Author: Dynamo DeFi, Translated by: 0xxz@Golden Finance
This article will provide a brief overview of the current and future state of Solana, as well as the strategies needed to start earning yield and qualifying for airdrops in the Solana DeFi ecosystem.
It is divided into five parts: 1. Overview of Solana; 2. Growth momentum; 3. Solana ecological landscape; 4. Solana DeFi strategy; 5. Conclusion.
1. Overview of Solana
Solana has had a great year. The network currently processes millions of transactions per day, more than any other blockchain combined.
Solana’s TVL recently returned to its peak nearly 3 years ago (at the peak of the 2021 bull run) by just 10%.
2. What are the factors driving Solana’s growth?
Competitive Advantage
Meme Coin
The massive increase in memecoin creation and speculation has occurred primarily on Solana. While the increase in speculation is not a direct competitive advantage, the second-order effects of speculation reveal several things:
Solana transactions are extremely fast.
Solana is easy to use for both crypto natives and newbies.
There is a narrative that people can make money with Solana.
Millions of small transactions from users trading memecoin truly stress-tested the Solana network, and Solana’s reputation as a blockchain that can withstand waves of users makes the network even stronger.
New Products and Technologies
Those who paid attention to Solana during the worst of the bear market in 2022 were rewarded. Market sentiment was low, but it was clear that the Solana team was working hard.
Many people didn’t realize it at first, but Solana has quickly gained real traction over the past few months.
Solana Blinks enables blockchain transactions anywhere a URL can be published. This feature alone has huge potential to attract more users outside of the native crypto environment.
Solana is a pioneer in the decentralized physical infrastructure (DePIN) space and hosts some of the largest projects. There are also more DePIN projects on Solana than Ethereum.
Real World (IRL) Partnerships
Solana Pay offers instant USDC transactions with low fees and is available as a Shopify app integration for millions of businesses.
Visa Expands Stablecoin Pilot to Solana
11 of the 16 projects in Stripe’s planned fiat-to-crypto payment onramp are built on Solana
Colosseum announces $60M fund to accelerate projects and attract developers to the Solana ecosystem
What will happen in the future?
The biggest upcoming upgrade for Solana is the Firedancer validator client.
Solana ETF. There is clear interest from funds and large financial institutions. VanEck has filed for a Solana ETF and other large companies may follow.
Solana is also about to launch ZK compression, which may greatly improve Solana’s already impressive scaling performance.
3. Solana Ecosystem Landscape
wallet
Phantom
The famous Solana wallet is compatible with Ledger and is available as a browser extension and mobile app.
Onchain Navigation Tool
Here’s everything you need to trade on Solana:
Jupiter Exchange
Jupiter is Solana’s largest DEX aggregator, aiming to be the exchange for everything. With Jupiter, you can:
Bridging Funds to Solana
Exchange Tokens
Perpetual Contract
Providing liquidity for earnings (and potential future airdrops)
Hold JUP and vote on DAO proposals for future airdrops
Birdeye
Birdeye is your hub for all things Solana — find trending tokens, analyze token holders, view performance charts, and even track profitable wallets.
Step Finance
Step Finance is a great portfolio tracker for all your Solana activity — connect your Phantom wallet and easily see a breakdown of your portfolio from token holdings to yield positions and NFT holdings. Check out a Step Finance portfolio breakdown demo here.
4. Solana DeFi Strategy
Airdrop Opportunities
Jito Network
Jito Network is a liquidity staking platform that uses MEV to add additional APY on top of basic staking rewards. With Jito, you can easily earn 8% annual yield by staking liquidity.
Just click “Stake Now.” Essentially, you are just exchanging your SOL tokens for JitoSOL tokens, and you can treat them just like SOL tokens.
You can exchange them, lend/borrow them, or simply hold them to earn a yield of about 8% per year. This is a great way to earn yield and capture potential future upside in the underlying SOL token.
The Jito airdrop was a huge catalyst for the Solana ecosystem to explode.
Jupiter JLP Token
We’ve talked about the JLP (Jupiter Liquidity Provider) pool token a lot because it provides great opportunities for many different types of strategies.
The JLP token is composed of the following components:
Index Funds for SOL, ETH, WBTC, USDC, and USDT
Jupiter perpetual contract traders' total profit and loss
75% of perpetual contract transaction fees, bringing benefits to token holders
Yields fluctuate from 20% to over 100% APY and vary based on trading activity and trader performance.
To purchase JLP, simply exchange JLP tokens on Jupiter Spot Swap.
This is a potential airdrop opportunity as Jupiter will be airdropping to its community members in the coming months. It stands to reason that in return for providing liquidity, JLP holders will be rewarded.
Providing SOL/USDC liquidity
If you don’t have liquidity to stake your SOL tokens, you can earn over 100% APY by providing SOL/USDC liquidity on Raydium or Orca. Both protocols receive a large amount of trading volume and have over $500 million in TVL.
The APY varies daily, but due to the high volume of SOL trading, this is a great way to earn a high yield by holding SOL.
Orca pool: https://v1.orca.so/liquidity/browse
Raydium pools: https://raydium.io/liquidity-pools/
Orca is slightly simpler to use, while Raydium gives you more control over liquidity provision. Both are fairly easy to manage.
Other strategies
Solayer
Potential Airdrop, SoLayer is a re-staking protocol on Solana.
You need an invitation code to use the protocol. Stake your Solana to earn yield and possible airdrops by completing at least three of the following tasks:
Get a permanent referral link
Deposit into any LST pool: options include Solana Native Staking, mSOL, JitoSOL, bSOL, and INF
Participate in at least 2 Epochs
Recommend users who have deposited money
Invite at least 3 people
Strategies to improve JLP income
NX Finance
NX Finance is a composable leverage protocol and yield aggregator on Solana. The protocol is young and only has $18M in total locked value, but it is growing. There is a tab labeled “Airdrop” and here are the initial qualifications:
In fact, we might also consider using the protocol during this airdrop — and with our recently acquired JLP tokens, we can put them to use.
JLP tokens can be used as collateral to borrow USDC up to 5x. This operation has an annualized yield of over 200%, but the leverage is 5x, which we do not recommend (5x leverage means that a 20% drop in the JLP token will liquidate your position). Using less leverage can still yield triple-digit yields.
Kamino JLP Multiply
JLP Multiply on Kamino is a one-click looping strategy that can easily increase JLP positions by up to 3x.
If you’re looking for higher TVL, this is a solid alternative to NX Finance.
You can also take advantage of this yield pool by depositing USDC instead of JLP, as triple-digit stablecoin yields in a large pool on a trusted protocol can be a gold mine for some DeFi power users.
Here is Kamino’s announcement tweet with more information.
5. Conclusion
Despite being only four years old (for comparison, ETH was also only four years old in 2019), the Solana network has matured in a very impressive way, and despite debates about inflated metrics, chain outages, and Solana validator centralization (critics argue that the network is too dependent on a small number of validators), it remains the most watched chain and the one that new users are joining.
This is also a chain where the team has been building impressive tech, given the DePIN project and IRL partnerships, giving Solana perhaps the best chance of escaping from the crypto-native cave into the real world at top speed.
