Analysis the Solana DeFi ecosystem
Thanks to ETFs approvals, rumours of rate cuts and progressive regulation, crypto has had a lot of interest come back to it. Especially the Solana DeFi ecosystem has gone from under 3bn USD in volume in Jan 2023 to over 15bn USD in Jan 2024!
Looking at the volume split by DEX we see the following major players:
But what are CPAMM and CLMM and do they have an effect on why some DEXs see more volume than others?
CPAMM were one of the first systems to be used and allow for easier deployment and management of liquidity. CLMM were pioneered by Uniswap and are more capital efficient at the cost of added complexity and requiring more active management.
When looking at individual swap amounts we can see that Raydium v4 emerges as a more popular option than Orca or its own CLMM counterpart. We believe that this is due to the rise in popularity of meme tokens, which are more easily deployed on a CPAMM DEX.
This theory seems consitent with the fact that most swaps are done on Raydium v4 but with low volume (under 1k USD). So CPAMMs are used more often for smaller, meme coin swaps and CLMM are used for deeper liquidity to have lower slippage.
Moving away from DEXs, we also wanted to highlight the strength of Jupiter. In 2023 it aggregated over 40bn USD in volume, which represents 60% of total DEX volume (66bn USD). We believe it is one of the core reasons why Jupiter so highly valued.
Especially when comparing to the leading EVM aggreator 1inch we can see that the latter only manages to aggregate less than 12% of total DEX volume. So if Jupiter maintains its market lead, it will accrue a lot of value as Solana's DeFi ecosystem continues to grow.
And we believe that there are signs of more consistent growth in the Solana DeFi space, as it's not just the same users being more active, but also new ones joining the space.