 275 million USD. The estimated staking APY is currently 7.06%, slightly lower than Jito. The FDV is 6.87 million USD, which is a huge gap compared to Jito's 2.387 billion USD, indicating room for growth, but a high APY is also needed to attract users.

Lending

Save

Save (originally named Solend) is an algorithmic decentralized lending protocol on Solana. On Solana, Save can achieve performance that is 100 times faster and 100 times cheaper than traditional lending products.

In November 2022, Save experienced an oracle attack targeting the USDH stablecoin, resulting in a bad debt of 1.26 million USD, but full compensation was provided. This incident highlights the importance of oracles in the Decentralized Finance ecosystem.

Currently, the Solana ecosystem has low demand for lending, and there are few lending products. The new lending protocol Marginfi is about to be launched and is worth paying attention to.

Derivatives

Derivatives are financial contracts that derive value from underlying assets, used for risk management and market forecasting. In addition to Jupiter, there are several other derivative protocols on Solana, such as Drift, Flash Trade, Zeta, etc.

| Project | TVL (in billions) | FDV (in USD) | |--------------|-----------|------------| | Drift | 3.6 | 530 million | | Flash Trade | 0.1469 | 550 million | | Zeta Markets | 0.097 | Not issued |

Drift

Drift has a TVL of $360 million, offering multi-functional integrated DEX with pre-market trading, 20x leverage, and collateralized lending. Supported by Multicoin Capital, it raised $3.8 million in seed funding in October 2021.

Drift v2 offers enhanced liquidity, market making, and collateral functions. v1 attracted over 15,000 users and over $10 billion in trading volume within six months.

Flash Trade

Flash Trade is a decentralized spot and contract exchange focused on the Solana network, characterized by low trading fees and minimal price impact. It employs a unique multi-asset pool system and NFT structure to enhance user engagement.

The platform uses a pool-to-point trading model to ensure zero price impact and optimal trading conditions. Dynamic pricing is implemented through the Pyth oracle and a backup system. The gamified trading process through NFTs has attracted a TVL of $17 million.

Zeta Markets

Zeta Markets aims to democratize derivatives trading by providing two core products: DEX and FLEX. The platform simplifies the derivatives trading experience, utilizes Tradingview K-line charts, and has expectations for token airdrops.

PYTH

PYTH is a leading oracle project on the Solana chain, with many innovations compared to Chainlink. The data update speed is faster and more stable, and it can be applied to multiple blockchains. PYTH has a wide range of application prospects in areas such as financial derivatives trading, risk management, insurance payouts, and supply chain management.

Conclusion

The Solana DeFi ecosystem is thriving, with new projects like the prediction market B.E.T. continuously emerging. Mature products have a user base and market trust, while emerging products attract users by optimizing user experience and community building. As innovative products continue to emerge, Solana's DeFi ecosystem will become even more prosperous and diverse.