Author: @BanklessHQ
Translation: Blockchain in Vernacular
1. Ecosystem Analysis
With the recent surge in ETFs, stablecoins and real-world assets (RWAs) have emerged as one of the strongest paths to enable real-world applications and enhance the connection between the existing financial system and the on-chain economy.
Larry Fink's mission to tokenize the world became one of the most discussed concepts of this cycle, and he implemented this vision in BUIDL, @Blackrock's on-chain tokenization fund. Stablecoins remain at the center of discussion due to protocols like @ethena_labs, Stripe's re-entry via USDC payments, and new regulations from the EU like MiCA.
While Ethereum and Tron are at the center of stablecoins, Solana has risen significantly during this cycle, with daily trading volume exceeding $100 billion at its peak. RWA activity is also increasing on the network, such as @OndoFinanceâs USDY as DeFi collateral, @maplefinanceâs partnership with @jito_sol, and the launch of @librecap.
This article will dive deeper into these developments to understand the momentum Solana is gaining in becoming one of the blockchains with the most real-world applications.
2. Stablecoins on Solana
Stablecoins on Solana showed strong growth during this cycle, highlighting the strength of the network and its attractiveness to stablecoin issuers.
Currently, Circleâs USDC dominates the stablecoin market on Solana, accounting for about 70% of the chainâs total stablecoin supply, while it only accounts for about 30% on Ethereum.
As of this week, USDC has about 19x the volume of USDT (USDT is the second largest token on the chain), despite USDT having a total market cap of $114 billion on Ethereum and a daily volume of $31.5 billion, more than the top 20 ERC tokens combined. USDCâs dominance on Solana is due to @circle and @Solana Foundationâs strategy to incentivize developers and drive integrations with exchanges.
For example, USDC developer grants from platforms such as @solendprotocol and @superteam have attracted more developers to Solana. The launch of Circleâs Cross-Chain Transfer Protocol (CCTP) on Solana has also improved the usability and liquidity of USDC. In addition, Circleâs Web3 services simplify smart contract development, meet developer needs, and facilitate the integration of USDC. Overall, these efforts aim to unify DeFi and establish USDC as Solanaâs leading stablecoin.
In third place is @Paypalâs PYUSD with ~$240M in circulating supply, ~11% of Solanaâs total stablecoin supply, and growing rapidly since its launch two months ago.
DeFi protocols such as @KaminoFinance have provided significant supply-side benefits to PYUSD since July 1st, fueling its growth. Yields started at 30% and have dropped to 23%, while the annualized interest rate (APY) on borrowing is 0.22%, compared to 21% for USDC and 16.5% for USDT, making PYUSD an attractive DeFi tools. In the week of July 1, PYUSDâs supply increased by 88%, with 38% flowing into Kamino.
More than just stablecoin issuers, integrations with Solana from major financial platforms like @stripe and @Shopify open up new opportunities for developers and enterprises to leverage the network to build trusted platforms for everyday needs and connect Solana to mainstream finance.
In this space, projects such as @sphere_labs, @uselulo, @Decaf_so, and @helio_pay are under development, simplifying cryptocurrency trading, leveraging stablecoins like USDC to provide everyday financial services such as conversion to local currency, facilitating crypto payments in e-commerce, and high-yield savings.
Overall, the stablecoin momentum on Solana seems poised to expand the service scope of the existing financial system and provide efficient on-chain solutions.
3. Real World Assets (RWAs) on Solana
While Solanaâs growth in real-world assets has been muted compared to Ethereum, it is building a fertile ecosystem that goes beyond tokenized treasuries.
In December 2023, Ondo Finance launched its flagship tokenized treasury product USDY on Solana, with a current market value of $42 million. Although smaller than other major products classified as stablecoins, USDY still has some interesting developments, such as being integrated into the perpetual contract decentralized trading platform @DriftProtocol as collateral.
This and future collaborations add uses for tokenized real-world assets beyond lending, improving capital efficiency for traders.
Some of the other most interesting RWA projects in the Solana ecosystem right now include Maple and Parcl.
Maple, a marketplace that allows whitelisted companies to borrow from on-chain liquidity pools, was redeployed on Solana last year to provide a path to yield for stablecoins and altcoins through an overcollateralized lending market. In addition to this, Maple has also partnered with Jito to launch their new retail-focused lending product Syrup. The collaboration will provide flexible financing options for borrowers using JitoSOL, unlock sources of yield for lenders, and enhance risk management through JitoSOL's liquidity.
@Parcl is a decentralized exchange for real estate perpetual contracts that allows users to invest and trade in specific geographic markets, such as Boston, Chicago, or Miami, and can go long or short with up to 10x leverage. The protocol is designed to be used for directional investment and hedging strategies, making this traditionally opaque asset class more accessible. Parcl is also expanding into the foreign exchange market, with plans to launch markets for British Pounds (GBP) and Euros (EUR).
This is just the beginning of Solanaâs Real World Asset (RWA) expansion, which will continue to be driven by the recently announced Libre Fund and the upcoming launch of Jupiterâs GUM Alliance and elmnts trading platform.
LibreFund Libre, a joint venture between Brevan Howard's WebN Group and Nomura's Laser Digital, is launching a series of tokenized funds on Solana, such as the Hamilton Lane SCOPE fund, known for its high yields, and the Brevan Howard Master, which focuses on global macro trading strategies. Fund. Libreâs program has already attracted nearly $20 million in value locked (TVL) ahead of launch and it intends to introduce secondary trading services to its funds later this year.
4. Jupiterâs GUM Alliance
Trading platform @Jupiter's Grand Unified Markets (GUM) initiative, in partnership with the Solana Foundation and market makers like @wintermute_t and @DWFLabs, aims to create a "single atomic market" for real-world assets (RWAs) like FX, equities, credit, treasuries, real estate, and cryptocurrencies.
The initiative aims to efficiently introduce tokenized assets by ensuring deep liquidity, solving the common âchicken and eggâ problem in the tokenization process, where issuers are reluctant to tokenize assets without liquidity, and liquidity remains low until more assets are tokenized.
1ïŒelmnts
@elmnts_ is an upcoming marketplace focused on tokenizing energy resources such as mineral rights in the oil and gas sector, an industry expected to generate revenues of over $800 billion in 2024. The approach improves transparency, accessibility, and liquidity, addressing issues such as high transaction costs and low liquidity in the current market.
To this end, the company acquires mineral rights through auctions, private sales and networking, and experts track active lease areas and understand the oil and gas market. This market simplifies the investment process, reduces costs, and allows more investors to participate with lower fees and barriers.
2) Overview
With significant stablecoin growth and increasing RWA offerings, Solana has laid a solid foundation to expand the real-world market for on-chain economies.
With emerging and upcoming initiatives like Libreâs Tokenized Fund, Jupiterâs GUM Alliance, and elmntsâ underlying energy resource marketplace, Solana is not only more deeply embedded in the RWA market, but also provides access to a wider range of on-chain real-world assets than most other chains.
In fact, a recent report from @Coingecko suggests that the two main narratives for Q2 2024 are Memecoin (of course) and RWA. If Solana captures attention around RWA like it did with Memecoin, it could attract institutional money to the chain and solidify its position at the top of this trend.
As existing financial systems merge with our decentralized system, Solanaâs role in facilitating the tokenization of traditional assets will continue to expand, strengthening its position as a chain that can meet both retail and institutional needs.
