A Summary of the Solana Decentralized Finance Space
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 minutes to learn more
In recent times, Solana’s Decentralized Finance space has persevered through different hardships. Examples of these trials include hacks, FTX crashes, dwindling liquidity, and network cuts. But, to our surprise, it appears that Solana is getting even stronger through it all. This is made possible by the efforts contributed by the Solana team and developer in fighting to overcome the varied challenges that have faced this ecosystem.
Getting Started on Solana DeFi in 2023
If you are holding tokens on another chain like Ethereum/EVM, the best means of sending those tokens to Solana is via exchanges like Coinbase and Kraken or by using non-centralized interchain protocols, such as Mayan Finance.
Purchasing Tokens on Solana
So, as soon as you get your crypto onto the Solana blockchain, you should exchange it for the network token SOL, USDC, or perhaps another crypto you have in mind. Solana users do not trade via AMM like those on Ethereum; rather, they trade using Jupiter, which is a leading Decentralized Exchange aggregator. Jupiter offers the best exchange rates and also gives users the opportunity to create on-chain restricted orders for all crypto.
Staking opportunities
You are now prepared to investigate the numerous yield options on Solana, as you have some SOL and SPL tokens in your wallet. Staking SOL to receive incentives is one straightforward way. Thankfully, there are reputable companies that offer liquid staking, such as Marinade, Jito, SolBlaze, or Lido. JitoSOL (Jito), a cutting-edge liquid staking SOL, offers a larger yield than conventional staking methods by rewarding stakers not just with emissions but also with MEV payouts produced by Jito validators. With a stake of more than $150 million, Marinade is the largest staking solution at the moment.
Presently, Marinade provides the biggest staking solutions, as it holds stakes worth more than $150 million. Marinade also provides users with an interesting feature known as “Directed Stake”. This gives users the chance to choose a validator of their choice to whom they wish to delegate their Tokens. Also, another feature known as SolBlaze automatically stakes your Solana tokens, disbursing them among various validators based on their delegation strategy, which assists in decentralizing the ecosystem.
Liquidity provisioning
Leading decentralized exchanges like Raydium and Orca largely provide concentrated liquidity market-making (CLMM) pools, which have become the standard for AMMs in Solana. These provide increased liquidity for customers and higher fees for traders while being more capital-efficient. If you invested your SOL in mSOL or JitoSOL, for instance, you can help users who want to trade these tokens by making liquidity available on these exchanges for pairs like SOL or USDC.
Through liquidity mining systems, such as Marinade’s MNDE for mSOL pools, you may also earn additional rewards in addition to the yield from trading fees that are made possible by this. A more experienced user may choose to check out projects on Solana to which he or she can supply liquidity, in order to earn trading fees.
Increasing One’s Exposure to Solana Decentralized Finance
The best means of creating plans for Decentralized Finance is through borrowing and lending projects. The major lending projects on the Solana blockchain are Solend and Marginfi. The two accept different SPL assets, which include Lists (Liquid Staked Tokens). The lending and borrowing protocol for Margnifi was launched earlier this year. Meanwhile, Solend launched its version 2 very recently, with interesting features such as TWAP oracles, borrow weight, and outflow rate limits.
On-chain Futures with Solana Perpetual Exchanges
Continuous trading opens up new opportunities for lending and borrowing, and the Solana scene is very active in this area. With Drift, which is now the top perpetual exchange according to TVL, traders can leverage a variety of cryptocurrencies, including SOL, BTC, ETH, ARB, RNDR, and MATIC, to mention a few. Users can lend SOL, USDC, or mSOL to Drift traders in order to increase their liquidity. Drift has unveiled an insurance fund staking program, giving users who are prepared to backstop the everlasting exchange in the event of a negative occurrence additional loan possibilities.
How About Airdrops?
Protocols on the Ethereum blockchain have benefited considerably from Airdrops. Even layer-2 projects are utilizing Airdrops to strengthen their communities and draw liquidity into their ecosystem.
Regardless of whether Solana plans to introduce a token, their products are still worth investigating. Many projects will arise in the startup industry, but not all of them will be successful. However, it’s obvious that this is just the start of the new era of Solana DeFi, given the vigor of the builders in the Solana ecosystem and tools like Cubik that assist in funding early initiatives.
