Analysis of the Current Status of Solana Ecosystem Decentralized Finance Projects

Recently, the overall performance of the Solana ecosystem has been strong, with the price of SOL approaching 100 USD on December 22. The trading volume on decentralized exchanges on Solana once exceeded that of Ethereum, attracting market attention. Meanwhile, the Ethereum ecosystem faces various doubts, especially as DeFi projects that once led the last bull market are no longer favored. This article will explore the development status of various DeFi projects in the Solana ecosystem.

Liquidity Staking

Liquid staking is an important growth project in the Solana ecosystem. Staking can lock up funds, which is beneficial for the increase in SOL prices, while various liquid staking tokens (LST) can be used in other Decentralized Finance projects. The airdrop effects and incentive measures of new projects also promote the continuous growth of funds participating in liquid staking.

The two largest liquid staking projects in the Solana ecosystem are Marinade Finance and Jito. As of December 22, their total value locked (TVL) reached $1.05 billion and $626 million, respectively, ranking them as the top two in Solana's ecosystem TVL. Although Marinade's dollar-denominated staking funds are only 57% compared to the historical peak, the number of staked SOL (11.15 million SOL) has reached a new high.

In addition to providing staking services, Jito also offers MEV infrastructure. Thanks to the unexpected airdrop, Jito has gained a solid user base. Recently, Jito has started to incentivize the application of its JitoSOL in Decentralized Finance projects, leading to a rapid increase in its staking volume, which has now reached 6.42 million SOL.

Decentralized Exchange

In the field of decentralized exchanges (DEX), Raydium and Orca remain the two most important projects, with no outstanding new projects emerging yet. Both have developed centralized liquidity features based on their original foundations, but the market positions of the two have changed.

For DEXs, liquidity and trading volume are the most critical indicators. Raydium's liquidity has dropped from a historical high of $2.21 billion to the current $113 million, only 5.1% of its peak. Orca's liquidity has decreased from a high of $1.41 billion to $184 million, which is 13% of its peak.

Recently, the trading volume on DEXs on Solana has surpassed that of Ethereum, attracting widespread attention. Data shows that both the 24-hour and 7-day trading volumes are higher on Solana than on Ethereum. Although some have questioned whether this might be due to double counting the trading volume of aggregators, calculating the trading volume of each DEX individually still shows that Solana indeed exceeds Ethereum.

Another indicator worth noting is the DEX trading volume/TVL ratio, which reflects the utilization of funds. This ratio for Raydium and Orca is 4.81 and 2.87 respectively, far higher than the levels of major DEXs on Ethereum. This indicates that the returns on providing liquidity on Solana are much higher than on Ethereum for the same principal, which may attract more funds into the Solana ecosystem.

Decentralized Lending

The decentralized lending space has undergone significant changes. Among the lending protocols that once had large amounts of capital, only Solend remains at the forefront, but it has been surpassed by emerging projects. Solend's TVL has dropped from a peak of $910 million to $187 million, which is 20.5% of its high. Other established lending protocols have performed even worse, with the TVL of Port Finance, Larix, and Apricot Finance all experiencing significant declines.

Emerging lending projects like marginfi and Kamino have performed excellently, with TVL reaching $348 million and $204 million respectively, and they have seen rapid growth recently. These projects have not yet issued governance tokens, but both have launched a points system that allows users to earn points through deposits and loans. With the allure of various airdrops, funds are continuously flowing in, and various LSTs are also supported on these platforms.

Yield Aggregator

The yield aggregator track has almost been denied by the market. Due to the lower transaction fees on Solana, the advantage of investing through yield aggregators to avoid personal operation fee expenses is no longer obvious.

The once most famous yield aggregator project Sunny has seen its TVL drop from a peak of $3.4 billion to the current $4.02 million. Other yield aggregator projects offering lending and leverage mining functions, such as Francium and Tulip, have also performed poorly due to declining mining yields.

Perpetual Contract

Compared to the perpetual contract projects on Ethereum Layer 2, Solana's performance in this field is relatively mediocre.

Currently, the best performer in this field is Drift, which uses an order book trading model similar to dYdX, allowing for leverage up to 20 times. Drift's TVL has reached a new high of $105 million, with a 24-hour SOL-PERP trading volume of $43 million.

The TVL of the established project Mango has decreased from a peak of $210 million to $10.47 million. Mango primarily provides lending and leveraged trading services, and recently added perpetual contract trading functionality.

Jupiter's JLP adopts a model similar to GMX V1, with a funding cap set at $23 million, and a 24-hour SOL-PERP trading volume reaching $101 million, surpassing Drift.

Decentralized Stablecoin

There has yet to be a standout decentralized stablecoin project in the Solana ecosystem.

The UXD Protocol once completed financing with a valuation of nearly $2 billion, but its TVL peaked at only $42 million, currently standing at $11.19 million. The project has shifted from a Delta neutral hedging approach to using USDC for 1:1 minting.

Other stablecoin projects that use over-collateralization for minting, such as Parrot Protocol and Hubble, are also declining, with a significant drop in TVL.

Overall, various DeFi projects in the Solana ecosystem are showing different development trends. Liquidity staking and DEX sectors are performing particularly well, emerging lending platforms are growing rapidly, while yield aggregators and stablecoin projects are facing challenges. With the continuous development of the ecosystem, the DeFi landscape on Solana may further evolve.