Bankless: The Rise of Solana Stablecoins and RWA

Author: @BanklessHQ

Translation: Blockchain in Plain Language

1. Ecosystem Analysis

With the recent surge of ETFs, stablecoins and Real-World Assets (RWAs) have become one of the strongest paths to realize 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 has become one of the most discussed concepts in this cycle, and he has implemented this vision in BUIDL by @Blackrock on-chain tokenization fund. Stable Coin remains at the center of the discussion because of protocols like @ethena_labs, Stripe’s re-entry for payments via USDC, and new regulations in the European Union such as MiCA.

Despite Ethereum and TRON being the center of stablecoins, Solana has significantly risen in this cycle, with daily volume peaking at over 100 billion dollars. There is also increased RWA activity on the network, such as @OndoFinance’s USDY serving as DeFi collateral, the collaboration between @maplefinance and @jito_sol, and the launch of @librecap.

This article will delve into these developments and understand the momentum Solana has gained in becoming one of the most practical blockchain for real-world applications.

2. Stable Coin on Solana

In this period, stablecoins on Solana have shown strong rise, highlighting the network’s strength and appeal to stablecoin issuers.

Currently, Circle’s USDC dominates the Stable Coin market on Solana, accounting for about 70% of the total Stable Coin supply on the chain, while only about 30% on the ETH network.

As of this week, the volume of USDC is about 19 times that of USDT (which ranks second on-chain), despite USDT having a total Market Cap of $114 billion on the ETH network and a daily volume of $31.5 billion, surpassing the total sum of the top 20 ERC Tokens. The dominant position of USDC on Solana is due to the strategies of @circle and @Solana Foundation to incentivize developers and promote integration with trading platforms.

For example, developer grants provided by platforms such as @solendprotocol and @superteam have attracted more developers to Solana. Circle’s Cross-Chain Interaction Transmission Protocol (CCTP) launch on Solana has also increased the availability and liquidity of USDC. In addition, Circle’s Web3 service simplifies smart contract development, meets developers’ needs, and promotes the integration of USDC. Overall, these efforts aim to unify decentralized finance and establish USDC as the leading stablecoin on Solana.

The third is PYUSD by @Paypal, with a circulating supply of approximately 240 million US dollars, accounting for about 11% of the total stablecoin supply on Solana. It has risen rapidly since its launch two months ago.

Decentralized Finance protocol such as @KaminoFinance has provided significant supply-side income for PYUSD since July 1, promoting its rise. The yield started at 30% and has now dropped to 23%, while the borrowed annualized Interest Rate (APY) is 0.22%. In comparison, USDC has an annualized Interest Rate of 21%, and USDT has 16.5%, making PYUSD an attractive Decentralized Finance tool. Within the first week of July, the supply of PYUSD increased by 88%, with 38% flowing into Kamino.

Not just stablecoin issuers, major financial platforms like @stripe and @Shopify integrating with Solana provide new opportunities for developers and businesses to build trusted platforms that meet everyday needs and connect Solana to mainstream finance.

In this area, projects such as @sphere_labs, @uselulo, @Decaf_so, and @helio_pay are being developed that simplify cryptocurrency transactions, leverage stablecoins such as USDC to provide day-to-day financial services such as converting to local currencies, facilitating encryption payments in e-commerce, and high-yield savings.

Overall, the momentum of Stable Coin on Solana seems to be ready to expand the service scope of the existing financial system and provide efficient on-chain solutions.

3. Real World Assets (RWAs) on Solana

Although Solana appears low-key in terms of the rise of real-world assets compared to Ethereum, it is building a fertile ecosystem beyond tokenized treasuries.

In December 2023, Ondo Finance launched its flagship tokenized treasury product USDY on Solana, which currently has a market cap of $42 million. Although smaller in scale compared to other main products classified as stablecoins, USDY still has some interesting developments, such as being integrated into the Perpetual Futures Decentralization trading platform @DriftProtocol as collateral.

This collaboration, as well as future collaborations, adds uses to tokenized real-world assets beyond borrowing, improving traders’ capital efficiency.

Currently, some of the most interesting RWA projects in the Solana ecosystem include Maple and Parcl.

Maple is a market that allows Allowlist companies to borrow from an on-chain liquidity pool, redeployed on Solana last year, providing avenues for stablecoins and alts through over-collateralization lending markets. In addition, Maple has partnered with Jito to launch their new retail-focused borrowing product Syrup. The partnership will provide flexible financing options for borrowers using JitoSOL, unlock revenue streams for lenders, and enhance Risk Management through JitoSOL’s Liquidity.

@Parcl is a real estate Perptual Futures Decentralization trading platform that allows users to invest and trade in specific geographic markets, such as Boston, Chicago, or Miami, and go long or short with leverage of up to 10 times. The protocol is designed for directional investment and hedging strategies, making this traditionally opaque asset class more mainstream. Parcl is also expanding into the forex market, with plans to launch markets for the British Pound (GBP) and the Euro (EUR).

This is just the beginning of the expansion of Solana’s real-world assets (RWA). The recently announced Libre Fund and the GUM Alliance of Jupiter, which will be launched soon, as well as the trading platform elmnts, will continue to drive this process.

LibreFund Libre is a joint venture between Brevan Howard’s WebN Group and Nomura Securities’ Laser Digital, launching a series of tokenized funds on Solana, such as the high-yield Hamilton Lane SCOPE Fund and the Brevan Howard Master Fund, which focuses on global macro trading strategies. Libre’s plan has already attracted nearly $20 million in locked value (TVL) before its launch, and intends to introduce secondary trading services for its funds later this year.

4, Jupiter’s GUM Alliance

The trading platform @Jupiter’s Grand Unified Markets (GUM) program is collaborating with the Solana Foundation and market makers such as @wintermute_t and @DWFLabs, aiming to create a ‘single atomic market’ for forex, stocks, credit, government bonds, real estate and other real-world assets (RWA) as well as Cryptocurrency.

This plan aims to efficiently introduce tokenized assets by ensuring depth liquidity, solving the common problem of “chicken or egg” in the tokenization process, that is, the issuance party is unwilling to tokenize assets without liquidity, while liquidity remains low before more assets are tokenized.

1) elmnts

@elmnts_ is an upcoming marketplace focusing on tokenizing basic energy resources such as mineral rights in the oil and gas sector. The industry is expected to generate over $800 billion in revenue by 2024. This approach enhances transparency, accessibility, and Liquidity, addressing issues such as high Transaction Cost and low Liquidity in the current market.

To this end, the company acquires mining rights through auctions, private sales, and online channels. Experts track active leasing areas and keep up-to-date with the oil and gas market. This market simplifies the investment process, reduces costs, and allows more investors to participate at lower costs and thresholds.

2) Overview

With the significant rise of stablecoins and the continuous increase of RWA products, Solana has laid a solid foundation for expanding the on-chain economy in the real-world market.

Through emerging and soon-to-be-launched initiatives such as Libre’s tokenized fund, Jupiter’s GUM alliance, and elmnts’ basic energy resource market, Solana is not only embedded deeper in the RWA market, but also provides access to a wider range of on-chain real-world assets than most other chains.

In fact, the recent report from @Coingecko shows that the two main narratives in the second quarter of 2024 were Memecoin (of course) and RWA. If Solana can attract institutional funds into the chain by following RWA as it did with Memecoin, it may consolidate its top position in this round of trend.

As the existing financial system integrates with our Decentralization system, Solana’s role in facilitating the tokenization of traditional assets will continue to expand and strengthen its position as a chain that can meet the needs of both retail and institutional users.