Analysis of Solana Ecosystem DeFi Project Performance

Recently, the Solana ecosystem has shown a strong momentum, with the price of SOL approaching 100 dollars on December 22. Notably, the trading volume of decentralized exchanges (DEX) on Solana briefly surpassed that of Ethereum, attracting widespread attention from the market.

At the same time, Ethereum faces various doubts, especially as liquidity mining projects that led the trend in the last bull market are no longer favored. So, how are the DeFi projects in the Solana ecosystem performing? Are the established projects truly recovering? Let's explore them one by one.

Liquid Staking

Liquidity staking has become an important growth point in the Solana ecosystem. Staking itself locks up funds, which is beneficial for the rise in SOL prices, while various liquidity staking tokens (LST) can be applied in other Decentralized Finance projects. The wealth effect and incentives from new project airdrops also drive the continuous growth of funds participating in liquidity staking.

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

Jito not only provides MEV infrastructure based on staking but has also gained a good community foundation due to an unexpected airdrop. Recently, as it started incentivizing the use of JitoSOL in Decentralized Finance projects, the amount of staking for Jito has been rapidly increasing, currently reaching 6.42 million SOL.

Decentralized Exchange

The DEX field is still dominated by Raydium and Orca, with no prominent new projects emerging. Both have developed centralized liquidity features based on their original foundations, but their positions have reversed.

In terms of the key indicators of liquidity and trading volume, Raydium's liquidity peaked at $2.21 billion, currently at $113 million, only 5.1% of the peak. Orca's liquidity peaked at $1.41 billion, currently at $184 million, which is 13% of the peak.

Recently, the trading volume of Solana DEX exceeding that of Ethereum has sparked widespread discussion. Data shows that, whether in the 24-hour or 7-day metrics, Solana's trading volume is higher than that of Ethereum. Although some have questioned whether the trading volume of aggregators may have been counted multiple times, it was found that after calculating the trading volumes of each DEX separately, the trading volume on Solana DEX indeed surpassed that of Ethereum on November 21.

It is worth noting that the trading volume/TVL ratio of DEX can reflect the utilization of funds. Raydium and Orca have ratios of 4.81 and 2.87, respectively, while the ratios of major DEX on Ethereum such as Uniswap, Curve, and Balancer are 0.26, 0.09, and 0.042, respectively. This indicates that with the same principal, the income generated from providing liquidity on Solana is significantly higher than on Ethereum, which may attract more funds into the Solana ecosystem.

Decentralized Lending

The lending sector has experienced significant changes, with only Solend remaining at the forefront among previously large-capital protocols, although it has now been surpassed by emerging projects. Solend's TVL has dropped from a peak of $910 million to $187 million, which is 20.5% of its high. Other established lending protocols have performed even worse, with the TVL of Port Finance, Larix, and Apricot Finance all experiencing substantial declines.

Emerging competitors like marginfi and Kamino have performed outstandingly, with a TVL of $348 million and $204 million respectively, and have seen rapid growth recently. These projects have not yet issued governance tokens but have launched a points system to attract user deposits and loans. Under the recent airdrop wealth effect and various LST supports, funds are continuously pouring into these platforms.

Yield Aggregator

The yield aggregator sector has almost been negated by the market. The once most famous project, Sunny, saw its TVL drop from a peak of $3.4 billion to $4.02 million. Other aggregators offering lending and leveraged mining functions, such as Francium and Tulip, have also experienced a significant decline in TVL.

Perpetual Contract

Compared to various perpetual contract projects on Ethereum Layer 2, Solana performs mediocrely in this field.

Currently, Drift stands out with its order book trading model similar to dYdX, allowing for up to 20x leverage. Its TVL has reached a record high of $105 million, and the 24-hour SOL-PERP trading volume is $43 million.

Mango is a well-established project in the field, with its TVL dropping from a high of $210 million to $10.47 million. After experiencing a hacker attack, Mango added perpetual contract trading functionality, but the 24-hour trading volume for SOL-PERP is only $520,000.

Jupiter's JLP adopts a model similar to GMX V1, with a funding cap of $23 million and a 24-hour SOL-PERP trading volume of up to $101 million, surpassing Drift.

Decentralized Stablecoin

Solana has always lacked outstanding projects in the decentralized stablecoin space. The UXD Protocol once completed financing with a valuation of nearly $2 billion, but its TVL peaked at only $42 million and currently stands at $11.19 million. Other stablecoin projects that use over-collateralization for minting, such as Parrot Protocol and Hubble, have also seen significant declines in their TVL.

Summary

In the Solana ecosystem, liquid staking projects are leading the growth of TVL, with various LSTs being widely used and incentivized in other projects. Although the liquidity of DEXs is not as strong as that of Ethereum, trading volumes sometimes exceed Ethereum, demonstrating extremely high capital efficiency. Emerging projects in the lending sector are performing well and are expected to attract more funds. In the perpetual contracts sector, Drift and JLP are in a growth phase. However, yield aggregators and stablecoins still lack standout performances.