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Three reasons to develop Defi on Solana

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Compared to developing Defi on Ethereum, Solana has advantages in both the underlying chain and the parallel programming model, and the development of Defi ecology has potential.

Three Reasons to Develop Defi on Solana

原文来源： Francium

Part I: Advantages of Solana Chain Bottom & NBSP;

Transaction Costs & NBSP;

The transaction costs of Ethereum have affected the normal use of Defi by users. A user needs to have a high capital volume if he or she wants to continue to reap fee benefits through a change in the liquidity offering range in Uniswap V3. At Gas of 30 Gwei, the cost of a transaction to provide liquidity is around $40 (assuming the price of Ethereum is $2000).

Solana costs 0.000005 SOL, or 0.017 cents, to complete a transaction. Most DEFI transactions ignore this cost.

Solana is able to offer such low transaction fees because of its designed throughput of 50K /s. Can support a large number of requests at the same time, without limiting user requests by raising transaction fees.

At present, the actual TPS of Solana mainnet is also dozens of times that of Ethereum

可满⾜⻓期扩展性需求

The intuitive improvements that scalability brings to users are reduced transaction fees and faster transaction confirmation. For an underlying chain network, that means it can support more applications and higher frequency applications.

For an app selection ecosystem, one of their concerns should be development/maintenance costs and user experience.

"It seems that no matter which scaling solution is more important, it can't be the instantiation of a whole (such as a single synergistic rollup). The consequences of Ethereum scaling are all heterogeneous. So, How should Coinbase bring over 50 million users to Defi? With such a large user base, one of the most important considerations is certainty. Any business of that size desperately needs certainty now and in the future. The opportunity cost of error and the cost of subsequent migration/bridging is enormous, and I think the only blockchain protocol that can answer this right now -- or in the next two years -- is Solana."

Part of Multicoin's article "How Technology Scalability Makes Social Scalability" is cited here to illustrate this point. If, when designing and implementing the protocol, you don't want to invest the limited energy of the startup team into the trivial work of bridging and so on, the three main reasons for developing Defi on Solana (most of the startup team of Defi is small), and you don't want to give users a separate user experience at Layer 1 and Layer 2, Then Solana is a good idea for them. If you can, leave scaling and concurrency to the underlying chain to deal with.

Network value

Composability is a core feature of the DEFI protocol. An ecosystem that can accommodate more projects in the future is also improving the resilience and volume of each DEFI project.

The current funding metrics on Ethereum and its Layer2/BSC will have a big advantage over other chains. The former is a collection of early decentralization and DEFI innovations, while the latter benefits from the user base and speed of the relevant CEX. What factors will affect the current pattern? The value of the network is expected to be one of them. The value of a network is generally thought to be proportional to the square of the number of users in the same network. If an underlying chain can provide a stronger user carrying capacity, then the value space of the network is larger, and there may be more combinable space.

decentralized

Decentralization gives DEFI a trusted base. Currently, there are 3919 Ethereum nodes recorded by Ethernodes.org (excluding unsynced nodes), and the consensus number displayed by Solanabeach is 750. The number of nodes is not a complete representation of the degree of decentralization, but with this number of nodes, you already have the trust base that most DEFI require, and the number of consensus nodes is growing rapidly.

Part 2: Advantages of the Solana parallel programming model

Solana adopts a programming model different from EVM system to achieve stateless transaction execution, which greatly improves the parallel processing ability of transactions. An EVM-compliant blockchain can be thought of as a single-threaded operating system, where transactions can only be processed serially one after another, rather than in massive parallelism. In Solana smart contracts, logic execution and data state storage are completely decoupled, and transaction execution is stateless. The execution logic (Program) of transactions is stored in executable accounts, and the data is stored in separate accounts. Each transaction is accompanied by the accounts that need to be read and written for the execution. As long as the accounts carried in the transactions do not conflict with each other, these transactions can be processed by Solana in parallel. It greatly improves the parallel processing ability of transactions. On Solana, one Dapp will not block the other dapps because of the high volume of transactions. Even within the same Dapp, transactions between users will not affect each other as long as reasonable account allocation is adopted.

可以通过⼀个 Token 设计的例⼦感受这种编程模型带来的好处。就像 ERC20 ⼀样，Solana 也有⾃⼰的 Token 标准，叫做 SPL，由于所有满⾜ SPL 标准的 Token 都使⽤相同的逻辑，因此在 Solona 上只需要通过⼀个账⼾来存储执⾏逻辑（token_program），然后可以通过这个 Program 发⾏新的 token，每个 Token，都有⼀个对应的 Account(TokenMint) 来存储持有代币基本信息（供应量、铸币权限等），然后每个 token holder 还被分配⼀个对应的 token account 来记录持有⼈的持有数量的信息。在这样的 token 模型中数据的存储都是分开的，每种 Token，每个 Token 持有⼈都对应着⼀个独⽴的账⼾。在这样的模型中，即使有⼀万笔转账交易要处理，只要交易涉及的账号是不⼀样的，那么就可以并⾏进⾏。

Part III: Solana Defi's potential for ecological development

After a period of rapid development, Solana Defi Ecology has achieved a certain scale: Formed the layout of multiple segments including AMM DEX, limit order book DEX, stablecoin trading protocol, wallet, prophecy machine, algorithmic stablecoin, lending protocol, derivatives, Launchpad, options, Yield Farming, asset management etc. It also opens up the possibility of future innovative combinations between Solana's DEFI protocols.

Image credit: Solani ANS&NBSP;

Some of these include ecosystems of long-term imagination. Products such as:

· SERUM of ecosystem level positioning, as well as the order book trading protocol on the whole chain;

· Raydium protocol integrating order book liquidity and AMM liquidity;

· Provide Bonfida, the SERUM front end, which includes modules such as robot trading strategy, API and on-chain domain name;

· Pyth, a prophecy machine that provides traditional asset quotes and Crypto's original assets;

We see the long-term future of DEFI as being more sophisticated and specialized and more capital efficient, as the active liquidity management features offered by Uniswap V3 and the recent innovative protocols based on Uniswap V3 are also moving in this direction. Solana's advantages in underlying performance, especially its iterative ability to scale, provide a solid foundation for further refinement and efficient capital management of Defi.

Of course, there is still great potential and room for progress in the development of DEFI of Solana. The difficulty of Rust's ecological construction, the much-criticized user experience, and even the acceptance and value empowerment of Solana's currency in the ecosystem need to be improved. But essentially these are still solvable issues, and what really gives protocol developers confidence is the long-termism and down-to-the-ground disengagement of the eco-core builders and enablers, and the broader vision of a decentralized Wall Street that puts aside the competing landscape of Ethereum.

At the same time, Solana can also open up the imagination space for DEFI's new cycle of innovation: in the history of technology development, product and mechanism innovation are formed under certain constraints and frameworks, just as Ethereum's POW mechanism developed mechanisms such as AMM as the optimal solution. Solana's POH consensus mechanism, concurrent programming model, and UNIX-like operating system's on-chain account system will provide a new base and space for product innovation breakthroughs under the current situation of exhaustion and rollback of various DeFi on the Ethereum compatibility chain. Therefore, if Solana Defi Ecology can successfully form a pattern of direct competition with Ethereum in the next few years, there is a high probability that there will be a development path different from today's Ethereum compatible chains, and there is a high probability that there will be innovative product mechanisms that adapt to the characteristics of the underlying chain and ecological genes and come into the view of users.

In conclusion we see, the actual development experience, and in the process of cognition and judgment of the future, let us believe in Solana this decentralization is fully keep evolution, technical route, clear overall strategy does not get rich quick, ecological chain and the base of these elements, there will be more and more developers to create long-term value.