The Current State of Solana DeFi

The current state of Solana is an interesting one. As one of the leading blockchains with a growing community of developers and users, the emerging network of choice has developed well over the past few years. Despite the hype with the efficiency of the technology, rug pulls were inevitable due to the lack of discovery and transparency of some coins.

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So what solutions are being developed right now to make this a problem of the past?

For one, there are a few specific new innovations on the Solana chain that the pop culture of crypto can appreciate. Protocols such as pump.fun are making the entire experience much safer for users.
As quoted on their website, “Pump prevents rugs by making sure that all created tokens are safe. Each coin on pump is a fair-launch with no presale and no team allocation.”
This unique approach solves a common problem presented in not just the Solana blockchain but in crypto in general. I mean, imagine buying into a crypto presale because of the audacious promises made by the team with passionate cries of “WAGMI” and “HODL” just to have them sell out a few moments after to hide in the shadows while you realize that you are stuck with a worthless coin. This happens all too often. It diminishes the potential of blockchain technology.

And I know that we don’t enter these types of trades expecting a 100% guarantee and that we are all responsible for the due diligence but con-men can thrive when there aren’t any effective systems put in place. Despite the chaotic interface of pump.fun it serves as a testament to what Solana DeFi can become. But to truly understand the potential of this blockchain, we have to take a step back and look at how the ecosystem has evolved in the past year…

How The Ecosystem Has Evolved In The Past Year

According to The Economic Times, the price per Solana (SOL) has experienced a 10x surge in value in 2024. Despite the troublesome waters it found itself in after the FTX implosion, the Solana ecosystem has innovated itself back into the spotlight proving the resilience of its platform.

Decentralized exchanges (DEXes) such as Raydium and DEX aggregator Jupiter, which leverage Solana's high throughput and low latency to offer a seamless trading experience. These platforms facilitate a wide range of DeFi activities, from token swaps to liquidity provision, attracting users with their efficiency and lower transaction costs compared to their Ethereum counterparts.

Decentralized finance promises solutions that the centralized paradigm simply cannot offer. The development of Raydium and Jupiter are two prominent milestones that the Solana ecosystem can celebrate. From token swaps to providing liquidity, these two platforms work synergistically to unlock a financial revolution within this blockchain. There are other blockchains that do similar things but the key is its cost effectiveness.
Less middlemen = more money for the people. That’s something I can always get behind!
Although Solana may not make it into mainstream news everyday, developers are busy building and those in the know are seeing their progress payoff. There have been 500 dApps built on the Solana blockchain thus far and with 2500 monthly active developers, a more robust ecosystem is on the horizon.

Some critics may have wondered if the blockchain would be able to handle its increased demand and Solana has proved to remain efficient as it scales. This is optimistic news for developers and users. After all, if it becomes bogged down with BONK buy and sell orders for example, many may decide to move their memecoin dreams to another more efficient blockchain halting its progress and potential. But that doesn't seem to be the case..

As Q4 of 2024 comes closer, we can take a look at the active users to get a sense of how popular the blockchain is becoming. Back in January of this year, there were 875,940 active users. This shows that it regained its user base that it once had in 2020.

But did it continue to grow as the year progressed? Or was the recovery short lived?




Source

If you take a look at this graph, you can see that the number of daily active addresses on the Solana network has steadily increased throughout the year. Currently as of August of 2024, there are approx. 1.59 million active users on Solana. A pivotal year of growth for the blockchain.

With that being said, let’s explore how some dApps have begun to shape the direction of this unique blockchain...

The Top Projects & Protocols That're On My Radar

As mentioned earlier, pump.fun is at the top of my list of projects to keep an eye out for. I won’t get into too much detail as we already covered some of the problems it’s looking to solve. I love how it aligns with the pop-culture of meme coins with the chaotic interface.

It’s a unique approach to a financial application. It’s one that wall street finance bros might not get but us crypto dudes surely do.

In addition to pump.fun, I’d add dumpy.fun to this list. There are some shitcoins that are just destined to be doomed. Rather than holding them, dumpy.fun allows you to short them. It works by selling borrowed tokens and when the price goes down (as speculated), users can close the position at a profit. This is done by buying back the coins and repaying the loan.

It goes to show the power of having a diverse ecosystem of specialized applications.dumpy.fun uses Save for borrowing and Jupiter for selling.

The Arena is another app that’s on my radar. Simply put, it’s a Web3 social media app built on Solana that empowers creators with the ability to monetize their content. It faces a heavy challenge of gaining a network effect as it competes against many other social media platforms (both centralized and decentralized) but it has potential as more people are weighing the benefits of owning their content.

This SocalFi application has plenty of potential as many influencers are jumping on board but it’s still early in its development. We’ll have to wait and see if users enjoy the interface and the benefits it has to offer long enough for it to catch on to become the next big thing.

How Has The Experience Changed Across a Spectrum of Users

Sophisticated Traders
Step.finance stands out as a top choice for sophisticated traders. Described as “The Front Page of Solana” users are able to access on-chain analytics along with their personalized portfolio. It’s an intuitive app designed for DeFi and transaction tracking.

Institutions
Bitcoin has taken the headlines lately with their ETF approval but institutions are starting to dive into Solana too. “Investors are more optimistic for Solana,” explains James Butterfill, an asset manager. With billions under management looking into the asset, a surge of capital may enter into the ecosystem before we know it.

Retail
Jupiter emerges as the go-to swap aggregator for Solana users. It’s “built for smart traders who like money” and is simple to use. Perfect for the retail trader swapping coins on the Solana ecosystem.

Modern Day (Mainstream users)
Now, to close off this blog I have to admit that the mainstream (meaning non-crypto natives) still aren’t aware of Solana. Sure, maybe our Grandmas might have heard about Bitcoin and the general term crypto by now but it’s unlikely they know about Solana.

However, we should be optimistic about the potential of Solana DeFi as the next-generation of financially literate individuals lead the way. This blog showed the growth of active users along with meaningful applications solving problems that plagued the blockchain for too long. It’s just a matter of time before the tipping point occurs and DeFi will become a part of modern day living.