Solana Decentralized Finance ecosystem fully recovers, how are the projects performing?

Recently, the Solana ecosystem has shown a strong growth trend, particularly in the DePIN and MEME coin sectors. On December 22, the price of SOL nearly approached the $100 mark. Notably, the trading volume of decentralized exchanges (DEX) on Solana briefly surpassed that of Ethereum, sparking market discussions.

At the same time, the Ethereum ecosystem faces many doubts. Ethereum DeFi projects, which once led the way in the previous bull market, now seem to have lost their past glory. So, how are the DeFi projects in the Solana ecosystem performing? Are the established projects truly recovering? Let's explore together.

Liquid Staking: An Important Driver of Ecological Growth

Liquid staking has become an important growth project in the Solana ecosystem. The nature of staking itself, which locks up funds, is beneficial for driving up the price of SOL, while various liquid staking tokens (LST) can be widely used in other Decentralized Finance projects. The wealth effect from new project airdrops and incentive measures further promotes the continuous growth of funds participating in liquid staking.

According to statistics from the data platform, as of December 22, the two largest liquidity staking projects in the Solana ecosystem have a TVL of 1.05 billion USD and 626 million USD, ranking first and second on the ecosystem's TVL list.

Although the staked funds of one project in USD are only 57% of the historical peak, the number of staked SOL (11.15 million SOL) has reached an all-time high. Another project provides MEV infrastructure on top of staking, gaining a good user base due to an unexpected airdrop. Recently, this project has started to incentivize the use of its LST in DeFi projects, and the staking amount continues to grow rapidly, currently reaching 6.42 million SOL.

DEX: Changes in the Status of Established Projects

The two main forces in the DEX track are still the two existing projects, with no outstanding new faces emerging. Both projects have developed centralized liquidity features based on their originals, but their positions have reversed.

From the liquidity indicators, a project’s liquidity has dropped from a historical high of $2.21 billion to the current $113 million, which is only 5.1% of the peak. Another project’s liquidity has fallen from a high of $1.41 billion to $184 million, which is 13% of its peak.

A recent hot topic in the market is that Solana's DEX trading volume has surpassed that of Ethereum. According to data platform statistics, Solana's DEX trading volume is indeed higher than Ethereum's, whether in the past 24 hours or 7 days. Although some opinions suggest there may be issues with double counting the trading volume of aggregators, when calculating the trading volume of each DEX separately, it is found that the total 24-hour trading volume of major DEXs on Solana is $1.55 billion, while the total trading volume of major DEXs on Ethereum is $1.18 billion, confirming the fact that Solana's DEX trading volume has indeed surpassed that of 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 may far exceed those on Ethereum given the same principal amount. This could further attract capital inflow into the Solana ecosystem.

Decentralized Lending: New and Old Alternation

The decentralized lending sector has seen significant changes, with only one of the former leading projects still ranking among the top, but it has also been surpassed by emerging projects. The TVL of this established project has dropped from a historical high of $910 million to the current $187 million, which is 20.5% of its peak. Other established lending protocols have performed even more sluggishly, with TVL declines generally exceeding 90%.

At the same time, a number of new competitors have emerged in this sector. The TVLs of two emerging projects have reached $348 million and $204 million respectively, with rapid growth recently. These projects have not yet issued governance tokens, but have launched point systems that allow users to earn points through deposits and loans. Stimulated by recent airdrops from multiple projects, a large amount of capital has flowed into these emerging lending platforms.

Yield Aggregator: Near Extinction

The yield aggregator track has almost been denied by the market. Due to the already low transaction fees on the Solana network, the advantages of investing through yield aggregators for automatic reinvestment and avoiding personal operation fees are not significant.

The once most well-known project in this track saw its TVL drop from a historical high of $3.4 billion to just $4.02 million currently. This project was often used in conjunction with another project, which later came to light that both projects were developed by the same developer. The developer artificially inflated Solana's TVL by creating multiple identities to develop different projects, raising it by billions of dollars.

Other yield aggregator projects that offer lending and leveraged mining functions have also performed poorly due to declining mining yields. The TVL of two representative projects has dropped from $430 million and $1.07 billion to the current $20.89 million and $21.41 million, respectively.

Perpetual Contracts: Steady Development

Compared to the flourishing perpetual contract projects on Ethereum Layer 2, Solana's performance in this track is relatively stable.

Currently, a project with strong comprehensive strength in this field adopts a trading model similar to an order book and can provide up to 20 times leverage. This project's TVL has reached a new high of $105 million, and the trading volume of SOL-PERP in the past 24 hours was $43 million.

Another well-established project saw its TVL drop from a peak of $210 million to $10.47 million. The project was previously hacked, and the attackers were later prosecuted and arrested. The project mainly provides lending and leveraged trading services, and recently added perpetual contract trading features, but the 24-hour trading volume for SOL-PERP is only $520,000.

It is worth noting that a perpetual contract product launched by a certain trading aggregation platform adopts a model similar to GMX V1. The product has a funding cap set at 23 million USD, and the trading volume of SOL-PERP reached as high as 101 million USD in the past 24 hours, surpassing other competitors.

Decentralized Stablecoins: Lackluster

Solana has always lacked outstanding performance in the field of Decentralized Finance stablecoins.

A project that once completed financing with a valuation of nearly $2 billion had a TVL that peaked at only $42 million, which has now fallen to $11.19 million. The project initially used a Delta-neutral strategy to hedge SOL collateral, but has now shifted to using USDC for 1:1 minting.

The other two stablecoin projects that used over-collateralized minting have also fallen into decline. Their TVL has dropped from a peak of $476 million and $39.83 million to the current $8.61 million and $8.06 million.

Summary

The Solana DeFi ecosystem is showing signs of recovery, but the performance across various segments varies. Liquidity staking projects are leading the growth in TVL, DEX trading volume once surpassed Ethereum, emerging lending platforms are gaining prominence, and the perpetual contract sector is developing steadily. However, the yield aggregators and decentralized stablecoin sectors have yet to show outstanding performance. The overall development trend of the Solana ecosystem is worth ongoing attention.