Overview of Solana Decentralized Finance Ecosystem: Key Products and Development Trends

The decentralized finance (DeFi) trading volume on Solana continued to grow in the first quarter of 2024, with the average daily spot decentralized exchange (DEX) trading volume reaching $1.5 billion, a month-on-month increase of 319%. This growth was mainly driven by Memecoin trading. Solana has become the platform of choice for retail and Memecoin traders due to its low transaction fees and fast confirmation times. Against the backdrop of a steady rise in the price of SOL, Solana's total value locked (TVL) has grown to $4.311 billion. Similar to other public chains, Solana's TVL mainly comes from DEXs, liquid staking tokens (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 (in hundred million USD) | Circulating Market Cap (in hundred million USD) | Fully Diluted Valuation (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 users to create liquidity pools and direct token liquidity, a feature that has facilitated the launch of a large number of meme coins. Raydium's TVL is approximately $965 million, with a 24-hour trading volume of about $1.162 billion, making it a leader in the Solana ecosystem. However, with the rise of other meme platforms, Raydium's influence in project initiation may gradually decline.

Jupiter

As a liquidity aggregator, Jupiter seeks the best price routes among the major DEXs and AMMs on Solana, minimizing slippage and transaction costs. In addition to being a leading DEX platform, Jupiter also offers decentralized perpetual contract trading, allowing users to trade with leverage of up to 100x. Jupiter has also launched the MEME market discovery tool APE, helping users discover newly launched tokens and conduct risk assessments.

Orca

Orca, with the slogan "a DEX for people, not programs," has long been ranked among the top DEXs on Solana. It offers a concentrated liquidity active market-making feature similar to Uniswap V3 - Whirlpools, allowing liquidity providers to concentrate their liquidity within specific price ranges, enhancing capital efficiency.

Liquid Staking (LST)

The demand for liquid staking among Solana users is relatively low, mainly because Solana does not have a minimum staking requirement, and the price of SOL is relatively low, which lowers the barrier to becoming a validator.

| Project | LST | APY (including MEV revenue sharing) | TVL (in hundred million USD) | Circulating Market Cap | Fully Diluted Valuation | |------------|---------|------------------|-----------|-------|--------| | 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 quickly became a leading project in the field after launching its airdrop points program in September 2023. Its TVL is $1.705 billion, making it the project with the highest TVL in the Solana ecosystem. The staking APY of JitoSOL is currently 8.26%, which includes the Solana staking yield and MEV revenue sharing.

Marinade

Marinade is more popular in native staking, with a higher APY, becoming a leading project in the ecosystem with a locked volume of $1.413 billion. Although its locked volume is similar to that of Jito, its market capitalization and fully diluted valuation are vastly different, which may indicate that $MNDE has certain growth potential.

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. Its fully diluted valuation is 6.87 million USD, which is significantly lower than Jito's 2.387 billion USD, reflecting the current situation where the ecosystem is primarily dominated by memecoin players.

Lending

Save

Save (formerly known as Solend) is an algorithmic decentralized lending protocol on Solana. It offers faster and lower-cost services compared to traditional lending products. After experiencing an oracle attack, Save adopted the PYTH oracle to enhance security. Currently, the demand for lending in the Solana ecosystem is relatively low, but the new lending protocol Marginfi is set to launch and is highly anticipated.

Derivatives

Derivatives are financial contracts that derive value from underlying assets, used for risk management and market forecasting. The main derivatives protocols on Solana include Jupiter, Drift, Flash Trade, and Zeta.

| Project | TVL (in hundreds of millions) | Fully Diluted Valuation | |--------------|-----------|--------| | Drift | 3.6 | 530 million | | Flash Trade | 0.1469 | 550 million | | Zeta Markets | 0.097 | Not Issued |

Drift

Drift is a multifunctional integrated DEX that offers pre-market trading, 20x leverage, and collateralized lending features. It is backed by Multicoin Capital and has attracted over 15,000 users with a trading volume exceeding $10 billion in just 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 utilizes a unique multi-asset pool system and NFT structure to enhance user engagement.

Zeta Markets

Zeta Markets is a Decentralized Finance derivatives platform that offers liquidity, under-collateralized derivative options, and futures trading. Its core products include DEX and FLEX (option minting and auction base layer).

PYTH

PYTH is the main oracle on the Solana chain, providing fast and stable data updates. It is not only applicable to the Solana chain but can also be used on other blockchains, with huge development potential.

Conclusion

The DeFi ecosystem of Solana is continuously evolving, with new projects like the prediction market B.E.T. constantly emerging. Although mature products have their advantages, emerging products can quickly attract users by improving user interfaces, enhancing user education, and building communities. With the emergence of more innovative products, the DeFi ecosystem of Solana will become even more prosperous and diverse.