A brief intro to Solana [August 2021]
For those with some knowledge of DeFi
With so many new users coming into Solana, it made sense to write a basic introduction for those interested in learning about the chain. A lot is happening and some might argue that $SOL has been pumping for good reason. Over the past couple of months, we have seen:
- Lots of new development activity and projects emerging following the recent hackathon.
- Excitement around Neon Labs’ plans to offer an Ethereum Virtual Machine scaling solution to Solana.
- News that established projects like Aave, Lido and Sushi are exploring building on Solana.
While it’s great to see so much happening, keep in mind it’s still a very nascent space and most protocols are not yet audited. However, auditors are becoming more established, so expect this to start changing soon as services around the ecosystem mature.
So here lies a rough beginner’s guide to Solana. It is exclusively focused on protocols that are currently live (out of Test/Devnet) and as always, this is not financial advice.
First steps
So, you’ve decided you want to try Solana out and play around with some spare funds? The good news is that transactions cost a fraction of a dollar, so you don’t need much to get started!
There are several Solana wallets but Phantom seems to have won the early battle. In fact, it’s probably my favorite wallet I’ve used in crypto, period.
You can download the browser extension here and top it up with some $SOL via major Centralised Exchanges (CEXs) like FTX, Binance, Coinbase, and Crypto.com. Just make sure you add $SOL before any other tokens and follow these instructions.
Alternatively, the Wormhole Bridge enables you to bridge funds from other chains like Ethereum, Binance Smart Chain, and Terra. However, they recommend waiting to do so until their v2 is launched (late August 2021). Another option, via Allbridge, links Polygon to Solana’s largest stablecoin DEX, Saber.
Swapping and basic trades:
Now you have some $SOL and potentially other assets, you’ll probably want to head to a DEX.
NB: Serum vs other DEXs : Many new users get confused here because they’ve usually heard of Serum and try to head straight there. If Solana is the L1, you can think of Serum as an L2 in-between many (but not all) other protocols.
Serum is a decentralised order book that other protocols build on top of by using their AMMs for liquidity and executing orders. A detailed overview of Serum from Sino Global Capital can be found here.
Whilst it is possible to trade directly there, you might prefer to use one of the following instead:
AMMs and AMM-order book hybrids
- Raydium: The largest DEX on Solana with $363m of daily volume at the time of writing. Raydium uses an AMM / order book hybrid.
- Orca: Branded the most ‘user-friendly’ DEX on Solana. Orca uses a pure AMM and 0.01% of transaction fees go to charity through the Orca Impact Fund.
- Saber: Solana’s largest stable swap DEX focusing on building out a large offering of products, including assets from other chains.
- Mercurial Finance: Another stable swap protocol with a smaller but very creative offering (i.e. low slippage stable to non-stable swaps via a Serum integration).
Traditional Interfaces
- Dexlab: A launchpad and DEX build on top of Serum liquidity. A good place to find new listings.
- Aldrin: One of the better UIs and a good number of trading pairs. Also planning to launch a centralized exchange in the future.
- Bonfida: One of the original Solana interfaces that offers a suite of other products including PERPs and a Solana naming service (i.e. [name.sol])
- Solape Finance: One of many early projects to build on top of Serum. NFTs are also on the roadmap.
- Mango: A small number of cross-collateralized spot markets. Mango also has a lending service and has plans to launch PERPs.
What can I do with my tokens?
There is a rapidly evolving list of things to do with your tokens on Solana. One of the most obvious is to look at providing liquidity and farming on one of the DEXs listed above. To add to this, I have listed some other options below.
Staking: With the emergence of liquid staking in DeFi, this is set to become a hugely competitive space
- Marinade: Stake your $SOL and receive the liquid derivative, $mSOL. $mSOL incrementally rises in value every epoch (c.2–3 days) when compared with $SOL, and can be used on other protocols (i.e. Saber) to gain additional yields. Marinade has no lockup period.
- Steaking: Staking on Steaking (I see what they did there!) is live and they have plans to launch liquid staking too.
Yield farming: This space is still at an early stage as functionality relies on the existence of other protocols.
- Solfarm: An early leader in the ecosystem with over $260mil locked at the time of writing. Solfarm offers standard vaults, leveraged yield farming and lending with some juicy returns.
- Francium: A very young farming protocol currently supporting long-tail USDC pairs and some lending. In the future, other products such as community strategies will go live.
Money Markets (borrowing, lending): Another primitive with fierce competition. Yields on the more traditional projects will likely increase as demand for borrowing on Solana grows.
- Parrot Finance: Not your typical borrowing & lending platform. Deposit a wide range of crypto assets such as $SOL, staked $SOL derivatives, LP tokens and Bitcoin as collateral. In return, you can mint derivatives $pSOL; $pBTC; and the protocol’s own stablecoin, $PAI. These tokens can be used to access additional yield generating opportunities.
- Port Finance: In addition to variable-rate lending, fixed-rate lending, flash loans, and interest rate swaps are all on the road map. Port enables users to post a wide range of assets as collateral.
- Solend: Another early-stage borrowing and lending platform with a nice UI. They recently dealt with an attempted exploit very well.
- Mango: Lending is one of two integrated products currently offered by mango. Users can earn interest on margin positions.
Okay, I’ve put my coins to work; now what?
Monitoring your portfolio: Because we all need to keep track of our assets.
- Sonar: Track your full portfolio, including farming, lending, leverage, and LP positions.
- Step: The original Solana portfolio tracker. Step even enables you to claim rewards from yield farming and LP positions.
- Symmetry: A Clean UI and very good for tracking the latest prices in your portfolio. They also have a handy swap product and baskets (indices) coming soon. Portfolio management is live but still at an early stage.
NFTs & more: Not my area of expertise but interesting, nonetheless!
- Degen Ape Academy: After a problematic launch, Degen Ape Academy has evolved into the largest Solana NFT project by social media following. There are 10,000 apes in total.
- Sollamas: Another avatar-focused NFT project with a problematic launch and strong community following.
- FRAKT: An NFT collection that combines fractals, math, and blockchain. 10,000 pieces in total.
- ApeShit Social Club: 2,500 apes in total.
- Solpunks: Like crypto punks on Ethereum, but Solana. 10,000 in total.
- Solanart: A marketplace where you can find all of the above and more.
- Audius: Blockchain’s answer to Spotify.
Looking forward
There are many more promising projects being developed across the space. Among these, I’m closely watching Drift (Perpetual Futures), Jet (Money Market), Cyclos (DEX), Hydraswap (DEX), Fabric (Synthetic Derivatives), Synthetify (Synthetic Derivatives), and Socean (Staking).
Gaming is another exciting area with the highly anticipated Star Atlas and DeFi farming game, DeFi Land both expected to launch soon.
Follow or connect with me for more frequent updates:
- Discord: @DizzyLizzy#2055
Disclaimer: This content is for informational purposes only and nothing highlighted should be construed as financial advice.
