Solana Decentralized Finance Ecosystem Overview: Top Ten Core Products and Development Trends

The Messari Q1 2024 report shows that Solana's DeFi trading volume continues to grow, with the average daily spot DEX trading volume increasing by 319% month-on-month to $1.5 billion. This growth is primarily driven by Memecoin trading. Solana has attracted a large number of retail and Memecoin traders due to its extremely low transaction fees and fast confirmation speeds. Against the backdrop of a steady rise in SOL prices, Solana's total value locked (TVL) has also grown to $4.311 billion. Similar to other public chains, Solana's TVL is mainly composed of DEX, LST, lending platforms, and perpetual contracts.

Decentralized Exchange (DEX)

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

|---------|----------------|-----------|-----------------|-------------| | Project | TVL Total Locked Value (in 100 million USD) | Circulating Market Cap (in 100 million USD) | FDV Fully Diluted Valuation (in 100 million USD) | 24h Trading Volume (in 100 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 users to create liquidity pools and guide token liquidity. This feature has led to a large number of meme coins emerging on Solana, making Raydium the preferred DEX for meme coin issuance. Raydium's TVL is approximately $965 million, with a 24-hour trading volume of about $1.162 billion, ranking first in the Solana ecosystem.

However, with the rise of Meme platforms represented by Pump.fun, they are gradually replacing Raydium as the platform for launching projects. If these platforms begin to build their own DEX, it could have an even greater impact on Raydium.

Jupiter

Jupiter, as a liquidity aggregator, can find the best price routes across all major DEXs and AMMs on Solana, minimizing slippage and transaction fees, and enhancing trading efficiency and user experience.

In addition to being a leading DEX platform, Jupiter also offers a decentralized perpetual contract trading platform that supports leverage of up to 100 times. Users can participate as traders or liquidity providers. JLP holders can earn 75% of the fees generated by the perpetual exchange, which are directly reinvested into JLP, increasing its price and facilitating continuous compounding of returns.

Jupiter also launched the MEME market discovery tool APE, whose core features include discovering newly listed tokens and providing detailed token risk screening results.

Orca

Orca, with the slogan "DEX for people, not programs," has long been at the forefront of Solana DEXs. It features a concentrated liquidity automated market-making mechanism similar to Uniswap V3 - Whirlpools. This model allows liquidity providers to concentrate their liquidity within specific price ranges, improving capital efficiency and generating more market-making profits.

ORCA, as a top DEX in the Solana ecosystem, has an FDV of only 268 million USD, reflecting the bubble situation of other chains and DEXs.

Liquidity Staking (LST)

Solana users have relatively low demand for liquid staking, mainly because Solana has no minimum staking requirement, and the relatively low price of SOL lowers the threshold for becoming a validator.

|------------|---------|---------------------------|-----------------|----------|----------------| | Project | LST | APY (Annual Percentage Yield) (usually includes MEV revenue sharing) | TVL (Total Value Locked) (in 100 million USD) | Circulating Market Cap (USD) | FDV Fully Diluted Valuation (USD) | | Jito | JitoSOL | 8.26% | 17.05 | 295 million | 2.374 billion | | Marinade | mSOL | 7.44% | 14.13 | 27.41 million | 101 million | | BlazeStake | bSOL | 7.06% | 2.75 | Unlock amount unknown | 6.83 million |

Jito (JTO)

Jito launched an airdrop points program in September 2023, quickly becoming the leading project in the space after Lido exited Solana. The TVL of JTO is $1.705 billion, making it the project with the highest TVL in the Solana ecosystem. The staking APY for Jito SOL is currently 8.26%, which includes Solana staking yields and MEV revenue sharing.

Marinade

Marinade focuses on native staking, with an APY higher than Jito, becoming a leading project in the ecosystem, with a locked amount of 1.413 billion dollars. Although its locked amount is similar to Jito's, its market cap and FDV differ significantly, partly due to lower recognition, which also indicates that $MNDE may have growth potential.

BlazeStake

BlazeStake is the second largest LST project in the Solana ecosystem, with a TVL of approximately $275 million. The estimated staking APY is currently 7.06%, slightly lower than Jito. Its FDV is $6.87 million, far lower than Jito's $2.387 billion, which shows potential for growth while also reflecting that the main participants in the ecosystem are still memecoin players who need high APY to compete for users with the leading projects.

Lending

Save

Save (formerly known as Solend) is an algorithmic decentralized lending protocol on Solana. It provides lending services that are 100 times faster and 100 times cheaper on Solana.

In November 2022, Save experienced a oracle attack on the stablecoin USDH, resulting in a bad debt of $1.26 million, but full compensation was provided. This incident highlighted the importance of oracles in the DeFi ecosystem.

Currently, the demand for lending in the Solana ecosystem is not high. Considering the previous security issues, there are few lending products. A new lending protocol, Marginfi, is about to be launched and is worth paying attention to.

Derivatives

Derivatives are financial contracts used to manage risk and speculate on market trends. In addition to Jupiter, there are several derivative protocols on Solana, such as Drift, Flash Trade, and Zeta.

|--------------|-----------------|----------------| | Project | TVL (Total Value Locked) (in billion USD) | FDV Fully Diluted Valuation (in USD) | | Drift | 360 million | 530 million | | Flash Trade | 14.69 million | 550 million | | Zeta Markets | 9.7 million | Unissued Token |

Drift

Drift has a TVL of 360 million USD and is a multifunctional integrated DEX that offers pre-market trading, 20x leverage, and collateralized lending services. The project is supported by Multicoin Capital and raised 3.8 million USD in seed funding in October 2021.

Drift v2 provides enhanced liquidity, market making, and collateral functions, improving the trading experience. In the v1 phase, Drift attracted over 15,000 users and a trading volume exceeding 10 billion dollars 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 an innovative NFT structure to enhance user participation.

The platform's pool-to-pool trading model ensures zero price impact and optimal trading conditions. It utilizes the Pyth oracle and a backup oracle system for dynamic pricing, and gamifies the trading process through NFTs. Currently, Flash Trade has attracted a TVL of 17 million dollars.

Zeta Markets

Zeta Markets is a Decentralized Finance derivatives platform aimed at democratizing derivative trading. It offers two core products: DEX (Decentralized Derivatives Exchange) and FLEX (options minting and auction base layer). The platform has a simple interface, integrates Tradingview's candlestick charts, and the tokens have airdrop expectations, thus attracting over ten million in TVL.

PYTH

PYTH is the leading oracle on the Solana chain. Compared to traditional Chainlink, PYTH has faster data update speeds and higher stability. It is not only applicable to the Solana chain but can also be used on other blockchains, possessing tremendous development potential.

Conclusion

The Solana ecosystem is continuously growing, with more and more DeFi products emerging on its platform, such as the recently launched prediction market B.E.T. These projects not only enrich Solana's ecosystem but also provide users with more financial tools and options.

Although mature products have the advantages of a user base and market trust, emerging products have lowered the barriers to use by optimizing user interface design, enhancing user education, and building communities. Through well-planned branding and marketing promotion, new products can also quickly attract a large number of users.

In the future, with the emergence of more innovative products, Solana's Decentralized Finance ecosystem will become more prosperous and diverse.