Top 4 DeFi projects built on Solana
The Solana blockchain has seen a huge surge of transactions in 2021.
Catalysts for this growth include the migration of projects such as FTX exchange and the USDC stablecoin to the Solana blockchain, and the advent of NFTs on Solana, which can offer much cheaper minting and trading fees.
But the Solana ecosystem is also growing in it’s own right, with over 423 projects currently built on the platform, some of these being core DeFi projects for the future. It goes without saying that not all of these projects will be ultimately successful, but to save you time and research, we’ve picked out the top 4 DeFi projects built on Solana.
Serum - the DEX
Solana’s high speed and low cost transactions make it a perfect platform for decentralized exchanges. Serum, co-founded by Sam Bankman-Fried, CEO of the FTX exchange, is one such “permissionless” DEX and blockchain ecosystem that is built on Solana.
Serum aims to improve on the state of decentralized exchanges by bringing all the benefits of a centralized exchange to the DeFi space. It is one of the only DEXes in the crypto space that is designed with an orderbook-style exchange, giving a familiar interface that may attract traders who prefer the user experience of centralized exchanges (like Coinbase and Binance) to the experience provided on automated market maker (AMM) DEXes such as Uniswap.
These features are also matched with the benefits of decentralized exchanges, such as complete transparency and the security of decentralized node architecture (leaving no one centralized point of failure). This means there are no KYC requirements, and that users can add their own markets, without having to pay huge fees to a centralized entity in order to be listed on the exchange.
Serum gives us hope that DeFi can compete with centralized finance. Click here for a full breakdown of the project.
Raydium - the Automated Market Maker
It’s great to have decentralized exchanges that are fast and cheap to use, but one of the biggest challenges in DeFi is to source liquidity, or cash reserves that can be used to make sure traders can close their orders as near as possible to their desired price.
Raydium works as an on-chain order book that powers the “cambrian explosion” of DeFi of Solana. Investors can stake their assets into Raydium liquidity pools, and earn rewards in both the native RAY token, and the tokens that are deposited in the pool.
Like with Serum, Raydium provides on-chain liquidity to a central limit order book, making the user experience slicker and more familiar. In fact, both of the projects are closely-linked, meaning that users of Raydium can access the order flow and liquidity of the entire Serum ecosystem and vice-versa.
The Raydium team built the “AcceleRaytor” launchpad, which helps new projects get started in the Solana ecosystem. This fundraising is also done in a decentralized manner, as it is the Solana community who decides how much these blockchain start-ups can raise. Investors send USDC to the funds, and are rewarded with an equivalent amount of the native asset of the new project after launch.
Raydium also aims to partner with other DeFi and AMM communities and provide support to build out their products on Solana, making it a true “DeFi lego” protocol for the upcoming blockchain multiverse.
Oxygen - the Decentralized Bank
A DeFi trend to watch in 2022 is the development of applications that help token holders find multiple uses for the same collateral, or to oversimplify the idea, apps that allow people to spend their money twice!
Oxygen is a DeFi Prime Brokerage Protocol that allows token holders to lend, borrow, earn yield, and to generate liquidity / trading leverage, sometimes all at the same time.
So instead of just being able to earn interest by lending your assets, like on Uniswap or Balancer for example, Oxygen users can then borrow money against those loaned assets, so they still have money to spend or trade. It’s the digital equivalent of having your cake and eating it.
Oxygen also utilises “cross-collateralization”, meaning you can use every asset in your wallet as collateral. This is useful for when your debt position is moving close to its liquidation point (where you will lose your collateral), because it makes it easier to shore up your account and reduce the chance of liquidation.
The Oxygen Protocol is also order-book based, ensuring that lending and borrowing rates are fairly based on the latest market activity.
Saber - the Stablecoin Hub
Saber is actually the number one dApp on Solana in terms of total value locked, with over 2 billion dollars worth of value stored in the protocol as of October 2021. It works in a similar way to Curve Fiannce on Ethereum, in that it functions as a stablecoin exchange, but on Solana, and with cross-chain capabilities.
Stablecoin liquidity is vital to DeFi, because stablecoins serve so many functions in the ecosystem. A huge amount of stablecoin liquidity is needed to make sure that somebody trading a million dollars worth of USDC, for example, doesn’t end up paying $20,000 dollars worth of slippage fees. Saber brings this vital liquidity to Solana, and helps facilitate the transfer of assets between Solana and other DApp platforms.
Market makers (people who help a DeFi to run by providing funds) can deposit crypto into a Saber liquidity pool to earn yield from transaction fees, pick up some token-based incentives and benefit from automated DeFi strategies, which saves a lot of time manually chasing the best yield across different pools and dApps.
We hope you enjoyed this article, “Top 4 DeFi projects built on Solana”. The SOL token can be safely stored and staked on the Exodus Solana wallet. For more crypto insights, you can subscribe to the Exodus blog here.
This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.