The price of Solana’s native SOL coin edged up on Oct. 25 in the wake of a marketwide rally led by Bitcoin (BTC), with the total value locked (TVL) on Solana hitting record highs and SOL’s price seeing a promising technical setup.
Bitcoin triggers marketwide rally
SOL climbed by more than 6% to hit an intraday high of around $214. The price of SOL is now up a little over 35% over the past week, pushing it closer to its record high of about $222 set in early September.
Bitcoin’s run-up to its new record high of $67,000 last week resulted in the total crypto market capitalization passing the $2.5-trillion mark, a new milestone for the cryptocurrency.
Top 10 cryptocurrencies and their performance over the last seven days. Source: Messari
That helped push SOL higher, with rival cryptocurrencies Ether (ETH) and Cardano’s ADA also jumping by over 10% and 1% in the past week, respectively.
Solana TVL hits record high
The SOL price rally also appeared as the TVL of all the decentralized finance (DeFi) projects built on the Solana blockchain reached a new record high of $13.53 billion, as per data aggregator service DeFi Llama.
Solana TVL hits another high. Source: Defi Llama
The most dominant DeFi project on the Solana blockchain is Saber, an automated market maker (AMM) protocol that enables Solana users and applications to trade between stable pairs of assets efficiently and earn yields by providing liquidity to the platform.
Its contribution to the Solana liquidity pool was $2.05 billion as of publication time.
Meanwhile, there are four other DeFi projects with a TVL of more than $1 billion. These include Raydium ($1.91 billion), Sunny ($1.73 billion), Serum ($1.69 billion) and Marinade Finance ($1.63 billion).
Solana also declared that it would add more DeFi projects to its list after the completion of its “Ignition” hackathon on Oct. 18. Users will need to hold SOL tokens to use these applications, to pay for transaction fees, thus raising the prospect of the token’s higher demand in the future.
SOL price technicals
SOL’s latest price rally came as part of a breakout move out of what appears like a bullish pennant. As
SOL/USD daily price chart featuring pennant breakout. Source: TradingView
As a result, adding $85 to the breakout level around $158, SOL’s pennant price target is $243 U— i.e., almost $250. Meanwhile, a retest of the pennant’s upper trendline as support would risk invalidating the bullish setup.
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Several high-quality projects are vying to become the network’s blue chips.
By using these protocols early, users can get in on the ground floor before the ecosystem develops.
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Following Solana’s meteoric price rise, the smart contract platform’s DeFi ecosystem has exploded. With so many new projects establishing themselves on Solana, there are numerous opportunities to benefit from the rapid growth.
Solana’s Ascent
While Solana has grown exponentially over the summer, Ethereum is still the undisputed home of DeFi in the crypto space. Following the “DeFi summer” of 2020, a handful of top projects have established themselves as DeFi blue chips on Ethereum, covering the functionalities of traditional financial markets in the decentralized space.
However, the expense of using DeFi on Ethereum today has priced out many users. While Layer 2 solutions like Optimism and Arbitrum promise to reduce the cost of using the network, progress has been slow. As such, other Layer 1 chains like Solana arewell-positioned to take some of the DeFi market share away from Ethereum.
Solana ticks all the boxes for an up-and-coming DeFi-focused Layer 1. Its fast block times and Proof-of-History mechanism prevent frontrunning, and its node scalability means the network can theoretically avoid congestion and keep transaction costs low.
With this in mind, Solana is well on the way to fostering its own thriving DeFi ecosystem. At present, several DeFi projects are vying to become Solana’s DeFi blue chips. By identifying potential projects, users can benefit from being early adopters and all the perks that come with that, such as airdrops, liquidity mining, and more.
Potential Blue Chips
Two of the biggest DeFi blue chips on Ethereum are Compound and Aave. Both of these protocols act like decentralized banks, allowing users to deposit assets to earn interest and use them as collateral for borrowing assets. Advanced yield farmers often use Compound and Aave as the base layer for stacking “money legos,” borrowing assets to generate additional yield in various DeFi protocols.
Port Finance and Solend are two Solana-based projects that are competing to act as decentralized banks.
Port Finance, is currently the 11th largest dApp on Solana with a total value locked (TVL) of around $122 million, according toDeFi Llama. Port works much the same way as Compound and Aave and currently supports stablecoins USDC, USDT, and PAI, plus a few Solana-native assets such as Serum. Port is currently running a liquidity mining program, where users can earn the protocol’s governance token PORT in addition to interest paid out in the deposited asset.
The Port Finance Liquidity Program is now live 🔥
In the initial phase, we will release 5000 $PORT tokens per day, which is 150,000 $PORT tokens per month (~1M USD at the time of writing!)🤯
🔎 Click below for all details and PORTicipate!https://t.co/eg059GBMw7
— P◎rt Finance (@port_finance) September 9, 2021
Solend is another of Solana’s DeFi banks. With a lower TVL of $64.4 million, Solend is currently the 13th largest Solana dApp. It features many of the same assets as Port, with the addition of Raydium and Ethereum, allowing users to borrow against a more diverse range of assets. Solend has not released a governance token yet but has confirmed that a token will be introduced via a liquidity mining program sometime in September. Rewards for the program will be retroactive, so using the protocol early may yield an additional bonus.
Another of Ethereum’s DeFi staples is the stablecoin-focused decentralized exchangeCurve Finance. On Curve, users can swap pegged assets such as stablecoins and wrapped assets efficiently with low levels of slippage. On Solana, the demand for swapping pegged assets is filled bySaber, the protocol with the current highest TVL on the network.
Saber offers numerous pegged asset pairs such as USDC-USDT, staked and unstaked SOL, and BTC-renBTC. As well as swapping assets, users can also provide liquidity to earn interest. Unlike most liquidity pools on Ethereum dApps, Saber’s pools do not require the user to deposit equal amounts of both assets. While the yield rate fluctuates with the amount of liquidity provided and the pool utilization, users can expect to earn 3 to 10% APY on Saber. However, the opportunity to earn yield doesn’t stop there.
Once users have received their liquidity provider (LP) tokens, they can take them over to the yield aggregatorSunnyto earn extra rewards. Users can earn SBR for providing liquidity on Saber, and the Sunny aggregator also pays out SUNNY tokens with a variable APR depending on the liquidity pool. This additional yield layer is already highly utilized, with around $1.4 billion of Saber LP tokens deposited on Sunny, giving it the second-highest TVL on Solana.
While there are a variety of DeFi opportunities available on Solana, many users simply opt to stake their SOL for a variable return of 6 to 8%. Once funds are staked, they become illiquid, meaning that they are locked up and cannot be traded or deposited into other DeFi protocols. However, an activity known as liquid staking allows users to produce a synthetic asset representing staked SOL that isn’t locked. This lets users access additional yield opportunities while simultaneously staking their SOL.
Marinade Financefills this gap in the market by allowing users to stake their SOL and receive mSOL in return. mSOL is staked SOL that is tradable and can be used to generate additional yield on other DeFi platforms. For example, a user can take advantage of Marinade’s liquid staking to earn 6 to 8%, then deposit their mSOL into Saber’s SOL-mSOL liquidity pool to earn additional yield.
Another Ethereum blue chip to get a Solana equivalent isMakerDAO. The Maker protocol allows users to deposit certain crypto assets in vaults and mint an amount of DAI stablecoins equivalent to the deposited asset’s value. The result is a decentralized, collateral-backed cryptocurrency soft-pegged to the U.S. dollar.
Like MakerDAO, Solana’sParrot Financeallows users to lock up their assets and mint the PAI stablecoin in return. In addition to depositing single assets such as SOL, SRM, or RAY, LP tokens from Saber can also be used as collateral to mint PAI. Parrot currently has a cap on the amount of PAI that can be minted, but as the platform grows and demand stabilizes, these restrictions are likely to be lifted. Recently, Parrot has entered into a dual liquidity mining program with Port Finance, allowing users to deposit PAI and pSOL, earning both PRT and PORT tokens in addition to regular interest.
Another of Solana’s popular DeFi projects is Orca, an automated market maker (AMM) for exchanging assets on Solana. While Solana already offers ways to exchange assets such as Serum and Raydium, Orca simplifies the AMM experience and introduces a whole host of upgrades. Before providing liquidity to the protocol’s pools, the amount of tokens earned per $1,000 is displayed, making it easier for users to estimate their rewards. Additionally, when confirming transactions, Orca pulls data from price trackers on CoinGecko, alerting users if rates or slippage is higher than expected.
With all of the lucrative opportunities to earn yield in the Solana ecosystem, the network looks primed to attract more capital in the coming months. Getting involved early can often pay dividends, as was the case for many DeFi protocols on Ethereum. While SOL’s price may look overheated at the moment, the ecosystem developing on Solana looks like it’s here to stay.
Disclaimer: At the time of writing this feature, the author owned BTC, ETH, and several other cryptocurrencies.
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Solana-based cross-chain exchange Saber raised $7.7 million in a seed funding round.
The platform launched last month and enables the cross-chain exchange of stablecoins and wrapped assets. Saber Labs, the development team behind Saber, announced the funding round on July 28.
The development team is currently a three-person unit and the firm will use the funds to hire around seven more staff members this year. It will also expand support to more assets on the exchange.
The next step for Saber is to integrate with more assets and protocols across the crypto universe — if you’re building an app on Solana or elsewhere, we’d love to chat!
— Dylan Macalinao (@DylanMacalinao) July 27, 2021
The round was led by venture capital firm Race Capital, with participation from billionaire Chamath Palihapitiya’s Social Capital, Jump Capital, Multicoin Capital and the Solana Foundation.
The seed round was also backed by angel investors such as FTX’s Tristan Yver, OKcoin’s Jason Lau, Stacks’ Ryan Shea, Curve Finance’s Julien Bouteloup, and Terraform Labs’ Jeff Kuan.
Saber co-founder and CEO Dylan Macalinao noted on Twitter:
“For DeFi to reach millions of users and trillions in value, we need a blockchain that can handle mass scale. Due to its low transaction costs and high performance, we believe Solana is that blockchain.”
The firm’s website claims that the platform offers “low slippage trading, even at large volumes.” Saber also offers liquidity based passive yield returns from transaction fees.
According to data from DeFi Llama, Saber has the second highest total value locked (TVL) on Solana with $185.77 million. Automated market maker (AMM) Raydium is currently sitting at the top with $572.21 million in TVL at the time of writing.
Solana is aiming to be a much more scalable competitor to the Ethereum network and it has been gaining attention in 2021 with dozens of DeFi projects launching on the platform since March.
Related:Metaplex NFT marketplace launches on Solana
Cointelegraph reported on June 9 that Solana Labs, the team behind Solana raised $314.14 million through a private token sale, which was led by top crypto venture firms Andreessen Horowitz and Polychain Capital.
At the time of the $314.14 million token sale, Anatoly Yakovenko, founder and CEO of Solana Labs said the aim was to onboard one billion users on the network:
“The next phase is onboarding a billion users. Solana was built from the ground up to accommodate this scale.”
