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- Solana’s DeFi ecosystem is growing rapidly.
- Many high-quality projects compete to become the leaders in the network.
- By using these protocols early on, users can enter the ground floor before the ecosystem develops.
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After Solana’s meteoric price hike, the smart contract platform’s DeFi ecosystem exploded. With so many new projects establishing itself in Solana, there are many opportunities to take advantage of the rapid growth.
Solana’s rise
While Solana has grown exponentially over the summer, Ethereum remains the undisputed home of DeFi in the crypto space. After the “DeFi Summer” of 2020, a group of major projects established themselves as premium DeFi chips on Ethereum, covering the functions of traditional financial markets in the decentralized space.
However, the cost of using DeFi on Ethereum today has affected many users. While Layer 2 solutions such as Optimism and Arbitrum promise to reduce the cost of network usage, progress has been slow. As such, other Layer 1 chains such as Solana are well topic To take a portion of the DeFi market away from Ethereum.
Solana checks all the boxes for an upcoming DeFi-focused layer. Fast block times and a history-proofing mechanism prevent forward running, and its node scalability means the network can theoretically avoid congestion and keep transaction costs low.
With this in mind, Solana is well on its way to boosting the thriving DeFi ecosystem. Currently, several DeFi projects are vying to become Solana’s premium DeFi chips. By identifying potential projects, users can take advantage of being an early adopter and all the perks that come with that, such as airdrops, liquidity mining, and more.
Possible blue chips
Two of the biggest blue DeFi chips on Ethereum are complex And avi. Both of these protocols work like decentralized banks, allowing users to deposit assets to earn interest and use them as collateral to borrow assets. Compound and Aave are often used by advanced productivity farmers as a base layer for amassing “LEGO money,” and borrowing assets to generate additional revenue in various DeFi protocols.
Port Finance and Solend are two Solana-based ventures that compete to act as decentralized banks.
Port Financing, currently ranks as the 11th largest dApp on Solana with a total locked (TVL) value of about $122 million, according to Davy Lama. Port operates in the same way as Compound and Aave and currently supports USDC, USDT, and PAI stablecoins, as well as a few Solana native assets such as Serum. Port is currently operating a liquidity mining program, where users can earn the protocol’s governance PORT token in addition to the interest paid on the asset deposited.
Port finance liquidity program is now available 🔥
In the initial stage, we will issue 5000 Port $ Tokens per day, which is equal to 150,000 Port $ Tokens per month (~1 million USD at the time of writing!) 🤯
🔎 Click below for all the details and get involved!
– P ◎ rt Finance (port_finance) September 9, 2021
Solend is another of Solana’s DeFi banks. With a TVL of less than $64.4 million, Solend is currently the third largest Solana dApp. It features many of the same assets as Port, with the addition of Raydium and Ethereum, allowing users to borrow against a more diverse set of assets. Solend has not released a governance token yet, but confirmed that the token will be introduced via a liquidity mining program sometime in September. Program rewards will be retroactive, so using the protocol early may result in an additional bonus.
Another key component of DeFi from Ethereum is the stablecoin-focused decentralized exchange Curve Finance. At Curve, users can efficiently swap pegged assets such as stablecoins and encapsulated assets with low levels of slippage. In Solana, the demand for pegged asset swaps is met Sabir, the protocol with the highest TVL currently on the network.
Saber offers many correlated asset pairs such as USDC-USDT, SOL, pegged and unpegged, and BTC-renBTC. In addition to swapping assets, users can also provide liquidity to earn interest. Unlike most liquidity pools on Ethereum dApps, Saber pools do not require the user to deposit equal amounts of both origins. While the rate of return fluctuates with the amount of liquidity offered and the use of the pool, users can expect a profit of 3 to 10% APY on Saber. However, the opportunity to earn a return does not stop there.
Once users receive their LP tokens, they can transfer them to the Revenue Pool Sunny To earn additional rewards. Users can earn SBR to provide liquidity on Saber, and the Sunny pool also pays out SUNNY tokens with a variable APR depending on the liquidity pool. This additional yield layer has already been put to great use, with around $1.4 billion of Saber LP tokens deposited in Sunny, making it Solana’s second highest TVL.
While there are a variety of DeFi opportunities available on Solana, many users simply choose to share their SOL for a variable return of 6 to 8%. Once the funds are frozen, they become illiquid, which means they are closed and cannot be traded or deposited into other DeFi protocols. However, an activity known as Liquid Staking allows users to produce an artificial asset that is an unlocked SOL. This allows users to access additional revenue opportunities with SOL status at the same time.
Marinade Finance It fills this gap in the market by allowing users to participate in their SOL and receive mSOL in return. mSOL is a tradable SOL that can be used to generate additional revenue on other DeFi platforms. For example, a user can take advantage of Marinade’s liquid service that earns 6 to 8%, then deposit their mSOL into Saber’s SOL-mSOL liquidity pool to earn an additional return.
Another blue chip in Ethereum for Solana’s equivalent is MakerDAO. The Maker protocol allows users to deposit some crypto assets into vaults and mint an amount of DAI stablecoins equal to the value of the deposited asset. The result is a decentralized, collateral-backed cryptocurrency pegged to the US dollar.
Like MakerDAO and Solana parrot finance It allows users to secure their assets and mint the PAI stablecoin in return. In addition to depositing individual assets such as SOL, SRM or RAY, LP tokens from Saber can also be used as collateral for a PAI instrument. Parrot currently has a cap on the amount of PAI that can be minted, but as the platform grows and demand stabilizes, those restrictions will likely be lifted. Recently, Parrot entered into a dual liquidity mining program with Port Finance, allowing users to deposit PAI and pSOL, and earn both PRT and PORT tokens in addition to regular interest.
Another popular DeFi project on Solana is Orca, an automated market maker (AMM) for an asset exchange on Solana. While Solana already offers asset exchange methods such as Serum and Raydium, Orca simplifies the AMM experience and offers a full suite of upgrades. Before providing liquidity to protocol groups, the amount of tokens earned per $1000 is shown, making it easier for users to estimate their rewards. Additionally, when transactions are confirmed, Orca pulls data from price trackers on CoinGecko, alerting users if prices or slippage is higher than expected.
With all the lucrative opportunities to earn a return in the Solana ecosystem, the network looks poised to attract more capital in the coming months. Getting involved early often turns out to be profitable, as has been the case for many of the DeFi protocols on Ethereum. Although the price of SOL may seem frenetic at the moment, the ecosystem that is developing in Solana appears to be here to stay.
Disclaimer: At the time of writing this feature, the author owns BTC, ETH, and many other cryptocurrencies.
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