Analysis of the Current Development Status of DeFi Projects in the Solana Ecosystem

Recently, the overall performance of the Solana ecosystem has been strong, with the price of SOL nearing 100 USD on December 22. The trading volume on decentralized exchanges (DEX) on Solana once exceeded that of Ethereum, sparking market discussions. Meanwhile, Ethereum is facing some doubts, especially as DeFi projects that previously led the last bull market are no longer favored. This article will delve into the development status of various DeFi projects within the Solana ecosystem.

Leading Liquid Staking Projects

Liquid staking has become an important growth point in the Solana ecosystem. Staking itself locks funds, which is beneficial for the increase in SOL prices, while various liquid staking tokens (LST) can be applied in other Decentralized Finance projects. The appeal of airdrops from new projects and incentive measures have also led to a continuous increase in funds participating in liquid staking.

Marinade Finance and Jito are the two largest liquid staking projects on Solana. As of December 22, their total value locked (TVL) reached $1.05 billion and $626 million, respectively, ranking them as the top two in Solana's ecosystem by TVL. Although Marinade's dollar-denominated TVL is only 57% of its historical peak, the number of SOL staked (11.15 million SOL) has reached a new high.

In addition to providing staking services, Jito has developed MEV infrastructure. Thanks to the unexpectedly favorable airdrop effect, Jito has gained widespread support. Recently, with the incentive to encourage JitoSOL's application in Decentralized Finance projects, the amount of staking for Jito has continued to grow rapidly, currently reaching 6.42 million SOL.

DEX trading volume surges, but liquidity remains insufficient

The main players in the DEX space are still Raydium and Orca, both of which have developed centralized liquidity features based on their original foundations, but the positions of the two have reversed.

From a liquidity perspective, Raydium's all-time high is $2.21 billion, currently at $113 million, only 5.1% of its peak. Orca's peak is $1.41 billion, currently at $184 million, which is 13% of its peak.

A recent phenomenon that has caught the market's attention is that the DEX trading volume of Solana has surpassed that of Ethereum. Data shows that, whether in the past 24 hours or 7 days, Solana's trading volume is higher than that of Ethereum. Although some question whether this could include duplicate calculations from trading aggregators, calculating the trading volume of each DEX separately still shows Solana exceeding Ethereum.

It is worth noting that the trading volume/TVL ratio of DEXs on Solana is significantly higher than that on Ethereum, which means that the returns from providing liquidity on Solana could be much higher than on Ethereum under the same principal amount. This could further attract funds into the Solana ecosystem.

The Rise of New Stars in Decentralized Lending

The decentralized lending sector has undergone significant changes. Among the once large-capital lending protocols, only Solend remains at the forefront, but it has also been surpassed by emerging projects. Solend's TVL has dropped from its historical high of $910 million to the current $187 million, which is 20.5% of its peak. Other established lending protocols such as Port Finance, Larix, and Apricot Finance have performed even worse, with a TVL decline of over 90%.

Emerging lending platforms like marginfi and Kamino are performing well, with a TVL of 348 million USD and 204 million USD respectively, and growing rapidly. These projects have not yet issued governance tokens, but have launched a points system where users can earn points through deposits and loans. With the airdrop effects of other projects, funds continue to flow in. At the same time, various LSTs are also supported on these platforms, further promoting liquidity growth.

The Decline of Yield Aggregators

The yield aggregator track has almost been denied by the market. Due to the already low transaction fees of Solana, the advantages of yield aggregators are no longer obvious. Once flourishing Sunny has seen its TVL drop from a peak of $3.4 billion to the current $4.02 million.

Other yield aggregators that provide lending and leveraged mining functions have also performed poorly due to declining mining yields. For example, Francium's TVL dropped from $430 million to $20.89 million, and Tulip's TVL fell from $1.07 billion to $21.41 million.

The potential of the perpetual contract market is yet to be released

Compared to various perpetual contract projects on Ethereum Layer 2, Solana's performance in this field is not outstanding.

Drift is currently a project with strong overall strength in this field, adopting an order book trading model similar to dYdX, with a maximum leverage of 20 times. Its TVL has reached a new high of $105 million, and the trading volume for SOL-PERP in the past 24 hours was $43 million.

Mango is an established project in the field, but its TVL has decreased from a peak of $210 million to $10.47 million. After experiencing a hack, Mango has also added perpetual contract trading features, but the trading volume is currently low.

Jupiter's JLP adopts a model similar to GMX V1, with a funding cap of $23 million. In the past 24 hours, the trading volume of SOL-PERP reached $101 million, surpassing Drift.

The development of decentralized stablecoins is slow

Solana has consistently failed to cultivate standout projects in the decentralized stablecoin space. The UXD Protocol once completed its IDO with a valuation of nearly $2 billion, but its TVL peaked at only $42 million and has now fallen to $11.19 million. Other stablecoin projects that use over-collateralization for minting, such as Parrot Protocol and Hubble, have also declined significantly, with a substantial decrease in TVL.

Summary

In the Solana ecosystem, liquidity staking projects have led to an increase in TVL, DEX trading volumes have significantly improved, but liquidity still needs to be enhanced. Emerging lending platforms have performed well, while yield aggregators and decentralized stablecoin projects have underperformed. Although the perpetual contract market has grown, it still lags behind the Ethereum ecosystem. Overall, the Solana DeFi ecosystem is undergoing reconstruction, with new and old projects rising and falling in turn, and future developments are worth continuous attention.