Solana: The Ecosystem Update ~ Part 1
At this point you cant even remember why you dislike Solana. So stop pretending to be cool & instead learn why Grandma is DMing you about it. You're going to capitulate at some point... so why wait?
Introduction
What follows is a labour of love; one of romance, adventure & tragedy. A story that spans 3 years. From the empires of FTX to the collapse of Serum, a battle tested ecosystem that is fraught with pain, but what is this? a Phoenix rises from the ashes and with her a new world awaits!
Come with Dirt as he lays out the future of Solana in this 3 Part research series. Exploring its lands (sectors) with old faces and new.
Solana is DeFi ready… but the question is, are you?
NOTE: You will notice that many of your old favourites have been omitted, not because I do not like them but because Solana is in desperate need of a face lift.
Index - Part 1
LSD
MEV Extracting ~ Jito
Money Markets
MM + Stablecoin ~ Margin Fi
Decentralized Exchanges
Aggregator ~ Jupiter
CLOB ~ Phoenix
CEX competition ~ Cypher (Perp also)
Yield Manager ~ Kamino
Derivatives
Perpetuals ~ Drift & Zeta
Liquidity Layer ~ Hxro Network
1. LSD
Jito Network is a Solana LSD that specializes in MEV extraction for its stakers. If you don’t understand MEV on Solana Jito has you covered here ~ long story short Jito directs the fees earned through blockchain txn arbitrage back to stakers which means you earn MEV rewards on top of validation rewards.
Jito happens to be growing heavily month over month, 2x faster than Marinade Finance. Currently it has $26m TVL vs Marinade Finance’s $165m. I expect this growth trend to continue as they start to gain more notoriety. Especially with the alpha MarginFi just dropped (keep reading👇).
It should be known that Lido also offers staked SOL as well ~ but something tells me the Solana community wants to support its own native dApps. $stSOL is only up 36% on the month, the lowest of the 3. WARNING: Ive been wrong about Lido before. There is another LSD protocol on my radar known as Solblaze with $bSOL ~ stay tuned for Part 3 for that.
Now, Jito is great because you can literally stake your $SOL directly inside the new and vastly improved wallet experience known as Backpack … if you don’t know this wallet get out from underneath your rock (coming in Part 2).
Lastly, $jitoSOL accrues network + MEV rewards by increasing in price relative to SOL. Which makes composability even more seamless. You do not have to worry about claiming emissions or compounding… its automatic. Props to Lucas Bruder and team for helping bring to SOL’s sexy back.
STRATEGY: Currently staking $SOL within Backpack wallet’s Jito xNFT dApp. Which is stupidly easy and user friendly. There’s no token yet 👀 Further, use jitoSOL in the apps mentioned below!
Referral Link finally out: jito.network/staking/?ref=dirty_digs 🫡
2. Money Markets
marginfi is Solana’s new prime brokerage protocol and they just dropped an alpha bomb on the new Lightspeed Podcast, thought a quick shout out is in order for the Blockworks team for having the best damn podcasts in crypto.
DIRT QUIT S-ing D AND GIVE THE FUCKING ALPHA! Yes yes, marginfi announced this week that they have decided to launch a stablecoin named $MUSD which will be backed by LSDs, namely $jitoSOL 👀 Very exciting!
That’s huge. This is their attempt to bring the Solana ecosystem a truly decentralized stablecoin, which also limits the USDC risk. Now Dirt’s a believer in USDC but these iterations are absolutely necessary for $SOL’s DeFi and any added utility for jitoSOL is always welcomed. Should take this time to mention that the $UXD stablecoin offered by UXP Protocol is akin to wrapped USDC.
mrgnlnd, marginfi’s only live product, is smoking its competition Solend with a month over month growth of >600% vs the latter’s 50%.
Macbrennen Peet and the boys are getting at it. Can already see a V2 section within the docs, so do with that as you will. Dirt would like to see some bug bounties in addition to the audits.
STRATEGY: Get the fucking points. Using my jitoSOL to lend within mrgnlend, then borrowing mSOL & UXD, swapping UXD into USDC and lending further. Yes yes, a little bit of looping. Nothing too crazy 🚜 we like healthy account ratios. An airdrop for users is known.
Feel free to use Dirt’s Ref Link it supports his work
3. Decentralized Exchanges
a. Dex Aggregator
Jupiter is a wonderful DEX aggregator. Been using it for quite sometime. This one is really that simple = great UI/UX with innovative design. Jupiter been around longer than most of their competition here but that ain’t stopping them. They recently announced a of couple things:
In app minting of LSDs and deep liquidity allowing for low slippage conversion ~ the team has gone LSDfi !!
Unstakeit integration already done $1M in-app volume ~ ease of network unstaking.
Drift Protocol recently deployed Jup tech too (read on! 👇)
Dirt is a big fan of Meow & the Jupiter team and it seems like all the new Solana DeFi participants are too. Are you surprised that Anatoly is touting it for better fills vs the new Ambient Finance? Fock no. Oh yeah and you can do Limit Orders, set the stinks!
ps when you compare Jupiters all time volume to the DEXs on defillama it ranks in the top 10, thats insane!
STRATEGY: Use their aggregator as much as possible. It’s really good. The team is pretty tight lipped about any potential token as they technically don’t need one. IMHO this is smart, keep the na-sayers away.
BONUS: Read this thread from Unstakeit & join their telegram to keep an eye on Sanctum ~ we early 👀 … pss hey Sanctum! if you see this, approve my twitter follow!
b. CLOB Orderbook
Phoenix is a brand new CLOB dex being developed by Ellipsis Labs. They too have recently partnered with Jupiter and since facilitated $100M in volume ~ seeing a common trend?
Jarry Xiao is leading Ellipsis and he’s smert, very smert. Here he discusses how Phoenix innovates on Serum’s crank orders, the future of permissionless makers & deep on-chain liquidity. Ol Jarry thinks Phoenix is a 10x improvement on current DEXs.
Do we believe him? Time will tell. ps they just dropped a UI/UX sneak peak 👇
The Phoenix to rise from the ashes…
STRATEGY: They have a closed beta which started back in March. Further, a lot of people are awaiting this one. Strat to date is simply to follow Phoenix, Ellipsis & Jarry for twitter announcements and jump in as early as possible.
c. CEX Competition
Cypher is going after the true CEX feel by offering spot, margin, futures & perps trading. They also offer borrowing and lending on the protocol. The tech stack employs OpenBook liquidity which was the community fork of the Serum protocol.
We talking lightning fast Solana TPS combined with deep liquidity. I like Cypher’s UI/UX as much as Drift (more below👇) but I am concerned with complexities. I did however take these concerns to the discord and they were met with gratitude, THIS IS IMPORTANT. When teams are committed to improving and are welcome to constructive criticism you pay attention.
Going to be watching Cypher very closely and continuing to trade. ps sounds like TradingView integration is coming soon.
STRATEGY: Take advantage of the Responsibility Points promotion by trading on the platform. In this one, I’m going long SOL and short BTC. Which cud be dangerous but I think Solana outpaces BTC coming into the Breakpoint Conference in a few months. Will adapt trading style as market changes.
d. Yield Manager
Kamino is a Liquidity Provisioning platform, which finds the best LPs within the Solana ecosystem. They’ve been busy taking advantage of the LSDfi narrative forming in EVM land.
I imagine Kamino will be the first of many LP aggregators. Can’t say I am super bullish on them for any reason other than them being in the limelight. As yieldfairy has stated, it’s great to see so many pools with network fees built in.
STRATEGY: 2.0 is coming soon. No better time to farm potential rewards. Also LPing your LSD SOL tokens can net you an extra 2% APY. ps select pools have $RAY & $MNDE as added incentives.
4. Derivatives
a. Perpetuals
When it comes to L1s, L2s and new ecosystems perp DEXs seem to time and time again receive attention. This is likely due to the real yield derived from trading volume. Solana is built for high TPS and as such Perp exchanges. There is no clear winner yet…
As mentioned, Cypher offers Perps and so do these two:
Pros:
Better UI/UX
Currently 10x the Open Interest
Partnership w/ Jupiter for 5x leverage spot flash loan swaps
Users continuing to increase ~ 1200 WAU
Cons
Been around for awhile and is likely farmed out… but its been a bear market so discount that fact.
Pros:
Newer therefore higher chance of earning rewards
Launched with Perpetuals first ~ Options and Futures to come
Current partnership with Mad Lads ~ trading competition with NFT bonuses
NOTE: 9 Days remaining (07/25/23) to trade $15k in notional volume
Cons
Separated pair accounts makes for shittier UX
Less trading pairs
STRATEGY: Trade on both platforms in opposite directions and take advantage of this ranging market. ie Long SOL via DRIFT + Short SOL via ZETA and TP during moves.
Feeling fun? Support Dirt with his ref links =
b. Liquidity Layer
Hxro Network is an onchain liquidity layer for derivatives & gambling dApps. It’s also the only protocol on this list with a token.
Gunny and team are starting to get noticed and are beginning to power their own little Solana ecosystem. Here’s a sneak peak of some of these protocols ~ expect more info on these in Part 3 of my Solana series 👀:
Flowmatic ~ on chain trading terminal / hybrid dex
Pepper Dex ~ Futures & Perpetuals ~ MINI STRAT: join discord and compete in their competitions to increase your rank for their upcoming airdrop. ALPHA 75% of airdrop given to HXRO stakers.
YoloNolo ~ Discord trading bot… these trading bots are having a narrative cycle as we speak.
STRATEGY: Buy & stake $HXRO to earn protocol revenue from the applications built on top. Also to take advantage of Airdrops. Thinking to add $HXRO as a medium-term (multi month) Solana holding.
Conclusion
Solana is focking exciting, and I’m excited by writing this. My advice to you is don’t wait to dig in. The same can be said for all the new L2s and the Cosmos ecosystem.
Who knows what the market will do over the next year, the only thing thats a given and always has been is the following = early users & adopters are rewarded first
When these tokens launch you’ll be glad you know which protocols are the best, cause those are the ones you’ll load up on.
Here are some additional reasons to be bullish on Solana:
Solana’s Breakpoint Conference is happening at the end of October
Most of these protocols are token less and everyone knows that tokens must be present in open source protocols ~ else you’ll be forked and vamped
Solana has been shit on relentlessly over the last year ~ that’s changing fast
Instead of deciding which L2 will eat Ethereum’s lunch invest in Solana; all of the protocols benefit it
Anatoly et al are focused on network reliability ~ no downtime in Q2 and almost perfect in Q1… snaps are in order
i don't dislike solana but why solana ..?