The State Of Solana DeFi | Round Table

Transcript

Quick shout out to today's sponsor, Algarand. We'll hear more about their Algo Kit 3.0 and how it's built to supercharge your app development on Algarand later on in the episode. Nothing said on Xerox Research is a recommendation to buy or sell securities or tokens. This podcast is forformational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Pocachio, Ryan, and our guests may hold positions in the company's funds or projects discussed. Hey guys, welcome back to another episode of ZeroX Research. Today I am joined by Carlos and Dan Smith from Blockworks Data. Uh, it's going to be a great app today. How are you guys doing? How are you feeling?

Doing great. Feeling great. Uh, starting a new week. We're recording this on May 5th. Cinco de Mayo. Got some tequila lined up for the episode. No, I'm kidding. Um, no, it'll be good. This be fun. Yeah, doing great. excited to dive into it. All right. Well, we we'll we'll save the shots for after the end of the episode. We can do those maybe off cam. Um before we get into anything, as always, we have to shill the upcoming exciting Blockworks event permission list coming up end of June, June 24th through the 26th. Uh I believe everyone here on this pod is going to be there. Um so get your tickets. It's 0x10 for 10% off. Uh you can come out, see the folks from the research team, see the folks from around

the industry. There'll be some great talks, some great events, and I'm hearing rumors again that the ZeroX Research little event area at the conference is going to be a ton of fun. Uh Bach might be in a in a dunk tank. Dan Smith might end up in the dunk tank. Uh we're working on the details, but uh 10% off link in the description. Uh yeah, we also Wesley is getting uh a lot of love in the ZeroX Telegram uh Xerox Research Telegram chat right now. So he'll be on stage giving a talk as well. Uh so there you go. Come come join.

Awesome. Come see us there if you can make it out and uh we'll be excited to have you. So uh let's jump into it today. I guess before we go into the main topic, main dish, uh I I guess I just want to probe you guys. We do this on every app. How are we feeling about the markets at large about crypto? I think there's a lot of pessimism on the timeline. I'm seeing trying to be very like anti-p pessimism. Um, you know, I think some of the like crime season thinking has really like invaded uh the psychology of a lot of people in the space right now and uh, you know, maybe they're feeling a little bit lost. How are you guys feeling and and thinking about the industry today and and going

forward? Feeling good. Yeah, I I definitely agree with Meipo's uh point that everybody's just like super mad. Um I tweeted something similar just like the acknowledgement. I can't Oh, it was actually right right at the very beginning stages of the Zorus stuff. Everybody was just like viscerally upset about someone tweeting something about a social application. Um and I don't know, it was just like that made me love Zora to be honest. But uh the um the prevailing attitude is just certainly pessimism. Uh I don't know like sometimes I was like is this because we're all chronically online all the time or is it because prices are bad? Uh prices like aren't that bad? I mean some are but I guess that probably has a lot

to do with it. Like you know I it's been said a million times but Ethereum price lagging is definitely net bad for the industry's morale. Most people own ETH. Um and so that probably has something to do with it. I'm getting pretty bowled up on on on ETH and at least relative to the past. Uh we did an episode with John Charb. I kind of dove into some of the reasons why there. But I think it feels like all the right things are happening, right? The early stages were have the conversation, say the right words out loud. Um and then it's like, okay, create a plan around those words. And the last and obviously most important stage is execute on the plan that relates to the words you just said, right? And that's all about scaling the L1. Yeah. So, I I think Ethereum is kind

of moving in the right direction, which is net good for the industry without a doubt. I think if Ethereum were to just like implode and die overnight, the industry would get shot back into the dark ages. Um, so that's definitely a net good for not only morale, but also just for the industry as a whole. Um, as far as market skill, it feels like we're very macro driven, and that is just not where my skill set lies these days. Uh so at times like these I try to just hold my coins and figure out the right time to rotate away from majors and into more risk assets which for better or for worse I just kind of ventured out uh into some risk assets over the last week.

Awesome. I think I largely agree with them that sentiment is mostly price driven and you can see that depending on who holds what. Um and yeah in terms of markets you have seen like a huge uh divergence uh and like decreasing correlations like for instance uh bitcoin has outperformed uh no doubt uh and it has shown relative strength relative to current market conditions. Uh I was checking the soul leaf price this morning and in April it made an all-time high uh like and it's like 44% up year to date whereas against Bitcoin is still down

like 25% year to date. So that just highlights like uh increasing divergence in market performance and just like a flight to fundamentals or quality from investors. And in the application layer, you see kind of the same thing where apps that have um cash flows and real value to token holders through things like buybacks have outperformed in the past month or so. Yeah, I I think those are great takes all around. You can definitely see like the there's some desperate uh feeling from ETH folks who are maybe down in the dumps but also like very focused on this pivot idea or

pivot or not pivot whatever they want to call it to be honest. Um and then you know Fartcoin bros have been very happy over the past month and and like you say like price is a big factor in a lot of the the ongoing sentiment within the industry. So uh it's not surprising to see some of the the attitudes that are persisting right now. But it also makes sense, right? Pivoting is as is like inherently a challenging thing to do and there will be pain and like so I don't know everything like lines up. It all it all is logical and makes sense in my view. Yeah. I I think and maybe the tough part is like if you're making a pivot you you're making some kind of admission that your previous strategy was not the right one like that you made a mistake. And so obviously like that

maybe that's like a hard pill to swallow for some if they thought that they were not, you know, on the wrong course or something along those lines. So, you know, I could see that just being a difficult sort of thing to contend with. But nevertheless, we move on. Let's get past the pessimism and we'll get to the optimism. Um, shout out to the Xerx Research Telegram. If you're not in the Telegram, by the way, and you are an avid listener, check out the link in the description. But uh our very own Pepe Rodriguez, he had a request and we felt humbled to comply this week and talk about some Salana DeFi. The you know question being or the point being, you know, love when you guys do deep dives.

How about Salana DeFi trends, market share, road maps, anything goes. Um so I wanted to dive into that. No one better than Dan Smith and Carlos, our two main Salana guys, Gigabrains on the team. Um, let's get into it. Maybe some a big like area to start is just the DEX landscape. Um, and some of the trends there. Something that I I feel like you guys brought to light recently. I don't know if this was you, Dan, or someone else on the team, but um some of the prop AMMs and I think it may have been Soulfi is uh spin out or part of the efforts of Ellipsus Labs, who people may know previously from Phoenix Trade um and their like relative share of like stable

coin trading volumes on Salana. It seems like they've kind of been quiet for a long time. Um but it's interesting to note like I know we have some data on the on the site that I'm sure you'll pull up here at some point. Um, but they've been capturing some additional market share and I guess this this trend like has kind of gone under the radar. I've not seen people talking about this until just recently. Like there's some news that uh like these prop AMMs if we want to call them that are uh you know kind of starting to dominate some salana volumes. Yeah, it's a really interesting observation. So I'll pull up some data here uh to kind of talk you through the thinking. But from a high level, um what these are basically, uh if you're familiar with Lefinity style where you have like an order, uh an oracle priced

AMM um so instead of uh you know each individual LP actually moving their liquidity, you have an oracle that kind of manages manages this on behalf of the pool. Um and they're private liquidity uh deposits. So this is also pretty similar to lfinity as well where the idea of you have like a very small amount of liquidity that you can if you have an edge in pricing that liquidity and not requiring a trade to run through the AMM to move the price right because like think of a traditional AMM uh like unis swap or radium or whatever uh if there's a mismatch between the pool price and like I say a centralized exchange price like Binance then you can there's an arbitrage that can be run through that and that is generally toxic flow and that is generally um negative for LP returns. And so the idea here

with these more prop style AMMs is you take private liquidity, you seed them within this AMM, and then you have the ability to use an oracle to price this pool. Again, that you remove that toxic flow. And they do something pretty interesting. It looks like they're pricing the liquidity very very tight, so a small price window. Um, and then only quoting very thin. So it's very hard to push a large arbitrage size trade through these AMMs. Um, so you're really only capturing retail flows seems to be the kind of the goal. Um it was only about a few days ago, maybe a full week ago now, where Ellipsis uh and Eugene Chen kind of said, "Hey, by the way, Sulfi is us." Uh for a while there was just like nobody really knew what was happening and they're eating a pretty meaningful amount of total salana

volume. Um so I'll pull up this screen share here now. Uh and we can kind of see some numbers around what exactly that looks like. So uh I guess we'll zoom out here. This top chart is really just total DEX volume across the entire industry. You can see the growth over the sorry the entire just the salon chain not the entire industry you can see that growth over the last two or so years and then if you look down here at this chart towards the bottom right uh we can see the growth in total DEX volume and so specifically looking at Sulfi's growth over the last two years you notice they really only popped up around um the beginning or sorry the end of 2024 in the October time frame and now they're already running about 12% of all Salana Dex volume and it's very

specifically concentrated to a few pairs. So, if we look at SoulUSD and stable coin swap volume, this is where you really start to see their position uh rise, right? And so, they're doing about a quarter of all soul USD volume and somewhere around 20% of all stable coin swap volume. Uh so, again, we see that with these this new pool construction, uh you're really winning the majors. Uh so it' be interesting to see how this progresses into the more longtail assets like memecoins or any project tokens. Uh but for the meantime, it seems very concentrated to the majors. And so Oric and Zerofi are also seem to be these similar style pools. Uh no revealed ownership over those. Um but you'll see they both kind of play in

similar waters. So, Oric seems to be dominating uh the stable coin swap volume where uh Soulfi seems more focused uh on that more sole USD pair. Um and then so if you add the three of these together again that prop AMM portion we see that's about 50% in total of sole USD volume and north of 60% on stable coin swap volume. So again we see this activity is really dominating uh these subsets. But when we look more on like the project token side of things again that's really concentrated too um you know we'll see that uh is this orca I believe yeah orca and radium still kind of dominate these volumes with meteora playing a very important role there and then on st meme coins as a

whole uh you know it's obviously pump amm pump bonding curve and radium that win the majority of that flow I'm wondering Carlos from your POV I wanted to ask this like and we talked about this a little bit beforehand hand. But this like differentiation between large very liquid assets and like longer tail largely memes is is where you see uh more of the ill liquidity and um probably would have more difficulty you know performing the strategy on like small multiund,000 or multi-million market cap coins that fluctuate significantly. Um, I'm wondering like for some of the decks out there like an Orca, um, even maybe a Lefinity, although they

they kind of fit into this model, I suppose, a little bit, but you know, Orca, obviously, Radium is is now directly competing in memes with their own launchpad. Like, are they all going to be forced to kind of fit to one side or the other here, like lean harder into these longtail assets or go after a similar strategy to what like the Sulfi team is doing? Yeah, I think so. I think that's a fair framing. I think that Dexis will have to like concentrate on one niche and dominate one specific sector. Like if you if we look forward and ask ourselves is sulfi going to dethrone radium and orca and these like traditional AMMs I think the answer is that we will see like two uh sectors like develop and that's going to be

based on the type of asset. So for tailend assets like memecoins or on pom fun or other type of longtail assets I think that traditional AMMs like radium will maintain their dominance. Um the reason for this is that market makers uh like professional market makers will be unwilling to uh price these assets because it's too risky for them because they can move very quickly and then they expose themselves to toxic order flow. So passive liquidity like that provided by a traditional AMM like radium and pump swap are more efficient to handle liquidity for longtail assets. And today like meme coins make up more than 50% of

Solana's total DEX volumes. So I think like there's still like a future for these types of AMMs like in the Sena ecosystem. That being said, like for liquid markets uh so for assets that that require like uh highly concentrated liquidity like the sole USD pair, stable coin uh swaps, LST swaps. I think this will likely be dominated by these like prop AMMs. The reason for that is that professional market makers can close the spread and provide uh better prices.

Chris Jung uh from the meta aggregator Titan was giving a talk at SA crossroads in Istanbul and he mentioned that from what he's able to see like through the Titan aggregation routes um sulfi zeroi and these types of like prop amms are providing dramatically better prices for these like highly liquid assets and I think that we will going to continue seeing like this trend of increasing market share for this type of like uh oracle priced dexes if you will. Um so yeah I think like it's bad for dexes that are kind of like general

in the scope and haven't like dominated one specific vertical. For instance, Orca doesn't like dominate one specific pair where you think like, okay, they're dominating like in this sector. Whereas for things like radium and pump fun, like they obviously dominate like memecoins and I think they can maintain their position because market makers are never going to be willing to provide liquidity to a three-day old coin. Yeah. And I think Dan, if you show the project token volume by DEX, like that feels like probably a logical next area. Like we're already seeing success on Soul USD stable swap pairs, but pro like large project. There's pro I'm sure there's a power law sort of distribution going on

there where there are some very large project tokens on Salana um where you could perform similar strategies you know a jetto name a few other tokens that that are there but um that could make up a large you know majority of those volumes um that could steal a ton of this market share away from I think is where Orca still has some relative dominance. Yeah, I would agree with that framing as well. Um because that's that's the catch, right? When you start a new meme point in pool, the liquidity is distributed immediately into that pool. And then there are new pools that do crop up. Um but generally the initial pool will have the deepest liquidity. If you look at something like Fartcoin, which you became like a prominent meme

that spawned out of a memecoin launchpad, um it's interesting to see that like when it the longer it stays small, the more fees that get moved through that initial pool. And then you have this actually the if the price 10 100x is you get this pretty decent amount of liquidity especially in memecoin terms around that asset. And to be able to do this um more prop style AMM you need to hold the asset. Now there's things you can do to like derisk your price exposure to the asset like as the market maker but um that is like an extra layer of complexity that gets put on top of it. And so I don't think you're going to see it for the very very long tail. It'd be interesting to see it at the project token level. I think that's a pretty reasonable place uh to

to move next for these prop AMMs. But then be very interesting and I don't know how realistic it would be to like move to those fartcoin style memes that have hit some level of of market cap or size that it starts to make sense um to kind of play in those waters as those AMMs. I don't really know their intention, but that'd be fascinating to learn from. And and Car Carlos, you mentioned the uh the talk from Chris at the Crossroads Conference. Um one thing you mentioned there, which is these look a lot like RFQS, right? like unis swap x for example and the idea that a market maker can like list a price they're willing to trade at if a user trade comes through then they'll fill that trade. Um but for some reason I don't have a very good understanding of why and maybe we should have Chris on the

pod and talk about this is uh these propms can actually update their prices faster than if they were to use the uh like traditional RFQ systems and again I just don't have a good reason as to why that is. Um, I think it'd be really interesting if it was true, but like once you update the the oracle price, uh, the pool liquidity will move and maybe that just the fact that that's all on chain, you kind of have like this quicker feedback loop than having to move through some server that probably locks you in for some, uh, some set period of time that you have to leave this quote as open on these RFQ systems.

But again, like take that with a grain of salt. I'm not super positive on how that construction actually works in practice. Whether you're building D5 protocols, enterprise solutions, or next-gen DAPs, Algoit has all the tools you'll need to build faster, safer, and smarter on Algrand, Algoit 3.0 now offers native TypeScript and Python support, visual debugging, and seamless testing. Build, test, and deploy with tools designed for speed and simplicity. Start building with Algo Kit today by following the link in today's show notes. This episode is brought to you by Ledger, the global leader in digital asset security. Celebrating 10 years of innovation, Ledger remains the most secure hardware wallet for your crypto and login. Trusted by 7 million users and securing 20% of the world's digital assets. Follow the link in today's show

notes to grab your Ledger. Now, I figured we could jump to the next category. Lending is a big one. Um I one area where I've been interested and like over on the EVM side of things that I think has been an interesting shift to see is you know Morpho coming into the space and and even um teams like Oiler and Similar that are exploring these strategies using like a a base layer lending primitive with isolated pools and then putting a vault product on top of that and then even like in looking to expand those vault products like spinning out different um sort of like instances or like branded versions of that for different product teams. Um, we've seen Morpho do this with like Moonwell and, you know, Coinbase and, uh, a few other different projects to

date. Uh, it looks like Camino is exploring that, although their vault product isn't quite out yet. Uh, I guess I'm curious, like I don't I'm not much of a lending follower outside of, you know, some of that exploration in Demorpho. What else is kind of shaking things up in in lending in Salana? Yeah, for sure. So yeah, Camino is moving toward a modular architecture with their Camino land B2, but that still hasn't rolled out. I think an interesting protocol like in the money market space is loop scale. Um I like loop scale because they have taken a completely different architecture. Like if you look at DeFi lending is probably one of the primitives that has become

like architecturally stagnant in the sense that you still have the pool based design that was introduced by compound uh back in 2018. And even though you have seen like improvements like with this type of modular architectures in the background you still have like this pool based design where interest rates are determined algorithmically based on pool utilization. So what you have is essentially always this capital and efficiency where supply capital will always be larger than borrow capital and by definition you will always have a sort of a spread there between the supply APY and the borrow APY. Whereas on loop scale you have like an order bookbased approach where similar to like

an order book DEX what you have is like an orderbook system that directly matches lenders and borrowers. So by definition you remove that spread and have better rates both on the supply and the borrow side and this can unlock uh like new use cases that were previously not possible in D5. For instance, Loopski offers fixed rates, uh, which is great for more sophisticated borrowers that want to have like more planned out strategies. For instance, you can have structured products like um like for instance, looping is infinitely better with fixed rates because you remove that uh the interest rate moving against you. So, so

you can have like more aggressive loan to values and more aggressive leverage. You also enable like more collateral types because if you're like directly matching lenders and borrowers then as a borrower you only need to have like a willing lender to provide uh to to put up something as collateral. So for instance, you can imagine someone with lock tokens like for instance I have lock Jeta tokens. I can pose that as collateral and and if a lender is willing to lend me with log jeta tokens then they can do that and they can do like interesting things in the back end.

For instance in that example you you can like for instance not liquidate based on price but based on payments. So if I miss a payment, you can liquidate the JTO position and take like JTO at a discount. That that's just one example of things you could do with that. And like the thing today is that borrower concentration is like like if you look at money markets today, even on a which is like the biggest money market like most of the borrows are concentrated in very few borrowers. So if you can like provide net new use cases, you can easily disrupt that market and that's one of the things that that I'm excited about like with these type of of of

designs. Yeah, I really like this. I I think the uh initial episode of the new bell curve season uh kind of actually touched on this beautifully and basically with these uh more isolated designs, you're shifting complexity away from the protocol and onto the user. And how you pull that back off the user is something like a vault product, right? So now I don't have to manage, you know, if I have USDC and I want to earn some yield on it, I don't have to like balance that out between which pools are being utilized across Morpho, I can just deposit into a vault managed by a team that I trust like Gauntlet or Steakhouse and they do all the work for me. It's beautiful. I love the product. I'm a Morpho power user. I'm very excited for this to come to Salana. I think this is

definitely the right path forward for lending protocol and just like yield aggregation as well. I think the other really interesting thing in that kind of vein uh this is kind of like veering out of the scope a little bit but Spark doing this on behalf of Spark has something called the Spark liquidity layer and basically they take uh they basically allocated funds from the from Maker now and then we'll take that and balance it around different pools across uh basically any chain and any integrated uh market. And so they're integrated into the Morpho vault where um Coinbase is letting users deposit and borrow against their Bitcoin and that's kept the rate incredibly stable. So we're seeing these like layered

innovations actually start to play like come to life. Basically the idea of money Legos actually does exist and now we're starting to kind of see it where different protocols are building on top of each other and different uh retail user bases are being able to plug into these things and everything works. It's working quite seamlessly. So huge fan of the vault vault direction and definitely think that's the proper iteration for the lending space. Yeah. And I think another big call out for this like vault style of lending is that um things like Athena's USD and SUSD and then like Pendle PTS have been big drivers of growth for Morvo specifically. Um I'm not going to go too into the weeds on this one. If we had

Luke on, he certainly could. But we've got like Raidex and Exponent I think are some of the like sort of Pendle equivalents that are kind of building on Salana right now. Um where you can get you know these PTYT like exposures to different assets. A lot of them are you know LSTs things like JLP um where you can take duration or you know grab a fixed rate on something if you think it's you know the right time for that. Um, but we could see the same effect where if those markets can grow alongside like new vault products on Solano, you might see a similar effect that we've seen with Morpho where you know those PTs have become a big part of that market which I I think would be pretty interesting and might grow that pie a little bit. Yeah. Like on in the

Ethereum side you have seen a great like virtue cycle like between Pendle assets and and a like a listing these assets. Yeah. I think on Sena Camino has not yet uh listed any of RAX or Exponent uh like assets. Loop Loopkll has done it and they hadn't had any issues for Exponent. They did have like a an Oracle pricing issue for a Raidex asset and they got hacked in their bold product for like 10% of the total bolts or the total protocols like uh TBL which was not great but obviously it's kind of what

you would expect with this type of new uh designs and just to give an update the team has been able like the team communicated very often often and very early and was like super great in in terms of like transparency and have been able to recover that. But yeah, it just highlights like the relative like immaturity in some sense of Solana DeFi relative to Ethereum to Ethereums in in some ways. Yeah. No, I definitely agree with that and this was an issue with an AMM based oracle price and that lesson has been learned many of times in Ethereum land and even in Salana land as well. So I was surprised to see that be the core of the issue. Like I know the Curve Finance

team has spent a ton of time on, you know, building out tooling so that AMMs can be meaningful oracles. And now they actually have that within their lending product. Um, which is pretty cool to see. But again, they put a lot of effort into that. And so I don't know the full details here, so I don't want to like sling mud by any means. But um, I don't know. I there's just like the importance of learning from lessons past is is super salient. And I think the Camino team is pretty vocal about things like this, right? They were talking I think it was just yesterday uh with what the idea of like building a scalable lending product is not a developer issue. It's not a code issue. It's an underwriting issue and you have to be able to risk price the risk on these assets properly.

Um and that's that's a challenge, right? That's that is the core of how you can build a scalable lending protocol. Um and it's less so about an engineering challenge. uh which I found to be pretty interesting and maybe that has to do with their hesitation of listing a lot of these assets is if they're not you know if they can't properly underwrite the risk then it doesn't make sense for them and taking that cautious and guarded approach is something that makes a lot of sense and we've seen it a million times over. The key to success in this industry is surviving and doing things that won't blow you up. Um which can be hard, right? A lot of your competitors, you're going to take a ton of risk and that'll make you feel like you're doing something wrong. Like oh my god, how are we not getting the same

level of growth? our product is better for reasons x, y, and z. Um, and then, you know, six months goes by, they blow up for whatever reason, you're like, "Oh, okay, that makes sense." Um, and then you're still alive and you're not and your user base will continue growing. So, that's kind of like the the steady path you need to be focused on staying on, which can be quite challenging, but yeah, they look like a really pragmatic team. Um, I'm definitely excited about their product and its roadmap. And, um, I mean, I don't from like even from a valuation standpoint, it seems like a fairly reasonable opportunity. I haven't looked at uh the market cap or FTV in a minute or even what their token allocation looks like, but um the they're definitely a strong build builders on Salana. Another one I want to bring up

though, another category that I think is kind of going a similar path, at least we're starting to see inklings of it, is on the launchpad side of things, Radium and its Launch Lab product. They didn't get a ton of traction with just the initial launch from, you know, their own team, just the Radium Launch Lab version of it. but they have since like begun promoting it as like a rebrand launch lab with your own identity similar to like a morpho vault style product. Um, and we've seen Let's Bonk.f fun kind of pop up as part of that and the community around it. Um, really supporting it.

Dan, if you have that data and you want to pull it up, we can talk a little bit there. But I think what we're really starting to see is like one, it's like a counter punch back to Pump Fun, right? Pump Fun, they launched their own native decks. They took away all that that volume that they were giving away to Radium for free. Um, and now Radium is fighting back and they're saying, "Well, we could just do our own Launchpad product." But they've taken it one step beyond the simple pump model. They've got some customizability to the bonding curves. You can change up some of the supply dynamics, but then also they're allowing like these other teams to stick their name and brand on top of, you know, a spun-off version of the of this like core primitive, if you want to call it that, um, and capture like a piece of

that upside. and then some of the fees obviously go back to Radium. Um, so it's I think it's interesting to just see like this modular kind of approach pop up in another area and we're seeing that with Launchpads. I totally agree there and I like last time I checked launch like pumps pump swap was still doing or pump was still doing like 100x the token launches that launch that radium was doing. But I think it's interesting that they're actually recognizing that it's important to own the end user and are finding ways to go to that direction. For instance, uh Launchlab has partnered with some like AI bots on on Twitter where you ask

the AI bot to deploy in a co a coin for you and that will deploy directly on launch on launch lab. So that can help like with uh distribution uh in that regard and I think like I completely agree with you. I hadn't thought it in that regard like modularity uh coming to launch to to launch pools but yeah it's a I think it's a it's an interesting development. Yeah. Yeah. It's an interesting model. Right. So they were they did two things I think that stood out from a um I don't know market structure standpoint if you will. One is they're pretty aggressive on incentivizing creators with a portion of the revenue generated. Uh so like the

idea of creator rewards. We see this with Zora as well. About 50% of the total uh fee that gets taken on Zorocoin trading volume goes back to the creators. Um and this kind of like the same model as well, right? If you launch coins you there's like a kickback basically. Um but that's that's one piece and the other piece is um the idea of it's like a launchpad for launchpads in some regard or like it's allows other people to come in take their distribution and plug it into Radium's back end uh and then bring those that activity to Radium which I find to be pretty interesting. So yeah, Bonk's definitely the bigger one of all the subgroups that I've kind of launched on it. Uh so if we like remove the actual Radium portion here, I mean yeah, you can see it's like basically just

Bonk. Uh which which makes sense. It feels like a very natural fit for the uh for the excuse me for the uh the Bon ecosystem, right? They've got the trading bot from the Telegram trading bot. They are a memecoin community. Uh so it's a natural fit and you know it seems it works pretty well. So right now the launch labs products doing about 3 to 5 million in volume per day. Uh which is down from a higher portion here. Um, but again, you still see on a percentage basis the uh Bonk tokens are are driving the most uh volume on this specifically.

Um, and yeah, it's down from it looks like it topped out about $40 million in total volume uh a couple days into the launch. Yeah, and I think pump fund, the pump AMM or pump swap is doing a couple hundred million in volume a day. So there's like maybe an order of magnitude or two in trading activity and and tokens created. But at the very least like you know I think Raven Radium has proven like in the immediate immediate term that there is a little bit of a level lever here to pull um in terms of like grabbing the distribution of various teams getting them to launch their own launchpad products and kind of run with that. Um we'll see what else

they have cooking. Maybe there's some other teams that uh can leverage this as well. Although we also know like Jupiter has the Moonshot stake and Moonshot has its own launchpad too. Um I don't know that they've really been like promoting that super hard. Maybe they've got some more things cooking behind the scenes on that one or maybe it's not a concern for them, but they're technically another competitor. Uh though we haven't seen much from them. Um yeah, good flag. That's an interesting No, that's a good flag. I haven't thought about them. I forgot about their Moonshot acquisition. It'll be interesting to watch that come to life. They've been heavy on the acquisitions. Uh they snagged up Drip as well, which Vibu is building. Um yeah, that's going to be interesting to see how they roll that into one product.

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accessible for everyone. Ledger's newest devices, Ledger Stacks and Ledger Flex, introduced the world's first secure touchcreens, making it easier and safer to manage your transactions and assets. Alongside Ledger Stacks and Ledger Flex, they have also launched the Ledger security key app, offering a safer alternative to traditional passwords and enhancing your digital security. Follow the link into today's show notes to get started with Ledger today. I guess another area where Jup dominates on Salana is per. They uh despite I think a relatively simple product there, right, there are still only three assets available for trade on on Jupiter Per.

Uh they dominate Salana's per trading volume. Um outside of them, we've got like Drift and a few others. Uh I'm curious if you guys have any strong thoughts here. It Carlos from what I understand like it seems the main consens consensus is that building a really good per product is going to require like doing some of that activity offchain or like a new chain or some other means of going about like getting greater scale because as valator set is permissionless you can't really have like opinionated ordering of transactions. So an issue there is that um you you don't really have like a good way to reduce toxic order flow and the

market structure the way it works today is that the taker always has like an advantage over the maker. So you're not really willing to provide like the tightest threads possible. So you always need like kind of a like an offchain component to provide the best liquidity or the best pricing possible. And that's why you see like products like hyperlquid dominate where you have like a permission validator set and you can uh order transactions much more uh efficiently and prioritizing cancels uh a lot better than in than in Solana today which is part of like the road map but it's not something that's like

immediate and will take a lot of time in my opinion and yeah in terms of like new developments I think it's interesting to see Jupiter like only having like three assets still like just BTC, ETH and Soul. Uh but I was looking at a report like by by Mark and an interesting thing is like if you look at Hyperlid 90% of the volume also comes from these trading pairs. So it makes sense that Jupiter like still dominates volumes despite them only providing like uh this these three trading pairs because I was one like of the opinion that a key like requirement for a pers

to succeed is to continually lease new assets and that doesn't seem to be the case with with Jupiter at least to dominate Solana purse volumes. I think that's a fair point. I I would imagine though that well I guess some of the value for Hyperlid is probably its its efficiency and you know you can trade at much greater speed than you could on on Jupiter per. But um certainly listing new assets is part of that. But I think you're right like this power law effect is always going to be a really big factor. Um though naturally like to appeal to like maybe lower volume or like these retail focused traders who might want to make use of the platform.

Um offering up some of those if you want to call them longer tail lower liquidity assets um for purpose trading is probably a little bit of a le lever there. Like we know for Hyperlid there's PvP trade um which is basically a Telegram bot but allows you to trade per um with you know your friends in a group chat um and that's you know they as a team have been pretty successful. I think they've they've done over 7 million in revenue since their launch last year. So um and that's on like a very low take rate like five bips or less depending on your tier or your level on the platform. So, um, there's definitely ways to make money on those lower things, but yeah, defin that power law effect at at the top level like BTC, ETH, Soul, you know, pick your top favorite assets. It's it's always going

to dominate the the spectrum, it seems like. Yeah, I guess like the counterpoint to this chart is this is exactly what the DEX landscape looked like two years ago. And as we talked about, someone came in with some new tech. One, and two, the market structure changed a bit where users were doing different things. Um, right, meme coins became huge. uh they weren't that big of a deal two years ago on Salana. Today they are. So that brought in pump fun and radium has been crushing it. And then the tech changed and we have these prop AMMs uh like Sulfi that have the power to shift the landscape themselves.

Um so that's I feel like that's the kind of the counter point here is if we had any any lessons learned as maybe Salana becomes a better place to build an order book that could change the landscape here. Drift's probably best positioned to capture that and maybe that's what would would shift the this the the distribution of this data. Yeah, I think that's a great point, Dan. And I know that uh I don't know how much of this is being talked about or if it's just like in GitHub discussions at the moment, but like ideas or like conversations about trying to um makes make some future upgrades to Salana to like maybe prioritize cancels um like change change how the chain prioritizes different types of transactions to make

this more feasible to like run an order book on chain. Um, and like you're saying, if that's the case, then like Jup would not necessarily be the winner there if you know if they're not looking to scale Jupyter Ps beyond what it looks like today. Yeah. I mean, they announced like the Swift uh protocol which is like kind of like runs an offchain auction like to provide the best pricing possible. And then in terms of Sena upgrades, I think Max Resnik at token 2049 uh talked about like switching turbine which is like Sena's block propagation system from single leader to multiler which I don't know like the

exact technical details but it would enable like the chain to prioritize certain types of orders at the application logic level. So you could prioritize for instance cancels over taker orders in a way that market makers will not be picked off and can now provide like better pricing. So I completely agree with that like the landscape can absolutely evolve a year from now two years from now and so can improve in a way that order books are now possible and per dexis can provide like the best experience possible. I'm also really excited in a way about Atlas like the ellipsus team is very very good and I I I think like technically we saw

what they were able to achieve in six months with Sulfi on Solena. So if they are able to control also the infrastructure with opinionated ordering of transactions with their atlas O2 I think they can do some very interesting stuff in in that camp. Love it. I think uh those are all the big categories that come to mind to me unless you guys have anything else. But I think maybe we can we go in reverse and close out and look at the big picture. Um kind of talk about where Salana is at now. I do want to pull this up. Uh I know you we pulled this data just to to show it, but uh we're continuing to see Salana like the ecosystem really dominate on the app revenue side of things like as a percent

of the like broader market of applications. Um obviously a big portion of that is a lot of the you know memecoin related trading activity um that was discussed. Pump fund has been a massive winner and continues to be uh a top application by revenues uh month over month. I think Ryan Connor's metric something about like 13 months of consistent like top one or top two uh application by total revenues. But either way, uh, this dominance has continued. Um, just it it makes you wonder like where we go from here, like what what's coming next. Is it just keep scaling

IBRL, more more revenues, but uh, you know, maybe take rates continue to compress a little bit, but if overall activity increases, uh, everything still continues to look quite profitable or at least revenue generating. Yeah, for sure. I mean for me application revenue on Sena has been impressive. Like for context, Sena flipped Ethereum as the leading chain by app revenue in June of last year and has retained that spot ever since. Today it accounts for almost like 50% of total app revenue across all chains. And one of the things that I find incredibly interesting is just the ratio between application revenue and rev. Uh so if you look at Rev and

compare it to app revenue, app revenue has increased a lot faster than Rev to a point where today SAN apps make $1.85 for every dollar generated in Rev. So almost two times uh more application revenue than real economic value or operator payments like for the people that maintain the network and and stakers and that wasn't the case like a year ago. A year ago uh Solan apps generated about 80 cents for every dollar in in revenue. So to me that highlights just like the increasing product market fit of Salana

applications and at the end of the day like Dan always says this but like uh businesses within an ecosystem are at the end of the day like the the the ultimate indicator of success for for a network. Yeah. I think the challenge for Salana like I don't know if you put me as stuck stuck me on the the foundation tomorrow like what I would try to be doing is diversifying away from memecoin trading and not diminishing it at all. I want to aggressively continue to scale that sector. Um I think it's a very important sector for blockchain but like you just need some diversity around there. And so one of the verticals I actually think is the most interesting for this um rwas are definitely interesting but I I think Bitcoin bringing Bitcoin onto your chain is

actually slightly more interesting. Um, so hear me out. Like, okay, what is an RWA really? It's a store of value, right? It's they're largely a dollar-based. Um, so there's you can definitely bring stocks on chains and things like this or tokenized, you know, series B equity would be a really interesting thing as well. That's a totally different category I'm thinking about. I'm thinking about like dollarized products and and Bitcoin. Um, so these dollarized products, they tend to be extremely low velocity. Uh, like you know, if you looked at biddover, it'd be incredibly low. um it's basically just Athena using it as its a backend for its yield product which is great. I think that's an important role you play within an ecosystem. When we think about generating rev or generating application revenue um it's just like a it feels like a slightly different dynamic where if you look at base today

about a third of all DEX volumes are driven by Bitcoin products largely CBBTC very natural interplay there. Uh wrap Bitcoin is launching on Salana I think this week or very shortly which is pretty interesting. I think they should make an aggressive push for CB BTC as well or anybody any other like large Bitcoin rapper. Yeah, just yeah to add context there like Coinbase CBTC launched last year on Sena and it has like around $270 million in market cap today. Uh I think it is almost as large as like Wormholes Rapid DC which has like uh $300 million in market cap on Sena. So those two are like the largest rap Bitcoin products. Like collectively

they make like I don't know like $600 million in market cap. Like one of the interesting things about Bitcoin DeFi on Sena is like it used to be huge before FDX collapse. FDX had like the so BTC wrapped Bitcoin and that at its peak was over a billion dollars in market cap but when FDX collapsed it well obviously went to went to zero and then there was a huge like trust that was lost on users and that rap bitcoin growth never recovered on Sena to where it was before. So I think that's like a like path dependency kind of thing where like that's one of the few areas where you really haven't seen a recovery to prefx

levels and you are seeing teams try to like uh recover that. So the other like small protocol that Dan was referring to I think is sus network which launched launched the CBTC product on Sena. It's kind of like a decentralized uh play on on Rap Bitcoin. Uh that has around like less than $20 million today in in market cap. So it's still relatively small, but they have launched like a threemon liquidity campaign with Camino uh to grow like onchain liquidity for C.

Uh but the rewards are are actually really really small. So I don't think they will be able to like really compete with the centralized rap Bitcoin providers. Uh but I I definitely agree with Dan that this is a huge area of growth uh for Solana DeFi potentially but more so for money markets. And so I was looking at this like I think last year and if you look at the way rap bitcoin is used across Ethereum for instance which is like the largest ecosystem for rap bitcoin today most of it is deployed on app and money markets as collateral because if you think like what do people want to do with their bitcoin they don't really

want to risk much like with their bitcoin holdings and so the the most natural thing for them to do is like just deposit them as collateral on a money market and will lever long the thing or just earn some yield on it. But beyond that, you don't really see a lot of use cases. So I I kind of actually disagree that that it would increase Sena's rev significantly because most of Solenas rep today comes from trading activity especially like for contentious transactions and and for for Bitcoin I just don't really I don't really see it that way. I I more see it like as a product that would be sitting on money markets but not like actively contributing to to the ecosystems like

real economic value. So, here's why I think it's a little bit different, right? So, a RWA, there is no arbitrage to be had largely. Um, it's basically just a dollar. But, Bitcoin is an extremely volatile asset that is also viewed as a store of value. So, you get the volatility aspect. And then if you have deep enough liquidity, you're immediately competing for uh BTC priced arbitrage. Um, every chain is kind of competing for that. It looks like Bass and Ethereum are kind of like leading the way there. um because there is no exchange to arb against on bitcoin right so like there actually is that aspect which rwas don't offer uh which is why I kind of find it a little bit more interesting and lumbard was the other protocol I was thinking about uh but I I

don't actually even know if they're launching on salana um but they're doing something in the bitcoin space as well um so yeah I think this gives you this like because it's viewed as a store of value and because it's also volatile it's like a very strange combination you don't really find in the wild it's a bit of this golden goose Um, so I don't know. I think it's a really interesting vertical that uh is largely underexplored across most chains because it's very hard to do. Um, most Bitcoiners don't really want to move their funds anywhere and don't care about like smart contracts and DeFi. So the question is like, okay, now we're over the last five months, the regime has actually changed quite a bit in that like, you know, the US is talking about like how Bitcoin is an important asset.

That has never happened before. This is arguably the one or two most important economies in the world. that changes things and maybe that does shift maybe not like the hardcore Bitcoiner perspective but some of the individuals that are already like interacting with blockchains today like okay yeah you know what if the US is doing it important economies are doing it why would I not do it um and then that kind of like scales in from there so that's one thing I'm yeah that's kind of the angle I was thinking about yeah it it would help um well maybe it would be good and bad in the same way but um you know at least with base Coinbase they're able to like very selectively built out a strategy here and and the growth of Bitcoin and CBBTC on the chain has been like a clearly has been a as part of a

broader strategy. You know, they've they're doing Bitcoin uh backed lending uh that's done via Morpho on base. So, they're kind of driving a little bit of a flywheel there by one, you know, you make rap bitcoin CBTC, put a bunch of it on base, then encourage your users to do some lending and and get involved in that that ecosystem a little bit. um which is a great strategy, but we don't have like, you know, there's no FDX anymore. Um that that's probably a good thing, but uh if one did exist, you know, they could attempt, you know, a similar strategy and and you know, really target assets and within the ecosystem like this. Um, but maybe from a different lens, Dan, because you mentioned like expanding beyond memecoins, I think it's kind of I like I agree with you, but I I I also think

it's a little bit funny and maybe even ironic to like share this chart and look at the growth of stable coin supply on Salana and point out that the massive like 2x spike back in January was fueled explicitly by the Trump token launch and associated token launches that just fueled a bunch of capital coming onto the chain to trade the the coin. So maybe all we need is or all Salana needs really if it's if it's a Bitcoin related thing um is one particularly exciting exclusive event that encourages a ton of people to you know pump some Bitcoin liquidity onto the chain or um you know make use of a new protocol and get some action. Yeah. Yeah. It's like stables and tok uh like dollar RWA products are like a really good underpinning of your

onchain economy. Uh there's no doubt about it, right? Like even just think about like a memecoin user, right? So they're actively trading. Um something happens like, okay, like I'm going to take my chip chips off the table. I got to go on a family vacation or whatever. Who knows? Um what are they going to hold? Either the native token of the the uh of the protocol or of the chain or stable coins. And if they're holding stable coins that like you actually give them this ability to do so, they don't have to incur slippage while they're trading in or out of it. Um it's it's a it's a very natural piece of the trading economy even especially on the the memecoin side as well. And then of course you're just fueling the ability to have lending activity and that underpins a lot of other economic

activity as well. So I definitely think they're important. Um and you're right. I think it's a pretty salient point to to point out what the giant candle on this chart was was driven by. Right. That is it is very true. Um yeah. I don't know. I'm just trying to like ration about RWAs as a whole. uh like it's they're they're obviously not bad in the context of like building an economy. There's no doubt about that. That's not what I'm trying to say. But like how good they are is the question I think is worth measuring, right? Like a lot of these deals are I don't know if there's incentives related to them, but it seems like you know they'll get parked on a random chain. Like Stellar doesn't do a ton of activity at all. It has a very meaningful amount of RWA issued on it. So like what does that

mean in practice? Is stellar more valuable? like like that's that's the question that I think we need to be thinking more critically about because when I look at a lot of these announcements and then look at the tokens on that chain they're just they are literally just sitting there and it's like okay that's you got to say you got the announcement you got the stamp of approval from like a large bank or a large you know like Apollo has tokenized a fund that's huge that's really important but what is it unlocking for the issuer and will they want to continue doing it um are questions that I don't think have clear answers to to today uh and so like what is the ultim benefit to the chain that wins that integration. It's it's a little bit unclear. Like yes, it's good and yes, you get the announcement, but like what

is what is that doing for your onchain economy is yeah, that's where I'm just a little bit hazier. And so when there's velocity around these things, it's very obvious, right? If there's velocity, they're probably using being used across DeFi. And it's like, okay, cool. People want to interact with it and can interact with it because that piece specifically, I think, has a little bit of like a it's got not a little bit, it has a huge regulatory headwind, right? If you bring equity on chain, there will be KYC and no DEX today will be able to allow the transfer of that asset and there will be ATS that need to come online and build build on top of blockchains so that to facilitate that trading activity and so basically every DEX is a loser. I think the winners are probably lending protocols um because you know even with like superstate

assets today uh you can whitelist certain smart contracts or programs uh that your assets can interact with and lending protocols can be on that list. dexes cannot be uh which is an interesting dynamic as well. So I don't know that's just I I think the RWA stuff sounds really really good from a high level and you start picking back the layers and you're like okay like where is the actual pocket about performance going to be and I think that's a harder question to answer but I think lending protocols are honestly the winners. Yeah, I think that's a really interesting take and I think I mostly agree with you. I think you could view it as that that this thesis of like payments being a loss leader like for blockchains and trading taking the majority of the value and I think RWAS

won't be beneficial in that way for chains until they are actively traded there like for price discovery and stuff like that. And you also have to think about from the point of view of the issuer like today if you're issuing something offchain and issuing like a twin onchain ju you're just adding cost like you're not actually incurring any benefit. I think we we need like to get to a point where people are issuing things directly on chain not like twins of the physical world and then actively trading that on chain. And that way you can actually get like a flywheel effect

for the for the blockchain because at the end of the day trading is where the majority of the value comes from from for Sena or for any other blockchain for that matter. You don't actually gain anything from idle capital just sitting there. I think that makes a ton of sense. It's a great point. Um maybe maybe the one last thought I have on it is like it opens up this question of you know when we get to the point where these things are are being issued natively onchain without some tradfi equivalent serving as the backbone i.e you know, in other words, in a future state where Trady is just directly using a blockchain or blockchain technology for the issuance process. Um, does that

happen on an Ethereum, a Salana or somewhere else? I think that's unclear. We're we're kind of like stepping our way into that future. You know, that's regulators are starting to talk about some of these things, right? stable coin bills, market structure bills, you know, Robin Hood is stepping its way in. You know, Black Rockck B and some of these other things, they're like they're stepping their toes in, right? A couple hundred million, even a couple billion is not very meaningful to asset managers with like trillions in AUM. So, um we're just really like super early stages of this stuff. So, but I I agree with you Carlos like it's going to be very a very different picture when things are being natively issued on a chain versus you know issued somewhere else some database

or some you know trady office and then get get a copy created on chain as well to act as an intermediary to to trade alongside other things that are happening on chain today. Yeah, I think we got a draft of the market structure bill just now. Actually, I in uh I in Unzour sent a sketchily named PDF into the group chat. So, I'm not clicking that, but I got to confirm this. Yeah, I think another thing is just who's buying these things in chain, right? Like who's actually like where do you see demand on chain for like I don't know like uh money like money markets.

Um way mark a note here. I I blanked out. What's the name of this thing? Uh like a T- bill. Like a T- bill. Yeah. Like like where where do you see on chain like demand for for treasury bills? Like if you look at the largest like tokenized treasury bill today is like black spittle. The largest buyer of that is Athena. So I I think that you can see some interesting like uh synergies like between like DeFi native apps being like buyers of like centrally issued like like T bills and like some interesting products that can come out of that that can increase like the relevance on chain.

Yeah. And that's like the I don't know the second order effect of having these assets, right? It's like no, Bidd's not super high velocity or high turnover, but maybe SUSD that builds on top of it is and maybe that's what provides the value, right? So, they're they're certainly good. I'm not like I'm not even trying to bash that at all, but um it's just interesting to kind of think about how they will drive value. And I guess it's like a a closing level thought. It's like, you know, Ethereum is now really focused on scaling and it has this like massive pool of capital, right? If you look at like RWA distribution, if you look at stablecoin distribution only, if you look at app TVL, defy TVL, they are dominating in all of these uh categories and now they're trying to back into the performance piece. And then somebody

like a Salana or Swap Atos or some of these newer chains are going the other way around and they've built the performance piece first and now you have to kind of like back into getting that capital. Both are going to be really really hard challenges to solve, but you kind of have like the opposite rotations happening and it's going to be interesting to kind of figure out where that line lies of how much performance is enough for Ethereum given its massive capital base versus how much capital is useful for Salana given its insane levels of performance. Um, I don't like those won't be the same line in my mind.

Uh, so that's like the really interesting question I'm trying to answer as well. I think that's a great takeaway. Uh before we close things out and before we do closing statements, one last uh shout out for Permissionless 0x10 link in the description. 10% off tickets. We want to see you guys there. We'll be there uh end of June. It's coming up. It'll be in New York. Dan, what do you want to say about Permissionless? I'll be there. Come drink some beers. Carlos, any thoughts about Permissionless? Your favorite thing? Um, I really want to get see Bokeacho live on that thing. Yeah. And I bet a ton of people in the Telegram also want to see Bacio live. So, uh, and if you're

not already in the Telegram, the link for that is also in the description. Be sure to join if you're an avid listener. Hop in there. We'd love to chat about all things markets. You can get more insights from all the Gigab brains that come on the pod. Um, poke them with questions or just post in the chat like most of us do. And maybe one shout out for the newsletter as well, the Zerx Research newsletter. Uh we put out content daily during the week. Um just some additional insights and thoughts on the markets. So um awesome. Thanks for coming on guys. This was super detailed and deep into the salon ecosystem. I'm sure Pepe Rodriguez will seriously appreciate that. If you guys have other thoughts about what we should be talk about talking about, what we're not talking about, let us know and uh we'll

we'll consider it. Awesome. Cheers. Awesome. Thanks for coming on, guys. [Music]