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Bankless: Airdrop frenzy may revive Solana DeFi ecosystem.

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Solana will face a tough competition in terms of protocol, liquidity, and user adoption.

Original Title: "Is Solana Airdrop Season Here?"

Author: Jack Inabinet

Translated by: Luccy, BlockBeats

Editor's Note:

On November 28th, Jito announced the launch of governance token JTO with a total supply of 1 billion, of which 90 million will be distributed in this airdrop, and the remaining 10 million will be distributed next year. Jito is a liquidity staking service on Solana, where users can deposit SOL into Jito's liquidity staking pool and receive JitoSOL. In addition to receiving staking rewards, users' JitoSOL will also accumulate MEV rewards.

As of now, Jito's TVL has approached 6.8 million SOL, with over 50,000 stakers. Bankless analyst Jack Inabinet delves into the rise of airdrops in the Solana ecosystem, discussing their potential impact on the Solana DeFi ecosystem and whether this signals a new phase of development for Solana.

The article also raises points about the impact of airdrops on TVL and token protocols, as well as the challenges Solana may face in competing with Ethereum, while pointing out some key issues for Solana's future development.

Solana Stimmy Szn has arrived!

At the beginning of this month, Oracle network Pyth and DEX aggregator Jupiter announced an airdrop plan, while Jito, the largest tokenless protocol platform and liquidity proof platform on Solana, announced its token on Monday.

There are three important projects announcing token airdrops to users. Will this wave of wealth influx be enough to inject vitality into Solana's DeFi ecosystem, especially given its total locked value (TVL) being drier than the Sahara Desert?

Today, we will delve into the impact of these airdrops and explore whether this is just the beginning of the Solana airdrop frenzy?

Underperforming TVL

Since 2023, market participants have been eager to buy SOL, but their greedy desire to raise the token price has not evolved into a desire to participate in Solana's DeFi ecosystem.

Although SOL has risen by 500% so far this year, its price growth has far exceeded that of TVL.

Solana's TVL priced in USD has increased by 200%, which seems impressive, but it is still below the pre-crash bottom line of $1 billion for FTX. This is also just a temporary solution for the TVL priced in SOL. Since the beginning of this year, the TVL priced in SOL has decreased by 45%!

Solana's Next Chapter

Top-tier Solana protocol plans to distribute tokens through airdrops to its most active on-chain users. As the newly acquired tokens circulate on Solana, the resulting TVL injection will help increase the valuation of the entire Solana ecosystem.

The arrival of airdrops on Solana may not result in superior price performance for TVL, as these two indicators are positively correlated, but it should exert upward pressure on both numbers and may be the force driving TVL growth in SOL valuation in 2024!

Blast's sudden rise demonstrates the ability of airdrops to attract TVL. This is an L2 project that offers "points" rewards to users who deposit funds into a multi-signature account before the mainnet launch in February. Despite having just launched last week and not yet releasing any products, Blast's TVL managed to briefly surpass that of Solana's TVL.

The arrival of airdrops is a key component in launching the potential Solana supercycle and is also one of the easiest ways to attract users to the chain!

Users of EVM chains are eligible to participate in Pyth's airdrop. However, to claim the airdrop, they must download a Solana local wallet to receive their Solana local assets, which can then be used in Solana local DeFi protocols. EVM recipients of the PYTH airdrop may represent a net new user for Solana!

Airdropping tokens also helps attract attention to projects. Reports on Solana's airdrops remind users and developers that there are cool applications on the chain. This has gone a long way in positioning Solana as a viable ecosystem and alternative to Ethereum.

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Main Points

"Solana Stimmy Szn" may herald the recovery of the Solana DeFi ecosystem, but this outcome is not guaranteed. Although some top projects may be preparing for large-scale airdrops, the number of successful and innovative Solana protocols that can conduct airdrops is few and far between.

Liquidity still remains on Ethereum, just as protocols like Blast can attract hundreds of millions of dollars in TVL with vague promises and questionable innovations based solely on air drops, incentivizing developers to build there. Therefore, Solana will face a tough competition in terms of protocols, liquidity, and users.

Due to its low-cost environment, global state machine, and ability to provide consensus at the speed of light, Solana promises to open up new application areas that are impossible on Ethereum. We hope they will arrive soon!

Although the hype cycle and wealth effect generated by airdrops may be enough to attract new ecosystem participants to join Solana and support key statistics, Solana must cultivate its own DeFi ecosystem and be prepared to implement various protocols for airdrops in order to succeed.

Perhaps airdrops will become a catalyst for another wave of the Solana protocol. However, unfortunately, the lack of depth of token protocols on the network currently greatly diminishes the benefits that airdrops could potentially bring to the Solana ecosystem.