Solana's High Flying DeFi Ecosystem and How Jet Protocol Fits In
Why Solana's ecosystem growth makes it a great place build the future of DeFi
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A constellation of complimentary DeFi projects are slowly but surely being built on Solana. These projects are buoyed by the protocol’s blazing fast +50,000 transactions per second with 400 millisecond block times, low cost transaction fees, strong security guarantees and a developer friendly environment.
Taking a closer look at the projects being built on Solana we can see the quality of use cases and how they support the overall user experience. In this post, we’ll be looking at why Solana is an attractive platform for projects, a look at some promising DeFi applications and how Jet Protocol fits into the overall DeFi landscape.
What makes Solana “smart contracts” special?
Smart contracts, known on Solana as “programs”, remain the cornerstone of DeFi as we know it today. In the ongoing quest to attract talent and ideas, blockchains have tried to snap up DeFi market share from the market-leader Ethereum by offering a smart contract experience that is compatible with Ethereum. The Tron Virtual Machine (TVM) is an example of such an attempt, claiming to offer higher speeds than Ethereum without requiring developers to retool their skill set to a new language.
Alternately, Solana isn’t natively compatible with the Ethereum Virtual Machine (EVM) as a way of attracting developers to the ecosystem. Rather, Solana allows on-chain logic to be written in the performant Rust programming language, while providing enough of an advantage to the developer experience that potential businesses will choose Solana as their go-to platform. Additionally, Rust is a widely used programming language beyond the blockchain space, which helps attract talent from areas such as traditional finance (TradFi).
Sealevel is a core innovation to Solana’s value proposition that allows smart contracts to reach unparalleled levels of performance. Solana’s runtime can process tens of thousands of programs in parallel, using as many cores as are available to the Validiator. This is important, as it lets non-overlapping transactions and transactions that are only reading the same state execute concurrently. All of this is achieved with a low cost per transaction fee of roughly $0.00025. Sounds pretty good, right?
Furthermore, while Solana doesn’t natively support an EVM development experience, it’s also exciting to see Wormhole as a bridge between Ethereum and Solana. This bidirectional, decentralized bridge between the fungible ERC-20 standard which powers many DeFi projects and the SPL token is a promising way of porting over existing projects to benefit from Solana’s high speed and low cost.
Solana’s Growing DeFi Landscape
If you follow ecosystem coverage Twitter accounts such as Solanians, it’s clear that the number of new projects being built on Solana has been growing constantly. We’d like to highlight just three of the many DeFi projects which we believe will add massive value to the Solana ecosystem.
Circle’s (USDC) launched on Solana in January 2021 and already has extensive adoption and traction across leading crypto exchanges such as FTX, DeFi ecosystems such as Serum and several native wallets including , Phantom, Solong, Bonfida, and Binance’s highly popular Trust Wallet. With Solana USDC, developers can build on this ecosystem and access Circle’s full suite of payments and treasury infrastructure built around USDC.
Tether (USDT)’s 2020 announcement that they will be launching as the first stablecoin on Solana acts as a huge boon to the ecosystem. Firstly, USDt’s position as the largest stablecoin by market capitalization brings an unprecedented level of liquidity to the network. It was also reported that as of September 2020, three of the top DeFi protocols (Uniswap, Aave and Curve) have USDt deposits of $863 million. Naturally the stablecoin will benefit from the low cost and high performance that Solana offers, making it an exciting addition to the Solana family of DeFi.
Serum (SRM) is the second DeFi project supported by Solana which we’d like to mention. Serum is a fully decentralized exchange which aims to offer cross-chain support, stablecoins, wrapped coins, central limit order books, and the ability to create custom financial products. In a world of high-frequency trading, a fully decentralized exchange powered by a high-performing blockchain will, we believe, bring DeFi to mainstream status. This is because FTX is a top platform for traders, while Alameda’s years of being a titan in the financial world brings legacy experience to bear.
With too many individual projects, protocols and platforms to name, the growth of the Solana ecosystem hinges on active advocacy from key technological and financial institutions supporting not only with funding, but guiding eager teams to build the necessary infrastructure for continued growth.
Jet Protocol’s role in the Solana’s DeFi ecosystem
Borrowing and lending is primitive every blockchain needs in order to have a thriving DeFi ecosystem and this is Jet Protocol’s prime objective. Solana’s token-lending program was a core inspiration of our protocol, which we have rewritten in Anchor and reengineered in ways that allow us to experiment with bringing new lending products to the market faster. Jet Protocol allows Solana market participants to place a deposit and borrow against their assets and manage their debt positions with lenders able to earn market driven yields on their deposits. This is only the beginning — we envision an array of products being enabled by Jet Protocol’s core offering driven by community, governance and market demands being built by our own team as well as entirely separate team on their own.
Disclaimer: The statements, proposals, and details contained above are informational only, and subject to change. We are in early stage development and may need to change dates, details, or the project as a whole based on the protocol, team, legal or regulatory needs, or due to developments of Solana.
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