Over the past few months, a number of new products have been launched which bring traditional investment instruments to the global DeFi markets. These include xStocks (which make fractional stock investing in companies like Tesla, SpaceX etc possible), tokenized treasury products from players like Blackrock and Ondo and dual listing at venues like the Kazakhstan stock exchange. The uptake of these products has been phenomenal with xStocks reaching over $100Million in AUM a few weeks after launch. These assets, coupled with other instruments like Real Estate, Private Credit etc. are known as Real World Assets and their growth on-chain has been phenomenal. Tokenised RWA value on public blockchains had reached US$35 Billion by mid-2025.

The size and rise of these asset classes show a few clear emerging trends:

1. there is abundant liquidity in the hands of a new class of internet native investors that is chasing uncorrelated returns

2. a large amount of capital is available on-chain but much of it is forced to flow into volatile assets.

3. as with other investors, there is an inherent flight to quality that is currently limited by the availability of high quality assets on-chain

In light of the stellar growth in this market, in this post, we dive deep into a potential radical idea: leveraging global DeFi Pools to drive foreign investment in Indian capital markets.

The opportunity for India

For India, this convergence of factors – large pools of internet-native capital, proven blockchain infrastructure, and a clear trend toward tokenized finance – presents a strategic opportunity. By offering tokenized, regulated Indian investment instruments to global investors, India can channel the speculative capital currently tied up in risky internet capital markets into funding for the Indian economy’s growth.

There is an inherent attractiveness in Indian assets which would be attractive for these global on-chain investors:

• Higher Yields: Indian government and corporate bonds traditionally offer higher interest rates than developed market bonds. For instance, a 10-year Indian G-sec might yield ~7-8.5% in INR; even hedged for currency or issued in USD terms, it could deliver 5-6%, beating most developed market yields. Infrastructure bonds or securitized loans might offer even higher returns. Global stablecoin holders and crypto funds would find these yields attractive, especially if accessible without friction, which is not possible currently.

• Diversification and New Markets: Many crypto investors have little access to emerging market investments. Tokenized Indian equities or bonds provide diversification – a way to gain exposure to India’s growth story entirely through on-chain means. This is a new avenue to invest in India beyond ADRs and foreign institutional channels, potentially tapping a younger, tech-savvy, DIY investor class globally.

• 24/7 Markets and Instant Settlement: Even sophisticated investors (hedge funds, family offices) might be drawn to on-chain markets for the benefits of around-the-clock trading and T+0 settlement. If an Indian bond is tokenized, it can trade 24/7 on global liquidity pools – an investor in London or Singapore can rebalance holdings on a Sunday or during Indian holidays, which is impossible in traditional markets.

• Memecoin to Mainstream: For the more speculative traders, having regulated assets available on-chain creates a path to “mature” their portfolios. A trader who made profits on a memecoin might rotate into a tokenized stock or bond to secure those gains in a safer form without leaving the crypto ecosystem. Currently, the jump from crypto to a traditional investment (like buying an Indian bond via a bank) is huge – involving off-ramps, paperwork, and unfamiliar processes. If instead that bond is just another token a click away, capital that cycles out of hype can plough into real investments.

The potential advantages of attracting such capital pools for the Indian issuers are manifold and include:

1. increased foreign investment in Indian enterprises and infrastructure,

2. lowering of government bond yields due to rising demand, an effect already being seen in the US treasury markets.

3. deeper liquidity for Indian markets, especially in areas like GSecs and green bonds, which have been a focus area for the government.

4. positioning India as a forward-looking financial hub.

Key Challenges

The design of such a system will pose some key challenges, many of which are specific to regulated capital markets while some of them are specific to India:

1. KYC and AML regulations: Investment in regulated assets will require thorough checks on investors and their backgrounds to comply with global as well as India specific norms. These will be especially relevant during on-ramp and off-ramp phases of the investment.

2. Investor Qualifications and Caps: Certain instruments may be accessible only to qualified investors or up to a certain investment cap. The system design should enforce such rules at a fundamental level to minimize chances of any breach/ workarounds.

3. Foreign Exchange controls: India’s capital account is only partially convertible and there are FEMA regulations linked to transfers and profit repatriation. The system design should be able to handle these rules.

Apart from the above, the system design should also be able to handle features like confidentiality (required by high value investors), corporate actions (interest, splits, bond calls) and real time monitoring.

Many of the large blockchains, like Solana and Ethereum have developed the ability to address most of these issues in a robust manner. However, their implementation models may vary dramatically (ex: token level at Solana vs smart contract level at Ethereum). It will be necessary to implement these regulations in a standardised manner to reduce complexity for investors and ensure security. Let’s see how this could work in practice.

Workflow for a sample asset

We highlight the overall flow and design for this system using the example of sovereign Green Bonds issued by RBI . Green bonds represent an ideal asset for such this use case for India due to the following reasons:

1. It is an asset which the Government has to issue and place at regular intervals due to its Paris Climate Treaty commitments.

2. It is a high quality sovereign asset offering high levels of security and stable yields.

3. However, it has lower yields than vanilla bonds (‘greenium’) which makes it less appealing to traditional institutional investors. In fact, the last issue of Bonds had to be devolved to the underwriters due to lack of demand.

4. It requires transparency to prevent risks associated due to greenwashing.

We now deep dive into each of the elements in the workflow to highlight the design considerations and product requirements.

Pre-investment: Asset issuance, investor validation and distribution

The above diagram highlights the pre-investment workflows that would need to be performed for an Indian regulated asset to access DeFi capital:

1. Multiplicity of wallets and token standards: Due to its very nature of being open and permissionless, global DeFi capital is likely to be distributed across multiple chains, wallets and liquidity venues, each of whom will have their own standards for KYC and AML. A neutral connector could help standardise and enforce these rules across all the chains

2. Capital control rules and allocation guidelines: Regulators and issuers can work together to create a common standard for rules to be implemented across all the participating DeFi ecosystems to ensure compliance with capital controls and allocations.

Post-investment: Trading

To ensure accessibility to the largest possible DeFi capital pools, post allocation trading should be permitted in venues where liquidity already exists. With compliance built in at the token level, existing DEXs or CEXs can set up regulated liquidity pools or trading venues where wallets with the necessary approvals will be able to connect. These trades will happen within each chain’s ecosystem.

Post-investment: Corporate Actions

Corporate actions can include activities like interest payments, bond calls, stock splits and dividends. Post trading, it is possible that a number of new wallets with same permissions can hold the token. The connectors can act as a layer between the issuer and the asset holders by abstracting away the compliance and distribution complexities across chains while ensuring that issuers have a single protocol/ window that they can interact with.

Post-investment: Redemptions

At the point of redemption, the asset issuer will have to provide acceptable stablecoins/ CBDC/ fiat in lieu of the asset which will be returned to the issuer and burnt. Similar to the pre-investment issuance phase, there is a large amount of coordination and and compliance checks across wallets and networks that will have to be performed by a suitable, neutral, intermediary protocol. At the time of redemption, the protocol will undertake pre-offramp checks for capital controls, KYC, AML, along with providing a compliant off-ramp methods for the issuer.

Designing this system on Solana

As the hub of Internet Capital Markets, Solana could be the natural home for this idea. As a Layer 1, it has almost all of the performance, robustness and compliance built in that would be required by regulators.

1. High throughput and low latency with instant finality. Solana already does upwards of 3K TPS in production with 900+ globally distributed validators, constrained only by demand. It can already do 65K TPS and has a clear path to 1M TPS and beyond that includes a new consensus mechanism (Alpenglow).

2. Transaction cost & their predictability. Chains like Solana have undertaken a significant amount of engineering and business model innovations to ensure that fees are stable and predictable. Local fee markets on Solana ensure predictably low fees so that spikes on certain parts of the network don’t impact the rest of the network. Visa highlighted this in their paper as a major reason why they prefer Solana over other public networks.

3. Compliance. Public chains like Solana provide features like Token Extensions which provide transfer hooks which give the token issuers control over which wallets can interact with their token and how tokens/ users interact. Additionally default account state configures and enforces token account permissions. This means that all capital controls, KYC and AML required by the regulators can be embedded at the token level.

4. Robustness. The decentralised nature of blockchain networks ensures that the network is able to function even when parts of it go down. During the recent AWS outage networks like Solana continued to function while many centralised Web2 services went down.

Conclusion

The advent of DeFi and large pools of internet native capital creates a unique opportunity for India to access new sources of capital while deepening its capital markets. The design of such an initiative will require careful consideration to ensure the widest possible access and ease of use. A standardised protocol can help connect the disparate capital pools and markets together through its protocols and standards thereby ensuring that regulated issuers can access DeFi capital in a safe and seamless manner.

Thanks to Farhat Kadiwala for the amazing graphics and the poignant cover image!

The reaction within the Crypto community has been one of confusion with many theories being thrown around, but unfortunately most of the people have reached for familiar explanations centered around two key themes:

1. The Compliance Hypothesis: As crypto becomes more mainstream, the web2 giants have realised that further institutional adoption will be drive by offering more compliant rails that account for KYC, AML etc - essentially more safety and comfort for risk averse institutions.

2. The Value Capture Hypothesis: Regulatory clarity has the potential to increase the crypto TAM manifold with retail investors and Web2 giants with their refined B2C playbooks have clearly identified this as an opportunity for extracting maximum value (and making up for lost time) by creating new rails that can be ‘owned’.

However, if you look at the fine print and subsequent announcements, including Google’s AP2, it becomes quickly clear that those reasons matter, but only at the margins. The more compelling and simple explanation is: agentic payments, i.e. money movement initiated and orchestrated by AI Agents at machine speed, under conditions governed by code. If you are a Web2 firm at the bleeding edge of AI and payments, who believes that Agents will become a mainstream computing pattern, you operate on three core assumptions:

• Agentic payments do not fit on today’s payment infrastructure

• Which necessitates an agent-native settlement fabric

• And that means starting at L1

Let’s dive a few levels deeper into the core hypothesis, the supporting assumptions, and see which of them hold true in this fast changing world of AI, blockchain and crypto.

Hypothesis: It’s all about Agents

… and that is very true

The argument around regulatory compliance and value capture stand on shaky grounds.

The ‘Compliance’ argument falls apart very quickly when you realize that the existing card network and bank rails already have heavy compliance baked in. On the crypto side, exchanges as well as public chains like Solana have compliance built in to such an extent that anyone who really wants to create a compliant app does not have to worry about the lack of features or primitives. We have reached a stage in the adoption curve where addition of more compliance will neither sway untapped retail users nor will it encourage crypto-averse geographies like China and India to come on board.

The ‘Value Capture’ hypothesis also fails basic economic smell tests. As many analysts have shown in the past, “owning the rails” by operating a Layer 1s is not a particularly lucrative economic activity, especially when accounting for the security and decentralization costs. This is one of the reasons why most Layer1s are treated as public utilities and structured as such via Foundations. It seems unlikely that these large Web2 corporations with highly profitable business models and strict accountability to public markets would be incentivised to launch potentially unprofitable L1s. The alternative would be to launch a token that gets valued very highly by crypto markets which is again something corporations won't or can't do due to multiple factors, including reputational risk.

So what is forcing the creation of these new base layers? All signs seem to point to the emergence of a new actor; autonomous software that must hold, reason about, sequence and settle payments in a programmable setting with next to negligible human intervention. The gap in the market is quite clear:

1. Legacy incumbents have designed their workflows for human interaction for various aspects like authentication and dispute resolution. Agents need a substrate that they can program based on model behavior, not simply access. Visa, for example, is trying to meet where they are. It has announced plans to connect ‘Agents’ to its network (the card, the auth, the chargeback model). Alternatively, infrastructure providers like Cloudflare are introducing models like ‘pay per crawl’ for AI Agents. While these initiatives should work in theory, it’s still oriented around human first rails and dispute workflows. Agents need a substrate that they can program, not simply access.

2. Modern incumbents like Stripe, that provide an API layer over legacy rails that cannot fundamentally change and thereby cannot solve the new Agentic requirements. Stripe’s own arc over the past 18 months is instructive: it reintroduced stablecoin acceptance, brought stablecoin accounts and treasury to its stack and finally decided to pilot Tempo as an L1 focused on machine-scale micro flows. The direction of travel is clearly towards programmable money transfer that can invoke agents directly.

Why is this happening now?

While the timing is curious, it is not unexpected for anyone observing the cambrian explosion in the AI and blockchain space over the past few years:

1. Agents are getting real (or real-enough). While there are debates about their success rates, nobody is questioning their utility anymore. Discussions are increasingly moving towards addressing edge cases and building better tools. Enterprises are building autonomous assistants that need payment rails and the vast economy of AI Agentic startups are realising that without native payments, many of their business models do not reach their full potential.

2. Stablecoins became normal and part of the legacy financial system. Circle, Stripe and others made on-chain money mainstream. Programmable, 24x7 money with instant finality and settlement that was abstracted from crypto volatility became common, allowing businesses to get the benefits without the volatility.

3. Governments got in the game and the rules got clearer with the US (Genius Act), Europe (MiCA), Hong Kong, Singapore, BIS and others leading the way. This paved the way for enterprising and visionary leaders within the legacy Web2 companies to think creatively about this technology and apply it to the emerging world of AI.

Whether all aspects of this innovation are required is a question that we will debate in the subsequent sections, but it is without a doubt that today’s payment rails break for agents and the time is right to propose a solution.

Today’s rails break for Agents

To understand the motivations clearly, it is important to understand why today’s legacy payment rails break for Agentic applications:

1. The first reason is latency and cadence. Legacy rails like ACH settle in batches whereas faster payment systems operate on ‘deemed approved’ models throttle volumes to retain network stability. Agents are expected to operate with high volume of microtransactions and millisecond feedback loops that have to sync with LLMs’ time to first token rates.

2. PINs, One Time Passwords or any 2FA authentication for legacy payment rails are designed for humans. Almost all banking and payment systems place a premium on the last stage being executed by a human. It is impractical to expect, for example, a deep research agent looking to micro-transact $1 for 50 academic papers across multiple websites each to request PIN entry from the user for each and every transaction.

3. Reversibility and dispute resolutions are still human-centric. Card networks and payment systems are built for long chargeback horizons that in many cases require human and legal intervention. While that may work for the current payment ticket sizes, high volume micro-transactions conducted by Agents will require programmatic resolutions.

4. Programmability is not a first class citizen of the legacy payment systems. It is usually bolted on, usually by another layer leading to limited features, reconciliation or security issues.

5. Micropayments are discouraged, and many times are tagged as fraudulent transactions. Try making multiple similar, small payments to a merchant. This makes probabilistic or streaming payments highly unreliable.

6. Identity, custody and payment decision delegation are mostly delegated to humans or human run processes. Identity is established by manually logging into systems. Custodial decision making requires humans in the loop and delegation is based on complex rules mapped to humans, monitored by IAM systems.

7. The backbone of the payments rail is mainly designed to cater to banks and their systems, using them as a hub for clearance of transactions, rather than as a decentralised system for machines interacting with them directly. This introduces bottlenecks in the system, limiting the true potential of agentic payments.

Agentic payment rails of the future need to be reimagined

It is clear that to overcome these issues, the Agentic payment stack needs to be reimagined with a focus on key principles:

1. Deterministic near instant finality with payments seamlessly integrated into the Agent’s or LLM’s workflow

2. Native programmability, that can accept both deterministic and probabilistic output from LLMs and act on them as per well defined business rules within the Agentic workflow.

3. 24x7 access to the payment network with instant settlements and on demand access to payments.

4. Fully transparent audit trails that can be read easily by machines, alongside humans. This is required as the volume of Agentic micropayments is expected to be orders of magnitude larger than human payments.

5. Targeted and programmatic sharing of data between machines that comply with local regulations while maintaining necessary levels of privacy without human intervention.

6. Decentralised and peer to peer machine transactions to avoid bottlenecks and single points of failure.

7. Automated dispute resolution between machines, possibly enabled by LLM to LLM communication, without any human intervention. This will be especially relevant for micro and streaming payments where the cost and time involvement of humans will not justify the amount that is being disputed.

To people that understand blockchain technology, all the above points will seem strangely familiar. It is quite clear that many of the requirements of Agentic payment systems have been available with most of the leading blockchain networks for quite some time now.

We already see the beginnings of this with the launch of the x402 Foundation by Cloudflare and Coinbase on 24 Sep ‘25, specifically targeting AI Agents using Cloudflare’s Agents SDK or MCP Servers. While still rudimentary, the service is already being designed with deferred payments for dispute resolution and aggregated accounting. It is also instructive to note that Coinbase is the founding partner and the x402’s Sandbox is on the Base Testnet, indicating a native role for crypto in any future Agentic Payments network.

So all this begs the question, is it worthwhile to build a new Layer 1 to solve this, apparently solved, problem?

Is building new Layer 1 truly necessary?

… probably not.

The above analysis clearly identifies that legacy payment rails are not suitable for Agentic payments and that primitives like programmability and atomic settlements that are part of blockchain networks will be critical in the Agentic economy. But this still does not answer whether a new layer 1 is required. To answer that we must look at the existing networks.

Over the course of the past decade, public blockchain networks have invested significant amounts of time and engineering efforts to address some of the challenges identified above. Much of that has been necessitated by the fundamental nature of blockchains but many have been driven by the need to improve the experience for the community and unlock new use cases. We use Solana as an example below to highlight how some of the requirements of Agentic AI systems are addressed by existing public blockchains.

1. High throughput and low latency with instant finality.

   Solana already does upwards of 3K TPS in production at near 100% success rate with 1000+ globally distributed validators, constrained only by demand. It can already do 65K TPS and has a clear path to 1M TPS and beyond that includes a new consensus mechanism (Alpenglow). Alpenglow will also reduce the Solana block finality time from 12.8s to 150ms. At 150ms, Solana’s block finality time will be less than Time to First Token of all major LLMs (between 200-300ms), ensuring a near seamless handover from Agentic tools to LLMs which will go a long way towards improving the user experience.

2. Programmability.

   Blockchains like Solana are designed with smart contracts and programmability at their center making them ideal for Agentic workflows. Solana focuses on high performance by separating state and logic and using efficient instruction sets with Rust and C, which are widely adopted, safe and battle tested languages. The architecture provides fine-grained control and flexibility through its instruction-based approach, allowing for custom and specialized programs.

3. Transaction cost & their predictability.

   Agentic payments need to reside on networks where fees are low, and predictable such that a large number of microtransactions or streaming transactions can happen. Chains like Solana have undertaken a significant amount of engineering and business model innovations to ensure that fees are stable and predictable. Local fee markets on Solana ensure predictably low fees so that spikes on certain parts of the network don’t impact the rest of the network. Visa highlighted this in their paper as a major reason why they prefer Solana over other public networks.

   

4. Compliance.

   Public chains like Solana provide features like Token Extensions which provide transfer hooks which give the token issuers control over which wallets can interact with their token and how tokens/ users interact. Additionally default account state configures and enforces token account permissions. This means that the Agent can be programmed such that the money is transferred to only those service providers that meet the minimum KYC threshold, set by the Agentic program or LLM driven threshold. Since the rules are built in at the asset level into the protocol itself and not the app layer, even a rogue agent working on probabilistic data cannot violate them later.

   

5. Dispute resolution and peer to peer payments.

   Mature blockchain networks like Solana specific peer to peer payment protocols like Solana Pay, which not only bypass centralised intermediaries which can act as a bottleneck but also implement semi-automated dispute resolution mechanisms where smart contracts govern the process, with human in the loop oracles (called as judges) voting on the specific issue within agreed upon parameters. Many ecommerce vendors have successfully integrated such solutions and these protocols seem to have the fundamental building blocks required to modify these implementations for Agentic systems. Other Web3 providers like Circle have also built automated, custodial and non-custodial dispute resolution mechanisms for multiple blockchains.

   

6. Privacy.

   Blockchains like Solana allow for private transfers at a token level which protects the confidentiality of users balances within a transfer, as well as hides the transaction amounts. This can ensure that critical transactions remain confidential which is important for Agentic business applications, where leakage of data by autonomous agents is a big concern.

These features seem to clearly indicate that the basic infrastructure required for Agentic payment already exists and creating a new Layer 1 would be an overkill. So what form would an Agentic payment system take?

AI Labs, not payment companies, will be leading the charge for Agentic payments

If legacy payment systems are unsuitable for Agentic payments and creating Layer 1s is an unnecessary overhead, who leads the charge to create the Agentic payments layer? To me, the answer seems to be the AI Labs themselves. The bigger AI labs, like OpenAI and Anthropic will soon figure out that the natural home for an Agentic payment system lies within their APIs and they will build a native Agent aware payment system, powered by one of the open public blockchains. This setup makes sense for the AI Labs due to multiple reasons:

1. Replicating the infrastructure, compute and security that public networks have built up over past years will not be easy and frankly unnecessary.

2. Second, big tech already has a centralisation and trust problem and building on top of open systems would be a great way to mitigate user adoption barriers.

3. Building on open public systems will provide AI Labs the freedom to price their offerings and capture value without being tied into the pricing model of payment players and the legacy payment rails.

4. Lastly, a large part of the payments business is dependent on securing regulatory approvals at multiple stages, which may not be core to the business of the AI Labs.

An AI Lab driven payment be a full stack redesign, but rather a middleware consisting of three main modules:

1. A Stripe like orchestration layer to handle inputs and outputs from the Agent to blockchain based payments network

2. A policy management engine defining automation, spending and human in the loop rules

3. Fraud detection and explainability layer

Each of these modules will have further submodules to handle specific granular functions.

This model strikes a fair balance between the regulatory burden that may dissuade AI Labs from getting into Agentic payments and the control, design and economic upside that a potential payments layer may provide.

Conclusion: The war will be about Agentic Payments, Layer 1s are a distraction

At the end of the day, the so-called “return of the Layer 1 wars” isn’t really about blockchains fighting for dominance. It’s about the fact that our payment systems were never built for autonomous software, and AI agents are forcing that truth into the open. The compliance story feels like a rerun, and the value-capture story doesn’t stand up to the economics.

What’s left is the simple reality: agents need payment rails they can actually use, with features like speed, programmability, transparency, and machine friendliness. And that doesn’t require reinventing the wheel with shiny new L1s. The primitives are already out there in mature public networks like Solana.

What’s missing is a layer that makes those primitives safe, explainable, and usable in the context of agent behavior. That’s why the action will shift to the AI labs. They’re the ones closest to the agents, the ones that understand the workflows, and the ones with the incentive to build middleware that handles orchestration, governance, and trust. So let the giants keep announcing new chains. The real battleground isn’t at the base layer. It’s at the interface between AI agents and money, and that’s where the next wave will be won.

Props to Farhat Kadiwala for designing the cover image.

However, in spite of the current gloom and doom, the fact remains that:

1. 100+ countries accounting for over 90% of global GDP are trialing CBDCs.

2. BIS, the Central Bank to the Central Banks, is putting its weight behind CBDCs.

3. Non-US governments are becoming increasingly wary of ‘stealthy dollarisation’ via stablecoins and want to offer their citizens regulated alternatives that provide the same technological benefits.

4. The stablecoin ecosystem, after doing almost everything right, seems to be falling prey to the fragmentation with the launch of new L1s with limited value.

So it would be unwise to write off CBDCs just yet. In this post we argue that to bring CBDCs back in the game, Central Banks need to make ONE fundamental change and that is to change the distribution model — from current closed loop ecosystems built on proprietary platforms to open-source ecosystems like Solana and Ethereum.

Having worked on CBDC projects with various governments across the world for 7+ years and now having explored the world of public blockchains, I think the answer lies in bringing together the best of both worlds.

Before we dive in, let’s recap the basics of CBDCs. If you are familiar with them, feel free to skip to the next section.

CBDCs are sovereign money

Central Bank Digital Currencies are effectively cryptocurrencies that are issued by Central Banks, mostly on private ledgers, with their backing. They are more similar to cash than bank deposits as they represent a claim on the Central Bank (similar to banknotes in your wallet) as opposed to deposits which represent a claim on your bank (remember kids, if your bank goes kaput, barring a bailout, the max money you can get is the amount ‘insured’ as per your country banking laws - in short, very less).

Whereas regulated stablecoins today are privately issued and restricted to being payment instruments backed by short term securities or cash equivalents. Therefore CBDCs can have more far ranging use cases and less risk compared to privately issued stablecoins.

If you want to dive into this rabbit hole further, look at BIS’ wonderfully named “money flower” and read the accompanying paper.

So how do Central Banks get CBDCs into the hands of consumers and businesses? There are two major ways of doing so:

1. Direct Distribution: in this model, the CBDC is distributed directly by the Central Bank to the consumer’s wallet. Due to the obvious complexity and operational overhead of this model (the Central Bank will need to have a list of all the wallets), it is rarely used.

2. Hybrid Distribution: Central Bank distributes the tokens to the banks who then send it to consumer’s wallets. Think of this as similar to the ATM model where the Central Bank issues cash to the banks, who load up the ATMs from where we get our money. This is the model preferred by Central Banks. Unfortunately, this model has also failed to provide the necessary boost to CBDCs with the three largest CBDCs in the world, Digital Yuan, eRupee and eNaira stuck at low single digit percentages of total money flows.

However, there is a third approach that can alleviate this problem.

CBDCs are trapped on private ledgers

Today, most CBDCs are issued using the hybrid model and on private blockchains (incl. private forks of public chains like Ethereum). This decision has its roots in Central Banks’ fear of public blockchain and crypto from the 2018-2020 era. They feared that building and issuing CBDCs on public networks will lead to loss of control on issuance and thereby on Monetary Policy and also facilitate the entry of bad actors into the system. There was also an assumption that open crypto networks and protocols were a fad that would eventually die out.

However, history played out differently. Public blockchain networks have gone mainstream with over $1.5Tn in value locked (excl. bitcoin) and many of these public chains transact more than Visa and Mastercard on a daily basis. They have built up a truly decentralised network of validators/ stakers which make the network robust, avoid single points of failure and prevent control by a single actor.

Money, at the end of the day, is a game of network effects. The more places your money is accepted the more it is likely to be adopted - a principle that public chains have understood very well.

In retrospect, this single decision to distribute CBDCs on private networks has played a major role in limiting the uptake and adoption of CBDCs. A new private network, harms adoption in many ways:

1. It requires all parties (banks, merchants etc) to put up new blockchain infra

2. It requires consumers, already burdened with multiple payment methods like credit cards, debit cards, faster payments, bank transfers, crypto etc., to set up another app/ wallet. Especially for older and less tech savvy users, this is a significant roadblock to adoption.

3. An even more complicated problem exists for cross border transactions, arguably one of the strongest use cases for CBDC. We dive into this in a separate section.

The cross border transaction problem

Cross border transactions are one of the strongest use cases of CBDC, especially for emerging economies that are in the long tail remittance corridors. CBDCs have the potential to:

1. Lower costs by bypassing correspondent banks and SWIFT networks.

2. Lowering settlement times through instant value transfer and atomic settlement.

With each country building their CBDC on their own platform, there will be hundreds of incompatible networks that will require Bridges and interoperability protocols to transact with each other. Two countries operating on incompatible networks require one custom bridge. For 195 countries that’s 18,915 bespoke integrations (NC2). Each integration/ bridge can take months to operationalize due to the technical complexities and the bureaucracy involved. This will not only add costs and delay roll outs, but also create a far more fragile, error prone and hack prone system.

Instead of trying to set a new standard, relying exclusively on consortiums or private blockchains, CBDCs would be better off on public networks.

With Public Networks, these interoperability concerns are immaterial as the largest public networks have global reach and the global developer community has already taken care of the interoperability concerns. CBDC living on public chains therefore can move across borders seamlessly, only limited by the programmable logic embedded in the tokens.

However, Central Banks are right to argue that the issuance of CBDCs needs to be controlled carefully by them to prevent monetary policy and financial stability risks and they must also be distributed in a compliant manner. Fortunately with the technology and tools available with public chains today, it is possible to create a product that balances the need for control at the issuance layer with wider distribution. In the following section we design a product that balances these two requirements to create a winning CBDC product.

Issuing CBDCs on Private Networks but distribute on Public Chains

To understand how this works, we need to take a deeper dive into the mechanics of CBDC issuance and distribution. Let’s break it up into steps:

Step 1: CBDC Issuance and redemption in a closed network

CBDCs are issued by the Central Banks ‘on demand’ when commercial banks deposit bonds with the Central Bank and place a request for CBDC. The Central Bank then mints the tokens and transfers them to the wallet owned by the Bank, to be further distributed to consumers. At the minting stage, various rules may be applied to the token that may influence its behavior (ex: max number of transfers, burn rules etc). This process looks something like this:

The minting happens on the CBDC platform and is recorded on the Core Banking system of the Central Bank which is something traditional like an Oracle Flexcube or Quantum Central Banking System.

While it is tempting to suggest that this process be conducted on a public chain, it is not advisable to modify this system for various reasons:

1. Issuance is the sole prerogative of the Central Bank and best handled on a single ledger integrated well with their IT systems.

2. The primary distribution of CBDCs should be limited to a select few regulated financial entities banks who have been vetted by the Central Bank and can deposit the collateral that is required.

3. Similarly, in the redemption leg of the CBDC lifecycle, where a Commercial Bank asks the Central bank to redeem CBDC for the original collateral (fiat or bond) - it is advisable to do this in a closed network so that the transaction does not have any impact on the monetary policy.

4. From a security perspective, it creates a ‘airgap’ between the core infrastructure of the Central Bank and distribution infrastructure that is exposed to public networks and may be subject to attacks.

5. Lastly, Central Banks may wish to ‘burn’ CBDCs for their monetary policy/ financial stability objectives. This should be a controlled activity within this network to avoid adverse impacts on the market.

Step 2: CBDC Distribution via open public network

Currently most Banks distribute CBDCs to their own wallets, which are specialized for CBDCs and have limited reach. Activating each wallet requires multiple steps, from downloading the application to setting up the wallet, managing keys and undertaking KYC/ AML once again. It also puts additional strain on commercial banks' resources, which have to ensure that the new infrastructure is production ready and secure.

There is little incentive & too much of an overhead for banks to distribute CBDCs compared to their vast suite of existing products. On the other hand, public networks have demand for a stable settlement asset and already have:

1. Wallets that are available with millions of users,

2. Hundreds of apps serving real customers and generating revenue

3. Users who have already completed KYC, that can be extended to CBDCs

4. Battle tested security features

It follows that to ensure that CBDCs reach their true potential, Banks should build bridges or implement interoperability protocols to open Web3 ecosystems and distribute the CBDCs to existing wallets, DeFi apps, payment companies, etc. The modified issuance and distribution process flow can be summarised as below:

Once transferred to this ecosystem, the tokens would look like any Web3 asset and move across that ecosystem seamlessly across the world with the same levels of security and control, which we explore in the next sections.

CBDCs on public networks can open up many new use cases

A CBDC issued by a Central Bank and launched on a public network can enable a large number of use cases:

1. CBDCs that were earlier locked into a limited ecosystem can now be used for all web3 native applications, driving up usage and demand. Ex: CBDCs can now be used across DePIN applications or DeFi lending protocols.

2. Existing Web3 capital can move seamlessly into CBDCs enhancing their demand and opening up new use cases in where regulated capital is required. Here we show a holder of a Web3 token like Solana moving into CBDC first and then into a government bond that is either issued natively on chain or as a ‘digital twin’.

   

3. Money can seamlessly move across borders due to the global nature of Web3 infrastructure. This will make cross border use cases truly seamless. CBDCs can now be transferred across all countries and on/ off ramped as per local regulations and requirements of the user.

4. Programmability, finality and all other properties can be inherited by CBDCs on public chains ensuring that purpose bound tokens, or limits can be easily implemented.

Lastly, we come to the issue of control, rules and compliance that are important and central to most regulators and the major reasons holding back the launch of CBDCs on public chains. As we show in the next section, most of these concerns are addressed with most modern chains.

Permissioned assets on Public blockchains can be 100% compliant

Technology for all the major public chains have evolved to such an extent that most of the common objections from regulators can be easily handled. Below I highlight some of the key considerations for regulators along with examples of how Solana solves those problems.

KYC

Token Extensions provide transfer hooks which give the token issuer (in this case the Bank) control over which wallets can interact with their token and how tokens/ users interact. Additionally default account state configures and enforces token account permissions. This means that the Bank’s distribution system can be programmed such that the CBDC is only transferred to those wallets that meet the minimum KYC threshold. The real unlock is that this applies even to secondary transfers. Since the rules are built in at the asset level into the protocol itself and not the app layer, even a third party app cannot violate them later.

Throughput

A major concern for Central Banks and governments is the ability for public networks to handle the transaction volumes required by nation scale payment systems. For example Visa and Mastercard have the capability to process up to 22,000 TPS at peak loads, while India’s UPI currently handles 10,000 TPS with an eventual goal of handling 100,000 TPS at peak. Solana already does upwards of 3K TPS in production with 1000+ globally distributed validators, constrained only by demand. It can already do 65K TPS and has a clear path to 1M TPS and beyond that includes a new consensus mechanism (Alpenglow), multiple validator clients (Firedancer, Mithril) and a new fibre network (DoubleZero) along with tons of software level improvements like local fee markets, priority fees, SWQoS, BAM, ACE, etc.

On and off ramps

The infra for these already exist through Liquidity Pools and Market Makers. Additionally, new regulated public infra can be created by the banks (via swaps between the Central Banks) for such transactions, in case they need to happen in the regulated space for any particular reason. I envisage that over the course of time, liquidity and issuance will migrate to chains that have deep and low cost infrastructure built for such conversions.

Capital Controls for emerging markets

Capital controls are similar to transfer limits for tokens. An intelligent system design combining token transfer limits with Token Extensions and Default Account States, can ensure that specific wallets are limited in the amount of CBDC that can remit abroad.

Privacy

Blockchains like Solana allow for private transfers at a token level which protects the confidentiality of users balances within a transfer, as well as hides the transaction amounts. This can ensure that critical transactions remain confidential which is important for enterprise adoption.

Liquidity fragmentation across chains

Over the past few years, liquidity has concentrated across a few chains, however there are still 20+ chains with viable liquidity. A major concern of the Central Banks is the liquidity fragmentation that may happen across these chains. These issues, while relevant are not major concerns:

1. Protocols like Wormhole facilitate seamless interoperability between chains, allowing users the flexibility of moving their assets as per their requirements.

2. Over time liquidity will aggregate into a few networks and Central Banks will only have to support those

Transaction cost & their predictability

One of the major concerns is the fluctuating gas fees for transfers in public networks that can make it prohibitive to transfer assets. A solution to this problem can work in many ways:

1. Gasless transactions, where the banks and financial institutions pay for the transaction fees to drive adoption.

2. Alternatively, the transaction volumes will gravitate to the lowest cost chains like Solana due to sheer market forces.

3. Local fee markets on Solana ensure predictably low fees so that spikes on certain parts of the network don’t impact the rest of the network. Visa highlighted this in their paper as a major reason why they prefer Solana over other public networks.

The Road Ahead for CBDCs lies with public blockchains

CBDCs haven't lost the race for the ‘Future of Money’, they are just stuck in the wrong lane. As we show above, by moving from walled-off private networks to open public blockchains, Central Banks can give CBDCs the same reach and network effects that made stablecoins explode, while addressing all of the concerns that have held them back . Done right, this shift could make CBDCs useful in everyday life, power cross-border payments, and plug straight into the growing Web3 economy.

Building payment infrastructure on Solana requires understanding how to properly index blockchain data for centralized applications. Whether we’re building a centralized exchange (CEX), crypto gateway, or e-commerce platform, indexing is the foundation that enables us to track user deposits, process withdrawals securely, and maintain accurate balances.

This comprehensive guide covers everything we need to know about Solana indexing, from basic concepts to advanced security considerations for production systems.

What is Indexing?

Indexing means copying over the state of a blockchain to a Web2 system. In the context of Solana, it involves extracting specific transaction data from the high-throughput blockchain and storing it in traditional databases like PostgreSQL or MongoDB.

The goal isn’t to copy the entire blockchain — that would be expensive and unnecessary. Instead, we focus on indexing specific addresses or transactions relevant to our application. For example, we might want to track:

• All transactions to our exchange’s deposit address

• Activity on specific liquidity pools

• Transactions involving particular token contracts

• User deposits and withdrawals

The Solana blockchain processes hundreds of transactions per second since Genesis, generating terabytes of data. Our indexing system needs to efficiently filter this stream to capture only the transactions we care about.

How to Index: Yellowstone & Geyser

The most robust approach to Solana indexing is using Yellowstone, built on top of the Geyser plugin. These tools allow us to subscribe to real-time blockchain events as they happen.

Understanding the Architecture

When validators on the Solana network receive transactions and create blocks, they can run additional processes (plugins) that extract and forward specific transaction data. Yellowstone provides a gRPC interface to these plugins, enabling us to:

• Subscribe to specific accounts or programs

• Filter transactions based on our criteria

• Receive real-time updates as transactions are confirmed

Available RPC Providers

Several providers offer Yellowstone services:

• Triton: Created Yellowstone, offers premium indexing services

• Helios: Competitor with their own indexing tools

• Quicknode: Provides RPC and indexing infrastructure

• Alchemy: Web3 infrastructure provider

Pricing and Access

Free Yellowstone servers exist (like parafi.tech) but with limitations—typically only allowing subscriptions to predefined accounts like the vote program. For production use, expect to pay:

• Shift.io: ~$200/month for one connection

• Titan: ~$1000/month for premium access

• Custom validators: Exchanges often run their own validators with Geyser plugins

The Problem with Naive Payment Flows

Before diving into proper indexing solutions, let’s understand why simple payment flows fail. Consider a basic e-commerce site selling t-shirts for 0.5 SOL:

Broken Flow:

1. User sends 0.5 SOL to our address

2. User’s client gets the transaction signature

3. Client forwards the signature to our backend

4. Backend verifies the signature and ships the product

Critical Problems:

1. Lack of Atomicity (Client Crash) If the user’s client crashes after step 1 but before step 3, the money is sent, but our backend never knows. The user loses their SOL with no product shipped.

2. Transaction Sniping (Impersonation) An attacker can monitor our payment address, grab any transaction signature, and claim it with their own session cookie before the real user can. Our backend has no way to verify who actually sent the payment.

The Solution: Memo Program + Indexing

Solana’s Memo Program (MemoSq4gqABAXKb96qnH8TysNcWxMyWCqXgDLGmfcHr) provides the solution. This program logs arbitrary strings on-chain, allowing us to attach identifiers to transactions.

Secure Architecture:

1. Frontend requests to make a purchase

2. Web2 Backend generates a unique identifier (random number or user ID) and returns it

3. Frontend constructs a transaction with TWO instructions:
   system_program::transfer to send SOL to our address
   memo_program call with the unique identifier

4. User signs and sends this atomic transaction

5. Indexer (Yellowstone client) sees the transaction and parses the memo

6. The processor uses the identifier to credit the correct user

Implementation Example:

import {
  Connection,
  Keypair,
  LAMPORTS_PER_SOL,
  SystemProgram,
  Transaction,
  sendAndConfirmTransaction
} from "@solana/web3.js";

import { createMemoInstruction } from "@solana/spl-memo";

// Connect to Solana cluster
const connection = new Connection("http://localhost:8899", "confirmed");

// Create keypair for the fee payer
const feePayer = Keypair.generate();

// Request airdrop
const airdropSignature = await connection.requestAirdrop(
  feePayer.publicKey,
  LAMPORTS_PER_SOL
);

// Confirm airdrop
const { blockhash, lastValidBlockHeight } = 
  await connection.getLatestBlockhash();
await connection.confirmTransaction({
  signature: airdropSignature,
  blockhash,
  lastValidBlockHeight
});

// Create transaction with transfer and memo
const memoInstruction = createMemoInstruction("Hello, World!");
const sendSolana = SystemProgram.transfer({
  fromPubkey: feePayer.publicKey,
  toPubkey: Keypair.generate().publicKey,
  lamports: 0.5 * 1000_000_000
});

const transaction = new Transaction()
  .add(sendSolana)
  .add(memoInstruction);

// Sign and send
const transactionSignature = await sendAndConfirmTransaction(
  connection,
  transaction,
  [feePayer]
);
console.log("Transaction Signature: ", transactionSignature);

Why This Works:

• Solves Atomicity: The indexer runs independently and will always see confirmed transactions

• Prevents Sniping: Payment and user identifier are locked together in one atomic transaction

• Cost-Effective: We can use simple RPC polling instead of expensive Yellowstone for single-address indexing

Required Memo Extension for Token Accounts

For enhanced security with token transfers, Solana offers the Required Memo extension. This ensures all incoming token transfers must include a memo.

Creating Token Account with Required Memo:

import {
  TOKEN_2022_PROGRAM_ID,
  getAccountLen,
  ExtensionType,
  createInitializeAccountInstruction,
  createEnableRequiredMemoTransfersInstruction,
} from "@solana/spl-token";

export async function createTokenWithMemoExtension(
  connection: Connection,
  payer: Keypair,
  tokenAccountKeypair: Keypair,
  mint: PublicKey,
): Promise<string> {
  // Create account instruction
  const accountLen = getAccountLen([ExtensionType.MemoTransfer]);
  const lamports = await connection.getMinimumBalanceForRentExemption(accountLen);

  const createAccountInstruction = SystemProgram.createAccount({
    fromPubkey: payer.publicKey,
    newAccountPubkey: tokenAccountKeypair.publicKey,
    space: accountLen,
    lamports,
    programId: TOKEN_2022_PROGRAM_ID,
  });

  // Initialize account instruction
  const initializeAccountInstruction = createInitializeAccountInstruction(
    tokenAccountKeypair.publicKey,
    mint,
    payer.publicKey,
    TOKEN_2022_PROGRAM_ID,
  );

  // Enable required memo transfers instruction
  const enableRequiredMemoTransfersInstruction =
    createEnableRequiredMemoTransfersInstruction(
      tokenAccountKeypair.publicKey,
      payer.publicKey,
      undefined,
      TOKEN_2022_PROGRAM_ID,
    );

  // Send transaction
  const transaction = new Transaction().add(
    createAccountInstruction,
    initializeAccountInstruction,
    enableRequiredMemoTransfersInstruction,
  );

  return await sendAndConfirmTransaction(
    connection,
    transaction,
    [payer, tokenAccountKeypair],
  );
}

Transferring to Required Memo Account:

const message = "Hello, Solana";

const transaction = new Transaction().add(
  new TransactionInstruction({
    keys: [{ pubkey: payer.publicKey, isSigner: true, isWritable: true }],
    data: Buffer.from(message, "utf-8"),
    programId: new PublicKey("MemoSq4gqABAXKb96qnH8TysNcWxMyWCqXgDLGmfcHr"),
  }),
  createTransferInstruction(
    sourceAccount,
    destinationAccount,
    payer.publicKey,
    transferAmount,
    undefined,
    TOKEN_2022_PROGRAM_ID,
  ),
);

await sendAndConfirmTransaction(connection, transaction, [payer]);const message = "Hello, Solana";

const transaction = new Transaction().add(
  new TransactionInstruction({
    keys: [{ pubkey: payer.publicKey, isSigner: true, isWritable: true }],
    data: Buffer.from(message, "utf-8"),
    programId: new PublicKey("MemoSq4gqABAXKb96qnH8TysNcWxMyWCqXgDLGmfcHr"),
  }),
  createTransferInstruction(
    sourceAccount,
    destinationAccount,
    payer.publicKey,
    transferAmount,
    undefined,
    TOKEN_2022_PROGRAM_ID,
  ),
);

await sendAndConfirmTransaction(connection, transaction, [payer]);

Deposit Architecture Patterns

Pattern 1: Memo-Based Deposits (Recommended)

All users send funds to a single address with unique memo identifiers:

Advantages:

• Simple to implement and maintain

• Cost-effective indexing (can use simple RPC polling)

• No private key management complexity

• Perfect for most applications

Process:

1. User requests a deposit

2. Backend generates a unique seed/nonce, stores it in the database as ‘pending’

3. Frontend creates a transaction with transfer + memo containing the seed

4. Indexer monitors a single address and processes transactions

5. Processor matches memo to database record and updates user balance

Pattern 2: Unique Deposit Addresses (Binance-Style)

Every user gets their own unique deposit address:

Advantages:

• Familiar to users from traditional exchanges

• Clear separation of user funds

• Easy to track individual user activity

Disadvantages:

• Complex private key management for millions of addresses

• Requires fund consolidation (“sweeper”) process

• Higher gas costs for moving funds between addresses

• More complex indexing (must monitor many addresses)

The Sweeper Problem

When using unique deposit addresses, funds get scattered across thousands of wallets. A sweeper process must periodically consolidate these funds:

1. Monitor all user deposit addresses for incoming funds

2. Calculate gas fees needed to move funds from each address

3. Send SOL to addresses that need gas for token transfers

4. Sweep funds from deposit addresses to the main treasury

5. Timing sweeps during low gas periods for cost efficiency

This complexity makes memo-based deposits preferable for most applications.

Withdrawal Architecture and Security

Withdrawals are the most critical and dangerous operations in any centralized crypto platform. Once funds leave our control, they cannot be recovered, making security paramount.

The Withdrawal Problem

When a user wants to withdraw 100 SOL from their 400 SOL balance:

• The database shows that 400 SOL belongs to the user

• The actual SOL sits in our centralized “hot wallet”

• We must atomically reduce the user’s database balance AND send a blockchain transaction

• Any failure in this process can result in lost funds or double-spending

Naive Withdrawal Flow (DANGEROUS):

app.post('/withdraw', (req, res) => {
  // 1. Check user's balance (400 SOL)
  // 2. REDUCE balance in DB (set to 300 SOL)
  db.balances.update({ userId: 1, currency: 'SOL' }, { $inc: -100 });
// 3. Get MPCs to sign withdrawal transaction
  const signature = MPC1.sign() + MPC2.sign() + MPC3.sign();
  // 4. Send transaction to blockchain
  connection.sendTransaction(signature);
});

Critical Problems:

1. Database Before Blockchain

If we reduce the balance first, but the blockchain transaction fails (network issues, old blockhash), the user loses their funds in the database, but the money never leaves our wallet.

2. Blockchain Before Database

If the blockchain transaction succeeds but the database update fails (DB crash), the user receives their 100 SOL but still has 400 SOL in their account — they can withdraw again (double-spend).

3. Race Conditions

Multiple simultaneous withdrawal requests could all check the same balance, all see sufficient funds, and all proceed — allowing withdrawal of more funds than available.

Robust Withdrawal Implementation

Queue-Based Processing

The solution is using a message queue system (like Kafka) for sequential processing:

1. API Endpoint validates the request and places it in the withdrawal queue

2. Single Worker process pulls requests one by one:

• Checks and locks the user’s balance

• Creates and signs a transaction

• Sends transaction to blockchain

• Updates the database on confirmation

• Acknowledges the queue message

Idempotent Withdrawals

To handle worker crashes, we must make withdrawals idempotent (safe to retry):

Critical Insight: Store signature BEFORE broadcasting

async function processWithdrawal(withdrawalRequest) {
  // 1. Create withdrawal transaction
  const transaction = createWithdrawalTx(withdrawalRequest);
  
  // 2. Get MPC signatures
  const signature = await getMPCSignatures(transaction);
  
  // 3. STORE signature in database BEFORE broadcasting
  await db.withdrawals.update(withdrawalRequest.id, { 
    signature: signature,
    status: 'signed'
  });
  
  // 4. NOW broadcast to blockchain
  await connection.sendTransaction(signature);
  
  // 5. Wait for confirmation and update status
  await confirmTransaction(signature);
  await db.withdrawals.update(withdrawalRequest.id, { status: 'completed' });
  await updateUserBalance(withdrawalRequest);
}

If the worker crashes after storing the signature, a new worker can:

1. Check if the signature exists in the database

2. Query the blockchain to see if the transaction was confirmed

3. If confirmed, just update the database status

4. If not confirmed: safely create a new transaction

Advanced Security: Defending Against Insider Threats

Attack Vector 1: Stolen JWT Secrets

Threat: Malicious insider or hacker obtains JWT secret key, can forge user cookies, and call the withdrawal API.

Mitigation: Multi-Factor Authentication (MFA)

• Withdrawal API requires a valid OTP sent to the user’s email/phone

• Even with stolen cookies, the attacker needs access to the user’s communication channels

Attack Vector 2: Internal System Bypass

Threat: Malicious developer with server access bypasses public API entirely, directly calls internal MPC functions.

Mitigation: Cryptographic Handshake Between Browser and MPCs

1. Key Generation: Upon login, the user’s browser generates an ephemeral public/private key pair

2. Key Registration: Using MFA, the browser registers the public key directly with each MPC server

3. Request Signing: For withdrawals, the browser signs the request with the private key

4. Verification: MPCs verify the signature against the registered public key before signing the blockchain transaction

This ensures that even with full backend access, attackers cannot forge withdrawal requests without the user’s private key (which never leaves the browser).

Implementation Example:

// Browser-side: Generate and register keys
const keyPair = await crypto.subtle.generateKey(
  {
    name: "ECDSA",
    namedCurve: "P-256",
  },
  true,
  ["sign", "verify"]
);
// Register public key with MPCs (after MFA verification)
const publicKeyJWK = await crypto.subtle.exportKey("jwk", keyPair.publicKey);
await registerKeyWithMPCs(publicKeyJWK, otpToken);
// Sign withdrawal request
const withdrawalRequest = { amount: 100, address: "...", userId: 12345 };
const signature = await crypto.subtle.sign(
  { name: "ECDSA", hash: "SHA-256" },
  keyPair.privateKey,
  new TextEncoder().encode(JSON.stringify(withdrawalRequest))
);
// Send signed request to backend
await fetch('/withdraw', {
  method: 'POST',
  body: JSON.stringify({ request: withdrawalRequest, signature: signature })
});

Multi-Party Computation (MPC) for Fund Security

Modern exchanges secure their hot wallets using MPC clusters instead of single private keys:

MPC Architecture:

• 3–5 MPC nodes each hold a “share” of the private key

• Threshold signing requires a majority (e.g., 3 of 5) to sign transactions

• No single point of failure — compromising one node doesn’t expose funds

• Geographic distribution of nodes for additional security

MPC Workflow:

1. Withdrawal request validated and placed in the queue

2. Worker process creates an unsigned transaction

3. Transaction sent to the MPC cluster for signing

4. Each MPC node validates the request and provides a signature share

5. Shares combined to create the final transaction signature

6. Signed transaction broadcast to the blockchain

Proof of Reserves: Building Trust

Leading exchanges are implementing Proof of Reserves to demonstrate they hold sufficient funds to cover user balances. As highlighted by Backpack’s recent announcement, this involves:

Core Components:

1. Daily Balance Attestations: Cryptographic proofs of all user balances

2. Merkle Tree Inclusion Proofs: Users can verify their balance is included in the total

3. External Audits: Third-party verification of reserve calculations

4. Real-time Reconciliation: Continuous monitoring of asset vs. liability balance

Implementation Considerations:

• Physical Balances Only: Include assets that can be “touched” on-chain (available balances, open orders, unborrowed lends)

• Margin Risk Management: Over-collateralized borrows must be factored into reserve calculations

• Fiat Complications: Traditional bank deposits require special handling (deposit tokens)

• Perpetual Futures: Real-time P&L settlement automatically included in reserves

Cost Optimization Strategies

Cheap Indexing for a Single Address

For applications using memo-based deposits, we can avoid expensive Yellowstone subscriptions:

// Simple polling indexer
async function pollForTransactions() {
  const signatures = await connection.getSignaturesForAddress(
    ourDepositAddress,
    { limit: 50 }
  );
  
  for (const sig of signatures) {
    if (!processedSignatures.has(sig.signature)) {
      const transaction = await connection.getTransaction(sig.signature);
      processMemoTransaction(transaction);
      processedSignatures.add(sig.signature);
    }
  }
}
// Run every 20 seconds
setInterval(pollForTransactions, 20000);

This approach costs nearly nothing compared to $200–1000/month Yellowstone subscriptions.

When to Use Expensive Indexing

Reserve Yellowstone/Geyser for scenarios requiring:

• Multiple address monitoring (unique deposit addresses)

• Real-time processing (high-frequency trading, liquidations)

• Program-wide monitoring (DeFi protocol indexing)

• Cross-chain arbitrage (sub-second transaction processing)

Production Deployment Checklist

Infrastructure Requirements:

• Message queue system (Kafka/Redis) for withdrawal processing

• Database with proper indexing on user_id, transaction signatures

• MPC cluster for secure transaction signing

• Monitoring and alerting for all critical processes

• Geographic redundancy for indexing infrastructure

Security Measures:

• MFA is required for all withdrawal operations

• Browser-MPC cryptographic handshake implemented

• Regular security audits and penetration testing

• Incident response procedures documented

• Key rotation procedures for MPC nodes

Operational Procedures:

• Daily proof of reserves generation

• User balance reconciliation monitoring

• Withdrawal queue monitoring and alerting

• Regular sweeper execution (if using unique addresses)

• Gas fee optimization for blockchain operations

Conclusion

Building a robust indexing infrastructure on Solana requires careful consideration of security, cost, and operational complexity. The memo-based deposit approach provides an excellent balance of simplicity and security for most applications, while proper withdrawal architecture with MPC security and queue-based processing ensures funds remain safe.

Key takeaways for implementation:

1. Use memo-based deposits unless we have specific requirements for unique addresses

2. Implement proper withdrawal queues with idempotent processing

3. Secure hot wallets with MPC clusters and cryptographic handshakes

4. Consider proof of reserves for building user trust

5. Optimize costs by avoiding expensive indexing when simple polling suffices

The landscape of centralized crypto infrastructure continues evolving toward more transparent, verifiable, and secure systems. By implementing these patterns correctly, we can build applications that provide the user experience of centralized systems with the security guarantees that approach decentralized protocols.

Written with ❤ by Prapti for the Solana community.

1. Introduction

2. Tooling Evolution on Solana

3. Anchor and Rust Foundations

4. Python and Solidity Support Offerings

5. Frontend SDKs and Wallet Integration

6. RPCs, Indexers, and Dev Infra

7. Local Testing and Simulation Tools

8. Account Abstraction and Smart Accounts

9. Real World Adoption (Gaming, DePIN, Consumer Apps)

10. Tooling Ecosystem Map

11. Community-Led Tooling and Grants

12. Limitations and Pain Points

13. Future Roadmap and RFPs

14. Conclusion

15. References

1. Introduction

A couple of years back, building on Solana wasn’t easy. It was fast, but there weren’t enough tools to guide you. Rust was powerful, but it was hard to learn; the documentation was scattered, and debugging was painful. If you wanted to build something, you had to push through a lot on your own.

But fast-forward to 2025, it’s a whole different vibe.

Now, you’ve got a growing list of frameworks, SDKs, and infra tools tailored to different dev styles. You can write Solana programs in Rust, Python, or even Solidity. You can simulate mainnet on your laptop, use plug-and-play SDKs for wallets and NFTs, and deploy apps with the help of battle-tested CLI kits, dev dashboards, and powerful RPCs.

And that’s showing up in the numbers, too. Solana became the #1 blockchain for new developers in 2024, with over 3,200 monthly active devs in 2025 and a retention rate above 70%.

In this deep dive, we’ll break down the full stack, including tools, infra, community, and gaps, and show why this is one of the most exciting ecosystems to build in right now!

2. The Tooling Evolution (2020–2025)

When Solana launched in 2020, it came with raw power, namely fast block times, low fees, and parallel execution. But building on it was a real grind.

The earliest tools were basic:

• The Solana Command Line Interface (CLI), introduced in 2019, was the primary entry point for developers. It supported basic functions like deploying programs, generating key pairs, managing accounts, and interacting with clusters. It remains a foundational tool in the Solana dev workflow even in 2025.

• The SPL Token Program, launched in 2020, enabled developers to issue fungible tokens and NFTs. It provided the core token logic but had limited customization. Developers had to work around its constraints to support complex use cases.

• The game started to change with the launch of Anchor, which simplified Rust development drastically. It reduced boilerplate, added helpful macros for structure and security, and generated IDLs (Interface Description Language) for easier client integration. Anchor quickly became the de facto framework for serious Solana development.

• Around this time, tools like Solana Playground (solpg) also gained traction. It was a browser-based IDE that helped devs experiment and deploy without a full local setup, especially during hackathons.

• From 2022 onwards, Solana’s dev stack started opening up to non-Rust developers. Tools like Seahorse (Python) and Solang (Solidity) helped onboard devs from other ecosystems. Mucho CLI was introduced to streamline local workflows, while LamportDAO provided a web IDE, technical content, and grants to support early-stage builders.

• By 2024–2025, Solana’s tooling matured into a full-stack platform. Umi and Kinobi enabled smooth frontend-to-program integration. Squads v4 brought smart account infra and multisig workflows. Tools like Helius, Surfpool, and Pinocchio tackled RPCs, local mainnet simulations, and account abstraction. Even SPL itself evolved, and Token Extensions introduced features like confidential transfers and interest-bearing tokens.

3. Anchor and Rust Foundations

If there’s one tool that truly defines how developers build on Solana, it’s Anchor.

Before Anchor, writing smart contracts in Solana meant working directly with low-level Rust. Developers had to manually handle accounts, manage serialization, set up security checks, and deal with a lot of boilerplate code.

Anchor framework changed that!
It introduced macros that automated common patterns, enforced safe coding practices, and removed much of the repetitive setup. One of its biggest contributions was generating IDLs (Interface Description Language). This was the Solana version of Ethereum’s ABI, which made building frontend integrations much simpler.

The result was better code safety, faster development, and more structured programs.

Anchor quickly became the default framework for Solana development. By 2023, most serious on-chain programs and most of the applications (DAOs to DEXs) were being built using Anchor.

Its GitHub repo today shows 4.4K+ stars and 1.6K forks, reflecting high adoption and active contribution from the dev community.

Despite the rise of Python (Seahorse) and Solidity (Solang), Anchor remains the most stable and widely-used tool for writing Solana programs in 2025. Its ecosystem is backed by strong community support, ongoing updates (e.g., LazyAccount memory optimization in 2025), and deep integration with Solana dev infra like Kinobi, Umi, and Surfpool.

That said, learning Rust is still a barrier for many & comes with a steep learning curve. Anchor makes it more manageable, but developers still need to understand Rust fundamentals like ownership, lifetimes, and borrowing.

In short, Anchor and Rust remain the gold standard for secure, production-grade smart contract development on Solana. The rest of the tooling stack is largely built around this foundation.

4. Python and Solidity Support

While Rust and Anchor remain the dominant combo for Solana development, the need for accessibility led to alternative language support — most notably Python and Solidity. These tools are still maturing, but have played a key role in onboarding new devs into the ecosystem.

4.1. Seahorse: Python for Solana

Seahorse is a framework that lets developers write Solana smart contracts in Python syntax. Under the hood, Seahorse compiles to Rust and generates Anchor-compatible artifacts, meaning you can write in Python but still tap into Anchor’s safety and structure.

This lowers the barrier for non-systems developers, especially those from data science, scripting, or full-stack backgrounds. It’s particularly useful for hackathons and rapid prototyping where speed matters more than low-level control.

However, Seahorse has some limitations:

• The GitHub repo has seen low maintenance lately

• Compatibility issues can arise with newer Anchor or Solana runtime updates

• It’s not always suited for production-grade deployments without review or refactoring into Rust

4.2. Solang: Solidity on Solana

Solang is a Solidity compiler for Solana, allowing EVM developers to deploy smart contracts using a familiar language. It supports a large subset of Solidity syntax and maps it to Solana’s Sealevel runtime.

Use cases for Solang include:

• Porting existing Solidity contracts (e.g., from Ethereum or BSC)

• Onboarding Solidity-native devs without forcing them into Rust

• Experiments in EVM–non-EVM cross-deployment patterns

That said, Solang’s cross-language support is still evolving:

• Runtime differences between EVM and Solana require cautious design

• Integration with Solana-native SDKs (e.g., Umi) is limited

Despite this, Solang is actively maintained and backed by the Solana Foundation as a long-term bridge between ecosystems.

5. Frontend SDKs and Wallet Integration

Solana’s on-chain logic is only half the story… the other half lives in the frontend!
Over the past two years, the ecosystem has seen major improvements in how developers connect users to programs through SDKs, wallet libraries, and client tooling.

5.1. @solana/kit (the successor to web3.js)

Solana’s original TypeScript SDK @solana/web3.js was widely used.
But it started to get outdated with heavy bundles, inconsistent typings, and clunky crypto support.

In 2024, Solana started migrating to a modern replacement: @solana/kit. It’s modular, tree-shakable, and way faster.

• Reduces bundle size from ~90 KB to ~17–33 KB

• 10× faster crypto ops using browser-native BigInt and Web Crypto

• Cleaner TypeScript interfaces + async iterator support

• Fully extensible, supports custom transports and serialization logic

As of 2025, @solana/kit is the recommended SDK for all new dApps. The legacy web3.js v1.x is still stable, but it’s no longer being actively improved.

5.2. Wallet Adapter SDKs

Solana apps rely on external wallets like Phantom, Solflare, Backpack, and Ledger. To simplify integration, developers use Wallet Adapter, a modular TypeScript library that standardizes how wallets are detected, connected, and used across apps.

It supports:

• Multiple wallets out of the box

• Mobile and desktop compatibility

• Custom signing workflows

Newer adapters (e.g., by Anza and Backpack) also support xNFTs and session-based interactions.

5.3. Kinobi & Umi

• Kinobi helps developers serialize and deserialize instructions, accounts, and types. This reduces the chance of runtime errors from misaligned client-program logic.

• Umi, built by Metaplex, is a lightweight JavaScript library designed for NFT transactions, custom signing flows, and simplified account setup. It’s especially useful for consumer-facing apps and minting flows.

Together, these tools reduce dev friction, improve wallet UX, and make Solana apps feel more like Web2 products (fast, reactive, and easy to use).

6. RPCs, Indexers, and Dev Infra

Behind every fast wallet connect, NFT mint, or token swap, there’s a layer of infrastructure moving data to and from the chain. And on Solana, that layer has gotten a lot more reliable.

6.1. RPC Providers

Every dApp talks to Solana through RPC nodes.

Remote Procedure Call (RPC) nodes are entry points that allow dApps to communicate with the Solana blockchain by submitting transactions and querying on-chain data. They’re essential for reading account state, sending transactions, and subscribing to events in real-time by forming the backbone of any live application.

In the early days, most devs used public RPCs, but they were slow, rate-limited, and failed often under load.

By 2025, that’s changed.

• Helius leads the pack with fast RPCs, Solana-native APIs, real-time webhooks, and support for compressed NFTs and xNFTs. Teams like Backpack and Phantom rely on it.

• QuickNode, Triton One, Alchemy, and Ankr offer managed Solana RPCs with globally distributed nodes, SLAs, and analytics dashboards.

• Solana Foundation RPCs are still around, but mostly for devnet/testnet traffic.

On Solana, blocks finalize every 400ms, and programs run in parallel, so infra needs to handle thousands of txs per second. This isn’t just about speed, but about keeping your app reliable. If your RPC layer lags or drops txs, users bounce.

Most modern RPC providers now also offer real-time monitoring dashboards to track dropped txs, error rates, and performance spikes which is critical for debugging and uptime in production.

6.2. Indexers and APIs

Indexers extract and organize raw on-chain data into queryable formats by tracking accounts, logs, and transactions. They enable features like analytics, dashboards, bots, and complex data views without having to manually parse low-level Solana account structures.

APIs (Application Programming Interfaces) expose simplified endpoints for developers to interact with on-chain data or perform predefined queries without handling RPCs or indexers directly. They reduce dev overhead by offering ready-made access to tokens, NFTs, swap data, and event history by speeding up frontend and backend builds.

Solana stores program state in binary. That’s great for performance, but hard to work with directly. This is where indexers and APIs come in.

• Dune decodes over 150 Solana programs, making it perfect for dashboards, bots, and metrics.

• The Graph added Solana support in 2024 with Firehose integration and subgraph templates. Used heavily in DePIN and RWA projects for live state views.

• Geyser Plugins stream logs and account diffs straight from validators. They’re used by explorers (e.g., SolanaFM), bots, and even games for real-time state triggers.

• Moralis and Helius APIs provide plug-and-play access to token metadata, swap prices, NFT state, and more — no indexing setup needed.

These tools let you answer real product questions fast:
“What tokens did this user just mint?”
“What’s the historical price of this pool?”
“Which NFTs were transferred in the last hour?”

Infrastructure has quietly become one of Solana’s strengths. With stable RPCs, fast indexers, and production-ready APIs, devs can ship faster and sleep better.

7. Local Testing and Simulation Tools

Testing on Solana used to be chaotic. It involved devnet pushes, wasting hours on figuring out why transactions failed & debugging with raw logs. But by 2025, local testing will have caught up. You can now fork mainnet, simulate real accounts, and even test complex sponsored tx flows directly.

7.1. Solana Test Validator

Still, the first tool in every Solana dev’s setup. It spins up a single-node local cluster where you can deploy programs, reset state, and run basic integration tests. It’s perfect for fast iteration and isolated unit testing.

7.2. Surfpool

This is what you reach for when things get serious. Surfpool lets you fork mainnet on your machine by pulling in live accounts, token balances, and programs into a local simulation environment.

It matters as it lets you:

• Test real-world conditions (e.g., interacting with a live DEX, DAO, or NFT mint)

• Catch state-specific bugs before mainnet deployment

• Run fast without needing high-end hardware

• CI-friendly and can be integrated with pre-deploy pipelines

7.3. Pinocchio

Pinocchio is a zero-dependency Rust library designed for account abstraction flows — session keys, delegated signers, sponsored transactions, and more. It’s lightweight, no_std, and doesn't rely on the full Solana runtime.

It’s perfect for:

• Simulating alternative signing models

• Reducing binary size in custom program builds

• Safe prototyping of new auth or account delegation patterns

By July 2025, over 1,200 active Solana devs have added Pinocchio into their CI test flows, especially for wallet apps, DAO frameworks, and multisig infrastructure.

7.4. Other Tools

• Program-Test → Anchor-native testing framework

• BankRun.js → JS-based runner for end-to-end tx testing

• Bokken → Experimental Anchor debugger (under active dev)

8. Account Abstraction and Smart Accounts

Solana embraced account abstraction from the beginning, using Program Derived Addresses (PDAs). Instead of relying on private key–key-controlled accounts, PDAs allow program-driven account logic for custom behavior.

Account abstraction decouples signature checks from transaction logic. With PDAs, programs can define who can do what and when without the need for private keys to hold authority. It’s all contained in program logic, enabling smart wallets, delegated accounts, and flexible governance models.

8.1. PDAs: Core Building Blocks

PDAs are deterministic, program-owned addresses generated from seeds and a program ID. They can’t be signed by a key pair, and hence, only the owning program can authorize them.

This makes them perfect for:

• Creating upgradeable program-controlled accounts

• Implementing multisigs, spending rules, or access control

• Building DAOs, smart wallets, and composable on-chain infra

8.2. Squads v4: Powerful Smart Account Framework

Squads v4 transformed multisig on Solana into a full-featured smart account suite.

It supports:

• Time-locked execution, granular signer roles, and sub-accounts

• Spending limits and program fee relayer for gasless flows

• ALTs (Address Lookup Tables) for transaction size reduction

Plus, SquadsX, their multisig browser extension, makes dApps treat multisigs like any other keypair. It’s both secure and user-friendly.

8.3. Pinocchio: Lightweight Abstraction Testing

Pinocchio is a zero-dependency Rust library focused on simulating account abstraction flows, such as:

• Gasless (sponsored) transactions

• Session keys and delegated signers

By July 2025, 1,200+ active devs were integrating Pinocchio into their CI pipelines for robust testing. And importantly, Pinocchio remains minimal and decoupled — no declare_program! macro bindings, keeping builds lean and flexible.

9. Real-World Adoption

How Solana dev tools are powering live apps across verticals

I have noticed a pattern across ecosystems that dev tools only matter if real teams are actually using them. Solana has always been fast, but the difference in 2025 is this: projects are no longer building despite the tooling. They’re building because it exists.

The stack has matured, and real apps are now depending on it.

9.1. Gaming: GameShift API + Custom SDKs

Game devs don’t care about L1s or blockchain trilemma; they only care about UX, speed, and user retention. Solana’s fee structure helps, sure. But it’s the tooling that actually gets things built.

• GameShift API strips out wallet pain and lets Unity/Unreal teams plug into onchain assets like it’s just another SDK.

• Devs use Helius for real-time account state, and Umi for smooth NFT workflows.

• Pinocchio handles gasless loot drops, power-ups, and off-chain-auth actions

Over 30+ live games use this today. AI-native games like Neural and fast-paced titles like Aurory and Ev.io, are built on this exact stack. Two years ago, that wasn’t possible.

9.2. DePIN: High-volume, live-data use cases

Solana might be the only chain right now that’s truly ready for DePIN-scale data through capabilities like sub-second updates, micro-txns, and millions of devices.

• Helium runs entirely on Solana using Squads v4 for secure validator coordination.

• Hivemapper pushes real-time GPS streams using Geyser plugins + Helius webhooks.

• And most of them rely on Surfpool to test these flows against the forked mainnet state before rolling out.

9.3. Consumer Apps

Here’s where things have really clicked.

• DRiP distributes millions of NFTs using compressed mints and Umi. Minting what would cost $200k on Ethereum costs less than $100 on Solana.

• Their frontend stack uses Wallet Adapter, Kinobi, and a mobile-native Umi setup.

• Backpack / xNFT pushes it even further by combining Anchor, Squads, and Pinocchio for app-level permissions inside wallets.

Teams like TipLink, Dialect, Gari, and dozens more are building production-ready experiences that feel invisible.

10. Tooling Ecosystem Map

Here’s how everything we’ve covered fits together, layer by layer:

Smart Contract Layer

• Anchor framework for Rust is most common for powering most programs.

• Seahorse (Python) compiles to Anchor-compatible Rust, preferred for prototypes/hackathons.

• Solang (Solidity) lets EVM devs compile Solidity to Solana bytecode.

Language & SDK Layer

• @solana/kit offers the modern, tree-shakable TypeScript SDK replacing web3.js

• Umi is the JavaScript SDK optimized for NFTs and consumer flows

• Kinobi offers auto-generated serializers, keeping client logic aligned with programs

Wallet Integration

• Wallet Adapter offers a standardized SDK for Phantom, Solflare, Backpack, and Ledger.

• Session/gasless support is driven by Pinocchio and custom logic

• SquadsX offers a browser multisig signer for smart account flows

Local Dev & Testing

• Solana CLI + Test Validator is a foundational local cluster

• Surfpool is forked mainnet simulation tool

• Program-Test, BankRun.js, and Bokken are used for unit/integration testing

Account Abstraction / Smart Accounts

• PDAs are native to Solana, enabling program-owned accounts

• Squads v4 offer multisig, treasuries, DAO infra, etc

• Pinocchio is a zero-dependency Rust tool for session keys, sponsored txns

RPCs, Indexers & Data APIs

• Helius, QuickNode, Ankr, Triton One are performant RPC providers

• Dune, The Graph, Geyser Plugins for structured on-chain data

• Moralis, Helius APIs for token, NFT & event metadata

Web2 Integration & Enterprise

• GameShift API for plug-and-play for Unity/Unreal game studios

• AWS Solana Blueprints for fast node deployment via AWS

• Mobile SDKs offer Solana Mobile Stack and xNFT extensions

Community-Led Tooling & Grants

One of Solana’s biggest advantages is a builder culture that actually funds and supports developers working on the hard problems. A lot of the tools we’ve covered so far (like Mucho CLI, Surfpool, and Pinocchio) came from the community.

11.1. LamportDAO

LamportDAO is a decentralized, open developer collective focused on funding public goods in the Solana ecosystem.

• Offers microgrants up to $5,000 for developer tooling, public infra, educational content, and protocol improvements

• Acts as a signal amplifier, where projects often get recommended to the Solana Foundation for larger milestone-based grants

• Runs a community-maintained IDE, hosts hackathons, and coordinates contributor bounties via Discord and GitHub

11.2. Superteam

Superteam is another key player with a network of regional DAOs (India, Vietnam, Germany, Nigeria, etc.) offering:

• Quick grants (< $10k) for early-stage ideas

• Bounties and workshops on wallets, Solana CLI, and dev onboarding

• Local events that connect builders to mentors, capital, and fellow contributors

11.3. Solana Foundation

The Solana Foundation runs a structured grant program focused on:

• Milestone-based funding for core tools, infrastructure, and dev onboarding

• Convertible grants for commercial projects working on open dev infra

• RFPs (Requests for Proposals) for things like:
  I. Formal verification tools
  ii. Mobile-first SDKs
  iii. Native ZK integration
  iv. Secure dependency managers and CI tooling

12. Limitations and Pain Points

The ecosystem is growing, tools are shipping, and teams are getting funded. But under all the progress, there are still real gaps in the developer experience, especially when things don’t go right.

Here’s where the cracks still show up for many builders.

12.1 Debugging remains a pain point

Building on Solana has become smoother, but debugging is still one of the weakest links.

• Anchor macro errors can be opaque and hard to trace

• When CPI (cross-program invocations) fail, logs aren’t always clear

• There’s no visual debugger or instruction-level trace explorer

12.2. Language support is uneven

Solana has taken big steps toward multi-language access, but only Rust feels truly production-ready.

• Seahorse (Python) isn’t actively maintained and breaks with recent Anchor upgrades.

• Solang (Solidity) is improving but lacks mature tooling and ecosystem integrations.

• Devs using these tools often hit compatibility walls when deploying to mainnet or integrating with clients.

12.3. Documentation is still fragmented

Solana’s rapid development pace has outgrown its docs in several areas.

• Token Extensions, Kinobi, Surfpool, and newer SDKs often have incomplete or outdated guides

• Best practices are buried in GitHub issues, Discord, or private gists

• Developers have to piece together usage patterns from scattered sources

12.4. Dev UX

Even with solid infra, building a full product on Solana often requires assembling pieces manually.

• No first-party CLI to scaffold programs + frontend + Surfpool + CI

• Limited visual tools for contract simulation or account layout

• CI/CD best practices are still being figured out, team by team

13. Future Roadmap and RFP Opportunities

By now, Solana’s dev stack covers most of what a team needs to ship. But under the surface, there are still meaningful gap,s especially around dev experience, multi-language support, CI testing, and mobile workflows.

Here’s what’s next for builders looking to make an impact.

13.1. Debugging Tools

Debugging Solana programs, especially CPI-heavy flows, still lacks dedicated tooling.

• Anchor error logs are opaque and difficult to trace

• CPI failures often show just the failed instruction, not the full path

• Local environments like Surfpool help simulate, but don’t explain

Hence, there’s a need for Instruction-level CPI debuggers, log visualizers for Anchor, and tools that track account diffs across transactions.

13.2. Python Tooling Revival

Seahorse (Python-to-Solana transpiler) gave non-Rust devs a solid entry point, but it’s currently unmaintained and incompatible with modern Anchor versions. Solang (Solidity) exists but is still underused due to a lack of deep tooling integration.

There’s a need for a stable Seahorse 2.0, with Anchor macro compatibility, client IDL generation, and test runner integration, or a Python-native toolchain from scratch.

13.3. Formal Testing and CI Tooling

Most Solana teams still patch together CI pipelines manually.

• No standard templates for Surfpool-based tests

• Formal verification workflows (e.g., RiscZero-style provable correctness) are absent.

• Hard to simulate real user flows end-to-end.

Hence, CI templates with Surfpool forks, snapshot testing for account state, and portable security testing pipelines for Solana programsares needed.

13.4. Mobile-First SDKs + Dev Infra

Saga and xNFTs have moved Solana ahead in mobile adoption. But from a dev tooling perspective, there’s friction.

• Wallet adapters exist, but no mobile-specific CI or test flows

• No SDKs for mobile-native minting, compressed NFTs, or smart account flows

• Few reusable templates for launching mobile dApps

Hence, there’s a possible need for React Native modules for Solana actions, mobile dev CI support, and AppKit tooling to test txns in local simulators.

14. Conclusion

Building on Solana in 2021 meant learning Rust, writing boilerplate manually, and debugging CPI errors with println! statements and Discord threads. There were no structured testing environments, no proper client-side serializers, and no local mainnet forks.

That’s no longer the case.

By mid-2025, Solana’s dev tooling has matured into a layered stack. Anchor remains the dominant contract framework, but now sits alongside tools like Kinobi, Umi, Surfpool, and Pinocchio. These purpose-built tools were designed to handle the specific complexities of Solana’s runtime model.

On the client side, Wallet Adapter and @solana/kit provide standardized flows. For testing, Surfpool and Program-Test offer real environments with better fidelity. Smart accounts are being built using Squads, PDAs, and custom auth logic that’s live in production.

If you’re looking to contribute meaningfully to Solana’s ecosystem, this is where the impact is:

• Better abstraction and dev ergonomics

• Testing and formal assurance

• Multi-language support and onboarding

• Mobile-native development environments

The foundation is solid. What’s needed now is refinement.

15. References

• Solana Foundation — State of the Developer Ecosystem 2023

• Helius — Solana Ecosystem Report H1 2025

• LamportDAO — RFPs, Web IDE, and Grant Programs

• Solang GitHub

• Seahorse-lang GitHub

• Pinocchio Guide — Account Abstraction Tooling

• Surfpool GitHub — Mainnet Fork Testing Environment

• Solana StackExchange — Anchor CPI Debugging

• Solana Playground (Solpg) — Web-Based IDE

• Solana Mobile Docs — React Native SDK

• Umi — Metaplex Frontend SDK

• Kinobi — Instruction Serializer SDK

• Squads v4 — Smart Account & Multisig Protocol

• SolanaFM — Blockchain Explorer + API

• Moralis — Solana APIs

• The Graph — Solana Support

• Dune — Solana Data Dashboards

• GameShift API — Solana Labs Gaming Infra

• AWS Solana Blueprints — Enterprise Node Infra

• Colosseum Hyperdrive Hackathon

• Solana Attestation Service (SAS)

• Token Extensions (e.g., PayPal PYUSD)

• Solana Blinks & Actions with Dialect

• DRiP — Solana Compressed NFT Airdrops

• Helium — Migration Case Study

• Backpack/xNFT — Solana Smart Wallet UX

• Anchor Framework GitHub

• Solana Developer Documentation

• Metaplex Developer Docs

Sounds impossible, right?

That was my first reaction too. But then I found out that 150,000 people have already preordered something called the Solana Seeker, a phone that turns this "impossible" scenario into a reality. It turns out, they're not just buying hardware, they're buying a citizenship in what Balaji Srinivasan calls a Network State.

We're witnessing the emergence of the first digital economy where human attention directly converts to money being flown into the ecosystem.

These early adopters aren't just users; they're the founding citizens of an economy that operates by entirely different rules than the one we grew up in.

And here's what really fascinates me: this isn't some distant future we're speculating about. It's happening right now, in real-time, with people making real money from interactions we used to think of as worthless digital noise.

Your likes on Twitter are way more valuable than you think.

What Makes the Solana Seeker Different?

Let's be honest: using crypto today is a nightmare.

Want to send someone $20 in USDC? Hope you enjoy copying wallet addresses, calculating gas fees, waiting for confirmations, and praying you didn't mess up a single character.

But here's what most people miss: the problem isn't just the software, it's that we've been trying to force desktop crypto patterns onto mobile devices.

The Seeker attacks this from a completely different angle. While previous "crypto phones" like the HTC Exodus or Samsung's blockchain features bolted crypto functionality onto existing experiences, Solana Mobile rebuilt the entire stack around a simple question: What if crypto felt as natural as texting?

Here's the thing: the Seeker isn't just running crypto apps. It's built on something called TEEPIN (Trusted Execution Environment Platform Infrastructure Network), which creates hardware-level security for your private keys. Think of it like having a hardware wallet permanently integrated into your phone, but one that apps can communicate with seamlessly.

The magic happens through the Mobile Wallet Adapter (MWA) and the Seed Vault. Instead of manually copying addresses and signing transactions, apps can securely request payments in the background. Your private keys never leave the hardware security module, but transactions feel as smooth as Apple Pay.

But here's where it gets interesting: the phone runs on SKR tokens, creating what they call an "SKR Flywheel."

=> Developers earn SKR for building quality apps.

=> Users earn SKR for engaging with those apps.

=> Hardware manufacturers get rewarded for expanding the ecosystem.

That way, everyone has skin in the game.

The result? You can walk into a coffee shop, scan a QR code, and pay with USDC as easily as you'd tap your credit card. You can earn tokens from a fitness app and immediately spend them in a game. You can tip a content creator and have the transaction settle instantly.

The Seeker ships in August 2025 with 100+ apps already live in the dApp Store. These aren't just crypto experiments, they're full applications that happen to have crypto superpowers.

The question isn't whether this will work. With 150,000 preorders, it's already working. The question is: what happens to digital behavior when financial transactions become as frictionless as scrolling through TikTok?

The Apps That Make It Possible

But the Seeker is just the hardware. The real magic happens in the apps that turn this vision into reality. When those 150,000 Seeker owners power on their phones in August 2025, they'll find an app ecosystem unlike anything that has existed before, one where every interaction has the potential to generate value.

These aren't the crypto apps you know from desktop. They're mobile-native experiences built from the ground up around the question: What if your phone could pay you for living your life?

Want to get fit? STEPN has already proven that >3 million people will walk for tokens. Want to discover art? DRiP has distributed over 10 million free NFTs to collectors who think they're just browsing cool content. Need phone service? Helium Mobile pays you for helping build network coverage.

The pattern is becoming clear: the most successful mobile Web3 apps don't feel like crypto apps at all. They feel like better versions of things you already want to do.

Mapping the Mobile Apps Ecosystem on Solana

This brings us to a fascinating question: what does this new app ecosystem actually look like? And more importantly, which approaches are winning?

Here's where things get more concrete. The current hackathon has almost 500 registrations with $1M+ in prizes. SendAI's AppKit has been downloaded 100,000+ times. These aren't vanity metrics; they represent real developer interest in building mobile-first Web3 experiences.

But developer interest and user adoption are different beasts entirely. The ecosystem currently has 100+ apps in the dApp Store, but how many of these represent genuine utility versus speculative experiments? The honest answer is: we don't know yet, and that's precisely what makes it interesting.

The Four Quadrants of Mobile Apps on Solana

Market Penetration (Top-Left): This quadrant houses the familiar faces, Phantom, Squads, and Magic Eden, serving existing crypto users with proven Web3 functionality. Growth here is steady but limited by the ceiling of crypto adoption itself.

Market Development (Top-Right): Here we see simplified versions of DeFi protocols like Jupiter Mobile (100K+ downloads, 4.6 star rating), Kamino lending, and SendAI's AppKit with pre-built modules for 18+ protocols. These apps successfully translate complex crypto operations into familiar mobile patterns, proving there's an appetite for accessible DeFi.

Product Development (Bottom-Left): The infrastructure layer powering everything else, Dialect's Web3 messaging, Helius's mobile-optimized RPC, and developer tools like those from the broader ecosystem. Essential but invisible to end users.

The Sweet Spot (Bottom-Right): This is where the magic happens. STEPN doesn't call itself a "blockchain fitness app". It's a fitness app that pays you. With 2-3 million monthly active users, it proves that people will use crypto when it solves real problems without crypto friction.

Star Atlas, Aurory, and Mad Lads represent the gaming frontier where virtual economies feel natural because gaming has always had virtual economies.

The Winning Pattern

Look at the apps that are winning: none of them lead with crypto.

Instead, they solve real problems first and use blockchain as invisible infrastructure. It's like the best magic trick ever; users get all the benefits without realizing what's powering the experience.

This tells us something important about where mobile Web3 is heading. The future isn't about "bringing crypto to mobile." It's about making mobile apps so good that they're impossible without crypto, while keeping the crypto completely invisible.

The Infrastructure Behind the Magic

But here's the question that matters: how did we get here so fast?

Just two years ago, mobile crypto was basically unusable. Gas fees killed microtransactions. Wallet connections were clunky. Most "blockchain games" felt like spreadsheets with graphics.

Today, we have fitness apps with millions of users, art platforms distributing millions of NFTs for free, and mobile carriers that actually pay you. That kind of leap doesn't happen by accident.

Something fundamental changed in the infrastructure layer that made all of this possible. The apps in our Sweet Spot aren't just good ideas; they're good ideas built on entirely new technical foundations that didn't exist before.

The breakthrough came down to one key innovation: the Mobile Wallet Adapter (MWA) protocol. This isn't just another technical standard; it's an attempt to solve the fundamental user experience problem that has plagued crypto since its inception.

Think about it: every crypto interaction requires managing private keys, understanding gas fees, and navigating complex interfaces. The average person finds this about as intuitive as performing brain surgery. Solana Mobile's approach is to hide this complexity behind familiar mobile patterns.

Technical Architecture: A Deeper Look

The MWA protocol represents a fundamental departure from traditional mobile app development patterns. Where conventional apps communicate with centralized servers, mobile dApps must establish secure connections with wallet applications while maintaining state across multiple applications.

This creates unique technical challenges:

• State Management: Unlike web apps, where wallet connections persist in browser sessions, mobile apps must re-establish authorization with each interaction

• Security Models: The Seed Vault leverages Android's hardware security module, creating a self-custody experience that feels familiar to users accustomed to biometric authentication

• Cross-App Communication: The WebSocket-based protocol enables seamless value transfer between applications. Imagine paying for a ride-share with tokens earned in a fitness app.

The Technical Magic: How MWA Works

But here's where it gets really interesting from a technical standpoint. The Mobile Wallet Adapter isn't just a clever abstraction—it's solving fundamental problems that have plagued mobile crypto for years.

The WebSocket Revolution

Traditional mobile apps can't maintain persistent connections the way web browsers can. When you switch between apps on your phone, connections typically die. The MWA protocol solves this through a sophisticated WebSocket architecture that persists even when apps are backgrounded.

Here's how it actually works: When you tap "Connect Wallet" in a mobile dApp, your phone broadcasts an solana-wallet:// intent. Any compatible wallet app listening for this intent responds by opening a WebSocket connection. This creates a secure communication channel that survives app switching—something impossible with traditional HTTP requests.

The Three-Step Dance

The technical flow is elegantly simple:

1. Authorization: The dApp sends an authorize(dapp_identity) request through the WebSocket

2. Session Management: The wallet responds with an authToken and authorized accounts

3. Transaction Signing: All subsequent transactions use sign_transaction(tx) calls within this established session

Hardware-Level Security

What makes the Seeker phone special isn't just software—it's the Seed Vault. This isn't another app storing your keys; it's a hardware security module that operates at the Android system level. Think of it like Apple's Secure Enclave, but specifically designed for crypto operations.

Your private keys never leave this hardware vault. When apps need signatures, they communicate with the Seed Vault through the MWA protocol, which validates requests and returns signed transactions without ever exposing the actual keys.

The Developer Experience

For developers, this complexity disappears behind simple React Native hooks:

javascript

const { authorizeSession } = useAuthorization();
await transact(async (wallet) => {
  const authResult = await authorizeSession(wallet);
  const signature = await wallet.signAndSendTransactions({
    transactions: [transaction]
  });
});

The transact function handles all the WebSocket management, connection persistence, and error handling. What used to require dozens of lines of boilerplate now happens in a single async callback.

This technical foundation is what enables the seamless experiences you see in apps like Jupiter and Vector—transactions that feel as natural as tapping "like" on a social media post.

The iOS limitation reveals deeper architectural constraints. Apple's aggressive background process management breaks WebSocket connections, forcing developers to fall back to traditional wallet adapters. This technical reality means Android becomes the proving ground for truly native mobile web3 experiences.

The Seed Vault technology is particularly interesting from a systems perspective. By storing private keys in hardware-backed security, they're essentially trying to make self-custody feel as simple as unlocking your phone. Whether this actually achieves its goal is debatable, but the attempt reveals an important insight about technology adoption.

People don't want to understand the underlying technology; they want the technology to understand them. The challenge isn't building better crypto tools; it's building tools where the crypto becomes invisible.

Emerging Design Patterns in Mobile Web3

What if I told you the best crypto apps don't look like crypto apps at all? After studying the interfaces of Jupiter, Vector, Time.fun, and Kast, a fascinating pattern emerges: the winners are systematically hiding blockchain complexity behind familiar mental models.

Jupiter: The Venmo-ization of DeFi

Jupiter's onboarding reads "Welcome to Jupiter" with a simple promise: "Buy or receive SOL to get started." Notice what's missing? No mention of automated market makers, liquidity pools, or slippage tolerance. The "Instant Buy SOL" flow feels identical to buying Starbucks credits - $30 USD becomes 0.178 SOL through Google Pay, with a calculator interface users understand from banking apps. Jupiter took the most complex financial primitives ever built and made them feel like sending money to friends.

Vector: Memecoins as Entertainment

Vector's genius lies in framing speculation as social discovery. "Ape memes with frens" transforms degenerate trading into entertainment. Users scroll through token feeds like TikTok videos, seeing "$32.12 bought" with profit percentages instead of complex charts. The "demon mode" toggle gamifies intensity without explaining leverage or derivatives. By borrowing from social media rather than financial software, Vector makes trading feel like content consumption.

Time.fun: Commoditizing Access

"Time Is The New Currency" reframes creator monetization entirely. Instead of "purchase utility tokens for platform governance," users simply "Buy 30 mins" with verified creators. Toly's profile shows "$90/min +174%" like Uber surge pricing—familiar, understandable, valuable. The interface treats time as a purchasable commodity, making complex tokenomics invisible while enabling entirely new economic relationships.

Kast: Premium Banking Psychology

Kast transforms crypto spending into status signaling. The sleek black interface promises "SPEND WITHOUT BORDERS" while hiding cross-chain infrastructure. Users see "KAST Points" and reward tiers (Standard, Premium, Luxe) borrowed from credit card marketing, not DeFi protocols. The "Claim Gift" button treats airdrops like loyalty rewards, making blockchain benefits feel earned rather than extracted.

The Unifying Principle

Each app succeeds by choosing the right metaphor. Jupiter = digital banking. Vector = social discovery. Time.fun = premium booking. Kast = luxury credit cards. They didn't try to educate users about blockchain; they made blockchain invisible by wrapping it in behaviors users already understood and desired.

The infrastructure works. The remaining challenge is psychology, not technology.

What to Watch: Key Inflection Points

The next 18 months will tell us everything we need to know about mobile Web3's future.

Q3 2025: Seeker shipments begin. Success metric: >50% of recipients actively use Web3 features within 30 days.

Q4 2025: Developer ecosystem maturity test. Success metric: 10+ applications with >100K monthly active users and sustainable revenue models.

2026: Mainstream integration indicators. Success metric: Partnership announcements with major consumer brands or integration into traditional mobile services.

Three simple tests. The infrastructure is ready. Now we find out if anyone outside crypto actually wants this.

Why This Experiment Matters

So here we are, watching 150,000 people bet real money that their phones should pay them for living their lives. The infrastructure is ready. The apps work. The user experience finally makes sense.

But stepping back, what we're witnessing isn't just a technological shift, it's a fundamental renegotiation of the relationship between human attention and economic value. For the first time in history, the tools exist to make every digital interaction potentially profitable for the person having it, not just the platform hosting it.

This raises uncomfortable questions we're only beginning to grapple with. What happens to human behavior when every swipe, every step, every social interaction has financial implications? Are we building tools that empower users, or sophisticated mechanisms for turning human existence into extractable data?

The Solana Mobile experiment will teach us something important regardless of whether it succeeds or fails. If it works, we'll learn how quickly people adapt to living in a fully financialized digital world. If it doesn't, we'll discover which aspects of human psychology resist commodification.

Either way, the lessons will matter far beyond mobile apps or blockchain technology. We're not just building better phones, we're running a real-time experiment on what happens when the boundary between living and earning disappears entirely.

Your next 150 phone unlocks are going to happen anyway. The question is whether you want them to pay you or not.

Resources

Official Documentation & Platforms

1. Solana Mobile Documentation

2. Solana Mobile Stack Overview

3. Mobile Wallet Adapter (MWA) Documentation

4. Seed Vault Documentation

Key Apps & Platforms

1. STEPN Official Website

2. DRiP Platform

3. Jupiter Mobile

4. Send Mobile AppKit

News & Analysis

1. Solana Seeker Ship Date Confirmation

2. STEPN User Statistics

3. Time.fun Launch Coverage

4. Vector App Analysis

Technical Resources & Hackathons

1. Solana Mobile Hackathon

2. Solana Mobile GitHub

3. Solana Developer Course

4. DRiP Statistics & Analysis

Historical Context & Theory

1. HTC Exodus Official Launch

2. Balaji Srinivasan's Network State

3. Solana Mobile Ecosystem Expansion

4. Kast Solana Card Integration

Nowhere is this shift more evident than in the rise of Real-World Assets (RWAs), and no chain is leaning into this future harder than Solana. This isn’t TradFi vs DeFi. It’s TradFi plus DeFi, and it’s unlocking a new era of global finance.

What are Real World Assets (RWAs)?

Real-world assets (RWAs) are traditional financial assets brought onchain through tokenization and represented as digital tokens on the blockchain. These can include tangible assets like real estate, as well as intangible ones such as government bonds, stocks, and carbon credits. Backed by real-world value, RWAs offer a sustainable and reliable digital asset class that bridges the gap between decentralized finance (DeFi) and traditional finance.

Okay, but why do they matter?

To understand the significance of RWA tokenization, picture a large pizza you want to share with friends. Instead of giving each friend the whole pizza, you slice it into pieces, with each slice representing part of the whole.

Tokenization works similarly with assets. When an asset is tokenized, it’s divided into smaller parts called “tokens,” each representing a share of the asset. These tokens can represent anything valuable, from real estate to intellectual property. Managed and traded using blockchain technology, these tokens ensure secure and transparent ownership records, making assets more accessible, liquid, and tradable globally.

And why on Solana?

Solana is uniquely positioned to drive the growth of real-world assets (RWAs) due to its high throughput, low fees, and scalable infrastructure, all essential for supporting high-volume, real-world financial activity onchain. With lightning-fast finality and a rapidly expanding ecosystem of RWA-native protocols, Solana delivers the speed and efficiency needed for institutional-grade asset tokenization.

In this essay, we'll explore how Solana is emerging as a leading platform for real-world assets (RWAs), combining the speed and scalability of blockchain with the stability of traditional finance. We'll break down the key metrics that highlight Solana’s RWA momentum, examine the most important players and institutional partnerships, and map out the broader RWA ecosystem taking shape onchain. We'll also compare global regulatory approaches, spotlight new opportunities being unlocked by RWAs, and offer a perspective on what the future holds for this fast-growing intersection of TradFi and DeFi.

The Rise of RWAs: A New Financial Primitive

From $5B to $24B: Mapping the growth of RWAs (2022–2025)

RWA tokenization has surged from $5 billion in 2022 to over $24 billion by June 2025. That’s an impressive 380% growth, making it crypto’s second fastest-growing sector after stablecoins. While stablecoins are technically tokenized fiat currencies, they are excluded from this analysis, as a separate in-depth report is being developed.

This rapid rise isn’t just hype anymore. We are experiencing a shift from early experimentation to real-world adoption at scale. By December 2024, the tokenized RWA market (excluding stablecoins) had reached $15.2 billion, and just six months later, it expanded another 85% year-over-year, exceeding $24 billion.

This momentum is the result of years of infrastructure development converging with institutional interest. Major players like BlackRock, JPMorgan, Franklin Templeton, and Apollo have moved beyond testing and into production deployments. Governments are also beginning to treat blockchain as critical infrastructure, particularly for modernizing outdated financial systems and addressing broader economic inefficiencies.

Looking ahead, industry projections estimate that 10 to 30% of global assets could be tokenized by 2030 to 2034. That positions RWAs as a key bridge between traditional finance’s $400 trillion in assets and crypto, which still sits below a $3 trillion total market cap.

The integration of RWAs into DeFi is now accelerating through regulated, composable frameworks. Platforms like Ethena, Maple, Morpho, Pendle, Kamino, and Securitize are enabling tokenized assets to access decentralized liquidity while remaining compliant. This is creating new opportunities for yield generation, broader asset distribution, and active secondary markets.

Private credit has emerged as the largest RWA category, with $14 billion tokenized as of June 2025. It shows strong institutional demand for blockchain-based credit markets. Tokenization helps lower operational costs, improve accessibility, and create liquidity in ways that were not possible in traditional finance. These products still meet institutional underwriting standards but are now more open and efficient.

At the infrastructure level, RWA oracles represent a breakthrough. Providers like RedStone are developing new pricing systems that combine traditional finance metrics like Net Asset Value, regulatory data, and adjustments for illiquidity. Unlike typical DeFi oracles, these systems are tailored for institutional adoption and form the foundation for integrating real-world assets into DeFi at scale.

RWAs have evolved from a concept to the main thing. The growth from $5 billion to $24 billion is just the beginning of a much larger transformation in how financial assets move, trade, and generate value onchain.

Why are tokenized treasuries leading the charge?

Among all real-world assets, tokenized U.S. Treasuries have emerged as the breakout product, and for good reason. In a high-interest-rate environment, Treasuries offer a low-risk, yield-generating instrument that is both familiar to traditional investors and attractive to crypto-native users seeking stability, which, in crypto terms, means not losing half your portfolio in a weekend. By bringing these government-backed assets onchain, protocols can offer DeFi users access to 4–5% annualized yields, denominated in tokenized dollars, without the volatility of typical crypto assets.

What makes Treasuries especially well-suited for tokenization is their liquidity, transparency, and regulatory clarity. These are instruments already digitized and actively traded in traditional markets, making the leap to blockchain more operationally feasible than more complex assets like real estate or private equity. Tokenized Treasuries are also relatively straightforward from a compliance standpoint, especially when issued by regulated entities and backed 1:1 by off-chain custodians.

Platforms like Ondo Finance, Matrixdock, and Backed have capitalized on this opportunity, allowing both individuals and institutions to access U.S. Treasuries directly through tokenized wrappers. These products are not only attracting stablecoin users and DAOs seeking safer yields but also setting the foundation for an entire class of tokenized fixed-income products in DeFi.

Ultimately, tokenized Treasuries serve as a gateway. They’re building trust with traditional investors, proving the viability of RWAs onchain, and opening the door for broader experimentation with more complex financial instruments in the future.

What does this signal for onchain finance?

This explosive growth of tokenized real-world assets (RWAs), particularly U.S. Treasuries, marks a turning point for the evolution of onchain finance. It signals a shift from speculative, volatility-driven activity to a more mature financial ecosystem rooted in utility, yield, and real-world value. For years, DeFi has thrived on native crypto assets but lacked meaningful integration with the trillions of dollars in traditional financial instruments. RWAs change that dynamic completely.

The onchain presence of assets like Treasuries introduces new layers of capital efficiency and trust. DAOs and protocols can now allocate reserves to yield-generating, low-risk assets without ever leaving the blockchain. Stablecoin issuers can back their tokens with tokenized government bonds, creating more transparent and auditable systems. Even lending markets can evolve, offering collateralized loans backed by tokenized Treasuries rather than volatile crypto.

This shift also opens the door to new participants. Institutional investors, family offices, and fintechs that were previously cautious about engaging with crypto are finding comfort in familiar financial products delivered through blockchain rails. It’s no longer just about yield farming or meme tokens; it's now about building the foundation for a parallel financial system that is faster, cheaper, and more inclusive.

In short, RWAs signal that DeFi is growing up. The future of onchain finance will not replace traditional finance but rather absorb and enhance it, offering a programmable, global, and transparent layer that traditional systems simply cannot match.

Why Solana? The technical and economic case

Solana currently leads all blockchains in transaction volume per holder, averaging around 40 million dollars. While this metric might seem niche at first glance, it reveals something important. Solana is not just fast; it is being actively and efficiently used at scale. A high transaction volume per holder means users are not only active but also moving significant value across the network. This reflects real engagement in areas like trading, payments, DeFi, NFTs, and increasingly, real-world assets.

For the RWA space, this is a strong signal. Institutions and asset issuers prioritize cost-efficiency, speed, and user activity when selecting a blockchain to support tokenized financial products. Solana’s ability to process thousands of transactions per second at extremely low fees makes it well-suited for assets that require frequent settlement, interest distributions, redemptions, or rebalancing. These features are especially important for tokenized Treasuries, bonds, and equities.

In short, the 40 million dollar transaction volume per holder highlights Solana’s readiness for serious financial applications. It demonstrates not only the network’s capacity but also meaningful real-world usage. For RWAs to scale, they need more than just tokenization. They need infrastructure that can support high-volume, high-value financial activity. Solana is already delivering on that.

Speed, Cost-Efficiency, and Parallel Transaction Processing

One of the main reasons Solana stands out for real-world asset adoption is its unique technical architecture. Unlike most blockchains that process transactions sequentially, Solana uses a system called Proof of History, which allows for parallel transaction processing. This means thousands of transactions can be verified and finalized simultaneously, resulting in unmatched speed and scalability.

Combined with transaction fees that typically cost a fraction of a cent, this makes Solana ideal for financial products that require high-frequency settlement or constant updates. Whether it’s paying out interest on tokenized Treasuries, issuing dividends on tokenized stocks, or updating ownership records in real-time, Solana’s low-latency environment supports these use cases with ease.

For RWAs, this is more than just a technical detail. It directly impacts usability and cost-efficiency. Institutions need infrastructure that performs at scale without introducing friction. Users want real-time interactions with their assets, not delays or high gas fees. Solana delivers on both fronts, offering a blockchain experience that feels closer to the expectations of traditional finance, but with the added benefits of transparency, programmability, and composability.

In combination with strong metrics like transaction volume per holder, Solana’s technical edge further reinforces its position as a natural home for tokenized real-world assets.

Now beyond speed and cost-efficiency, Solana’s thriving developer ecosystem plays a major role in driving real-world asset adoption. The network has attracted thousands of builders who are creating tools, protocols, and infrastructure that make it easier to launch, integrate, and scale tokenized financial products. From smart contract frameworks like Anchor to real-time indexing tools like Helius and RPC providers such as Triton, the developer stack on Solana is maturing quickly.

This growing ecosystem pushes composability, one of the defining features of onchain finance. In Solana’s context, composability means different protocols can easily interact with one another. For RWAs, this creates an environment where tokenized assets can plug directly into DeFi primitives such as lending markets, liquidity pools, yield aggregators, and more without needing complex workarounds or bridges.

For example, a tokenized U.S. Treasury issued by a protocol like Ondo can be deposited into a lending protocol, used as collateral, or traded instantly on a decentralized exchange. These kinds of interactions are possible because of Solana’s unified runtime and high transaction throughput, which keep the system fluid and efficient even under heavy demand.

In traditional finance, combining services from multiple institutions involves slow settlement layers and manual coordination. On Solana, composability makes it easy to build financial products as simple and fast as brewing a cup of chai. Fast, seamless, and programmable. This is a major advantage for the RWA sector, which requires flexible infrastructure to support innovation across issuance, settlement, custody, and trading.

With developers building openly interoperable tools and protocols on a high-performance chain, Solana provides the kind of ecosystem that RWAs need to reach a global scale.

All of these technical and ecosystem-level advantages would mean little without demand, and that demand is now coming from some of the biggest players in traditional finance. Over the past year, major institutions have not only taken notice of real-world assets but have started deploying capital into tokenized products directly on blockchain networks. Solana, in particular, is emerging as a key destination for this institutional activity.

Institutional validation: Big names, Big moves

BlackRock’s BUIDL USD Institutional Digital Liquidity Fund has become a standout example. Launched in March 2024 via Securitize, BUIDL has since expanded to Solana and six other chains and surpassed $1.7 billion in assets under management by March 2025. That includes an impressive 240% growth from $500 million in July 2024 to $1.7 billion in under seven months. Today, it holds nearly $3 billion, showcasing huge capital inflows and rapid scaling. BUIDL’s launch marks the moment institutional DeFi got real, offering peer-to-peer share transfers, daily dividend accruals, and institutional-grade custody via Anchorage, Copper, Fireblocks, and BNY Mellon.

Franklin Templeton’s OnChain U.S. Government Money Fund (FOBXX), live since April 2021, added Solana in February 2025. Now at around $594 million in AUM, it ranks as the third-largest tokenized money market fund. It invests nearly 100% in U.S. government securities and repurchase agreements, offering a 4.2% seven-day yield as of January 2025. Its expansion to Solana shows increased confidence in the network’s performance by one of the world’s largest asset managers, which oversees $1.6 trillion in total assets.

This Institutional Adoption Unlocks:

1. Market-wide validation:

When institutions like BlackRock and Franklin Templeton issue tokenized funds, they offer clear legitimacy, building confidence among regulators, enterprises, and institutional investors that blockchain-based financial products can meet high standards of compliance and oversight.

2. Infrastructure maturity:

Institutional demands for custody, auditability, and regulatory compliance force protocols to upgrade. Securitize’s platform, which serves as a transfer agent, custodian, and fund administrator across multiple chains, now supports more than $2.8 billion in tokenized Treasuries and manages the majority of top tokenized assets.

3. Enhanced liquidity and integration:

Institutional tokenized assets become collateral in DeFi, collateral-backed lending pools, and even secondary trading markets. Smart contracts allow daily yield distributions and programmable fund logic, representing a quantum step over traditional T+1 settlement cycles.

4. Fueling composability and ecosystem growth:

Institutional-grade RWAs bring new traffic to Solana; these assets can be composably used in lending, trading, and automated execution. As BUIDL and FOBXX flow into DeFi applications, they kick-start a broader ecosystem of yield networks and financial engineering.

In summary, BlackRock and Franklin Templeton have elevated Solana’s RWA narrative from hopeful potential to a working reality. Their onchain presence not only validates the space but it accelerates institutional capital, upgrades infrastructure, deepens liquidity, and amplifies composability. This marks an important moment in the evolution of onchain finance.

Key players and protocols driving RWAs on Solana

As Solana becomes a preferred destination for real-world assets, a growing number of projects are leading the charge. These protocols are not just building isolated products but forming the foundation of a fully interoperable financial system onchain. Each focuses on a unique part of the RWA stack, from token issuance and lending to infrastructure and institutional connectivity.

Ondo Finance:

Ondo Finance has emerged as one of the most influential RWA platforms on Solana. It offers tokenized U.S. Treasuries through products like OUSG, allowing both institutions and individuals to access short-term government debt onchain. Ondo is also expanding globally through partnerships with centralized exchanges, fintech platforms, and cross-border issuers. Its expansion into Solana reflects a commitment to low-cost, high-speed infrastructure, making its products more accessible and scalable.

Maple Finance:

Originally built on Ethereum, Maple Finance has expanded to Solana to power a new model of undercollateralized onchain lending. By working with institutional borrowers and whitelisted credit professionals, Maple enables capital to flow into real-world lending markets such as corporate credit and private credit. Its move to Solana enhances capital efficiency through faster settlement and lower transaction costs while preserving regulatory alignment and transparency.

VNX:

VNX is building tokenization infrastructure in Europe, with a focus on regulated digital securities backed by assets like precious metals and fixed-income products. The platform is aligned with Luxembourg’s financial licensing framework and aims to offer European investors seamless access to tokenized assets. VNX’s integration with Solana brings these products into a high-performance environment that supports cross-border issuance and secondary trading.

R3’s Corda and Solana Integration:

R3’s Corda, an enterprise-grade blockchain used by major financial institutions including HSBC, Euroclear, and SIX Digital Exchange, is integrating with Solana to bridge institutional finance with DeFi. This connection allows assets issued on Corda to move onto Solana’s public blockchain, unlocking liquidity and programmability for traditional financial instruments. The collaboration combines the regulatory rigor of enterprise blockchains with the speed and composability of Solana.

Together, these protocols demonstrate the diversity and strength of Solana’s RWA ecosystem. They are not only onboarding assets, but also building the infrastructure needed for them to be traded, lent, and used in complex financial strategies. This growing network of builders reflects Solana’s emergence as a serious home for tokenized finance.

Tokenized equities arrive Onchain.

In 2025, the launch of xStocks marked a major step for RWAs on Solana. Backed Finance, Kraken, Bybit, and the Solana Foundation introduced 55 tokenized equities and ETFs like Apple and Tesla as SPL tokens. These are fully collateralized, legally redeemable 1:1, and tradable on both centralized exchanges and Solana-native DeFi platforms.

Users can now self-custody stocks in wallets like Phantom or Solflare. Fractional ownership from $1 makes global access easier, especially for users in restricted regions. However, liquidity is still thin for most tokens outside blue chips. Weekend price discovery is also limited. Despite these challenges, support from institutions and growing demand suggest a fast evolution ahead.

Ecosystem highlights: Collaborations and Integrations

Solana’s RWA growth is accelerated by powerful infrastructure partnerships that link traditional finance with blockchain rails.

Jupiter and the Kazakhstan Stock Exchange:

Jupiter’s partnership with the Kazakhstan Stock Exchange (KASE) explores dual listings. The goal is to allow companies to IPO on KASE and issue tokenized shares on Solana. This would make Kazakhstan a pioneer in hybrid capital markets and signal rising global trust in public blockchain finance.

Stablecoins: Circle and Paxos:

USDC and USDP play a vital role in RWA settlements. Their integration on Solana enables instant, low-cost settlements and cross-border transfers for tokenized instruments like Treasuries and bonds. These stablecoins improve liquidity and usability for financial operations.

Wallets, Custodians, and Compliance Infrastructure:

For institutions, secure custody and regulatory compliance are essential. Fireblocks, Anchorage, and Copper offer institutional-grade custody. Fractal and Civic handle identity verification. Wallets like Backpack and Phantom are adapting to support financial tokens, improving the user experience for both retail and institutional investors.

Huma Finance and the Rise of Income-Backed Lending:

Huma Finance introduces income-based lending on Solana through its PayFi protocol. It enables users to pledge income streams like payroll or invoices as collateral. Huma’s PST token allows these streams to plug into DeFi strategies using Jupiter, Kamino, and RateX. This introduces a new credit layer to the RWA ecosystem, blending DeFi composability with real-world financial data.

xStocks on Jupiter:

Jupiter has integrated xStocks, allowing users to trade U.S. equities onchain with low fees and self-custody. The collaboration between Kraken, Backed Finance, and Solana aligns with Jupiter’s mission to enable global, permissionless access to traditional markets.

Mapping the RWA Ecosystem on Solana

As RWAs grow on Solana, protocols are organized into functional categories.

Tokenized Treasuries

• Ondo Finance: Offers OUSG, a tokenized short-term Treasury.

• Superstate: Institutional-grade yield assets.

• Franklin Templeton: The FOBXX fund is now available on Solana.

• BlackRock BUIDL Fund: Issued via Securitize and bridged to Solana.

Lending and Underwriting

• Maple Finance: Under-collateralized loans for institutions.

• Huma Finance: Income-backed lending onchain.

• Credix: Financing from off-chain income (potential Solana integration).

Infrastructure and Compliance

• Custodians: Fireblocks, Copper, Anchorage.

• KYC/AML: Fractal, Civic.

• Securitize: Legal transfer and compliance for tokenized funds.

Institutional Integrations

• R3’s Corda: Bridges financial giants to Solana.

• Kazakhstan Stock Exchange: Exploring tokenized dual listings.

• BlackRock and Franklin Templeton: Actively distributing tokenized funds.

Exchanges and Secondary Markets

• Jupiter: Aggregates RWA liquidity.

• Phoenix, Orca, Meteora: Support RWA token listings.

• Wormhole and DLN: Cross-chain asset settlement.

Solana’s RWA stack is not siloed. It's an interconnected financial infrastructure spanning issuance, custody, trading, and compliance.

Global Regulatory Outlook: Harmonizing TradFi and DeFi

Regulators are slowly catching up to the RWA trend.

United States:

The U.S. remains fragmented. The SEC and CFTC often conflict, but recent legislative efforts aim to clarify the status of stablecoins. BlackRock and Franklin Templeton’s activity shows that regulated paths forward do exist, despite slow rulemaking.

European Union:

The EU’s MiCA regulation, arriving in 2025, brings clarity to stablecoins and tokenized assets. With pilot programs underway for digital bonds and tokenized funds, the EU is creating a structured yet open environment for blockchain finance.

Asia:

Singapore supports tokenized finance through MAS-backed initiatives like Project Guardian. Hong Kong has licensed crypto service providers. Kazakhstan is emerging as a frontier market with Solana-native IPO experiments.

Across regions, regulators are accepting tokenized Treasuries and distinguishing between consumer DeFi and institutional-grade tools. Jurisdictions offering clarity and sandbox support will attract more RWA builders. Solana’s compliance tooling positions it as a leader.

Opportunities and the Future of RWA on Solana

RWAs are just beginning. Solana’s architecture is enabling new asset classes and more accessible financial services.

Beyond Treasuries: Real Estate, Private Credit, and Equities:

Tokenized real estate and private credit are next. Properties can be fractionalized for liquidity, while private credit can be serviced through transparent, programmable smart contracts. xStocks and Kazakhstan’s dual listing pilot show how tokenized equities will evolve globally.

Composable RWA DeFi:

Solana’s composability allows RWAs to be used across protocols. Tokenized Treasuries or property tokens can be collateralized, traded, or staked. This turns assets into programmable financial primitives.

Retail-Friendly Products and Yield-On-Ramps

Apps will emerge to help users allocate savings to tokenized asset baskets. Solana’s low fees and fast confirmations make retail-grade, user-friendly tools viable. Buying U.S. stocks, earning yield, or taking loans against tokenized ETFs is now possible through crypto-native interfaces.

Emerging Markets: LATAM, Africa, and Beyond:

In inflation-hit or underbanked regions, tokenized dollars or equities are a lifeline. Solana’s speed and affordability make it ideal for deploying RWAs at scale in these markets. Mobile access, local stablecoins, and community participation are key enablers.

Personal Opinions

The RWA movement is strong, but challenges like:

Liquidity Fragmentation:

Different platforms issue assets under different standards, making interoperability hard. Jupiter helps at the aggregation layer, but deeper cross-protocol integration is needed. Slippage and pricing mismatches also persist, especially during weekends.

Legal Enforceability:

Tokenizing an asset doesn’t guarantee enforceable rights. Legal agreements and clarity are crucial for global adoption. Cross-border jurisdictional variation complicates asset validity and investor protections.

Custody and Compliance Risks:

Smart contract risks, wallet mismanagement, and lack of insurance are barriers. Institutions need bulletproof custody and compliance frameworks. Even KYC and AML hurdles can slow down onboarding.

Bridging Traditional Investor Trust:

Institutions expect clarity, control, and reliability. Blockchain UX must evolve to match traditional platforms. Education, transparency, and trust will be as important as performance or innovation.

Conclusion: Solana’s RWA Advantage

Solana is no longer just a fast chain. It’s a financial platform actively hosting RWAs at scale. With support from BlackRock, Franklin Templeton, Kraken, and others, it has matured into a legitimate base layer for global finance.

RWAs bring familiarity and regulation to DeFi. Their presence shows that DeFi is shifting from speculative hype to productive capital markets. And Solana’s combination of speed, composability, and infrastructure makes it uniquely capable of leading this new wave.

Robinhood’s tokenized equity rollout on Arbitrum and Solana’s growing institutional support indicate that this is only the beginning. Tokenized stocks, private equity, and 24/7 trading will become standard. The wealth effect will spread into DeFi, stablecoins, and even memes.

This is the time for builders to create useful tools. For institutions to modernize their offerings. And for regulators to help shape frameworks that work.

TradFi and DeFi are converging now. And Solana is where that future is being built.

References

1. https://www.coingecko.com/learn/what-are-real-world-assets-exploring-rwa-protocols

2. https://www.gate.com/learn/articles/a-brief-history-of-real-world-assets-why-they-matter/4333

3. https://blog.redstone.finance/2025/06/26/real-world-assets-in-onchain-finance-report/

4. https://news.bitcoin.com/solana-integration-broadens-access-to-blackrocks-1-7b-tokenized-treasury-fund

5. https://www.coindesk.com/business/2025/02/12/franklin-templeton-expands-usd594m-market-money-fund-to-solana

6. https://blog.huma.finance/introducing-huma-2.0-permissionless-real-yield-on-solana

7. https://www.dlnews.com/research/external/huma-finance-20-launches-on-solana-bringing-composable-real-yield-to-defi-users/

8. https://www.coindesk.com/markets/2025/03/25/blackrock-securitize-expand-usd1-7b-tokenized-money-market-fund-buidl-to-solana

9. https://solana.com/solutions/real-world-assets

Members shipping code and content, co-working IRL, launching projects, crossing milestones, and more during the entire month. So grab a coffee and clear out your Sunday evening to read about the top updates from the Superteam India community in July 2025. We've got:

• Member Wins

• Community Contributions

• State of Superteam India

• Project Updates

• News You Can Use

• The Content Kitchen

Member Wins

Probably the best W we could think of to kick this off, the OnlyDevs is officially back, and the first episode features Solana Breakout winners and Superteam India members Rishabh and Nitanshu from Encifher. If you haven't watched this already, you gotta tune in right now:

Speaking of tuning in, the Superdevs fellowship by Kirat officially commenced in July. So many eager faces, a lot of challenging material, and a breeding ground for the next batch of elite engineering talent on Solana.

Cherry on top — the classes are open-sourced, so you can watch the first class here:

The Superteam India TL remains wholesome as usual, with so many members sharing their Superteam lore from different timelines.

Multiple member wins from the past and present, all at once — we love to see it.

July also saw the first-ever Capture The Flag competition, a cybersecurity competition on Solana. Shoutout to Kunal, Bolt and Rishabh for pulling this off IRL. Can't wait for the next edition!

Developers ate and learned well in July, with multiple developer-related events happening almost every week. We had:

• @dubbel06 took a session on Bonsol and ZK on Solana

• The Encifher folks took another one on Cryptography on Solana

• Dhruvraj hosted two sessions on Solana Program Architecture and Alpenglow

The community members have asked us to keep these going, and you can bet your house that we definitely will.

And we're finally back to the point of the monthly newsletter where SendAI and all its umbrella teams take over the entire piece. Multiple huge Ws as usual:

• SendAI launched SendAI Raycast — Solana actions embedded in your command bar

• Arpit and the Send Arcade folks launched Vibegame — a drag and drop platform to deploy and launch onchain games

• Magicblock also hosted the Send Madness Week with Send Arcade, which included quests, tournaments, treasure hunts, and prizes

• Send Arcade launched the NFT collection for their game Lana Roads — each NFT is a playable character along with other perks

Here's the launch of Vibegame, which has taken Solana Twitter by storm. You gotta love it!

As always, shoutout to the entire team for constantly shipping across different domains — Yash, Aryan, Srinivasa, @semi_infiknight, MYSTIC, Arpit, Kanishq, Ray, Raunit and co. (please add your name if we missed you)

Mention constantly shipping and in comes Little Unusual.

They announced that their working on usuals.ai, and it absolutely exploded on X. The team has created some of the best content in crypto over the last 2-3 years, and it's only fitting that they're now building the tool to ship bangers using AI.

(intern has gotten exclusive access to the demo — you all are not ready!)

July also had some very sweet IRL action happening all across the board. Both Shipyards (BLR and Vadodara) had Locked-In Wednesdays and Shipping Saturdays, respectively.

A bunch of folks got together, worked all day, and then ended with a quiz and some pizza. Nothing to complain about at all.

We also got together with Pengu India and members had some fast-paced Karting action in BLR. According to credible sources, only Superteam India members ended up on the podium, and I am not surprised at all.

From the podium to SF, the Met Engine folks (Harsh, Neel and Vraj Desai) are cooking in SF. Breakout winners and the only team from India that has made to the Colosseum Accelerator — we can't wait for what they ship in the future.

We're also seeing an emergence of members embracing their creator arcs and becoming nCMOs of Solana. Rajnandani is leading the way with a three-part series on stablecoins — first video is out here. More to come!

Aditya Sharma has also completely embraced his role as nCMO in the Solana ecosystem, and he's on his way to becoming one of the best creators out there.

Ayush shipped Pinoc, a tool to scaffold Solana programs using Pinocchio. This is built on top of Chio by Arjun, who is also a Superteam member. You gotta love to see it.

We can go on forever, but here are some more notable wins from the last 4 weeks:

• Chaitanya Bajpai tweeted about creating a Solana study group and "Anchorpoint" is live today.

• Our very own chad Ray has joined our very own group of chads over at SendAI.

• Srinivasa shipped a Jito Devrel Agent, using (you guessed it) SendAI MCP.

• Prince went full-time on Solana by joining xFractal.

Community Contributions

If the #just-shipped-it channel keeps flowing, you know the chads have been shipping. Proof is in the pudding:

Just Shipped It is the essence of Superteam. A bunch of producers who keep contributing to the ecosystem in the form of code or content. Here are some noteworthy ones from the last month:

• Kaushik shipped Nestfolio — a platform with curated baskets of xStocks on Solana

• Chad Pro Max Prince open-sourced a real-time Solana blockchain monitor for pump[dot]fun using Yellowstone RPC.

• Avhi published this banger and more on Pinocchio.

• @0xdevrel shipped an onchain version of Wordle!

• Aniket Sahu shipped MemeVault — a decentralized meme-sharing app on Solana.

• Pratik Kale shipped and presented DecentralWatch — a decentralized uptime monitoring platform.

• We love devs who ship not just code, but content as well — Aman Satyawani was at it throughout July shipping blogs. Check out his Medium here.

• And so was our very own Priyansh — shipping blogs on various topics related to Solana. Check out his blog here.

• Divyansh shipped a part of Pluto — his mini-game module for practicing Solana development questions.

• And finally, MYSTIC shipped an onchain derivative of Flappy Bird using Vibegame

  (-10 aura points for using that picture of @paarugsethi but love the game!)

State of Superteam India

Community GDP

India's community GDP stands at $4.48M (~39 crore INR). It represents the value created for & by community members who found earning opportunities through Superteam.

Open Earning Opportunities

Find bounties to compete in, longer-term projects to apply for, and grants for your project, if you're a founder. There is only one place to find the best earning opportunities in the Solana ecosystem, and that place is Superteam Earn.

Bounties are the best way to get started with earning your crypto. They are permissionless, show high effort and intent, introduce you to top projects in Solana, and help you build your proof of work regardless of whether you win a reward or not.

Some opportunities you can apply for TODAY:

• $1000 creator bounty on Streamflow's Active Staking Rewards Program.

• $1000 thread bounty on Dabba's Genesis Liquidity Program.

• Perena Bloom Contest for creators worth 250 USD*

• $250 thread on US Treasuries and USTRY Stablebonds by Etherfuse

• $525 bounty for writing product tweets on Memeshot (love to see member projects rainmaking)

and so many more listings live on Earn.

More opportunities

Our friends over at Dabba Network are looking for a Social Media Manager. If you're a wizard at socials, this is your shot to work at one of India's premier DePIN startups today. Apply for the project on Earn here.

And if you're looking for more full-time job opportunities in the Solana ecosystem, head over to Superteam Talent and find your next thing at some of the hottest startups around.

Project Updates

Superteam Earn

One of the most underrated teams in the ecosystem, the Superteam Earn boys ship faster than a lot of startups around. July was no different as they shipped a bunch of new updates, including:

• Auto Review for sponsors

• A revamped sponsor dashboard

• Multi-payment setups for listings

• Incognito cards for private listings

• Sponsor-related surveys for feedback, and more.

Can you think of someone else who ships faster than these guys? I'll wait.

Asgard

The Asgard team probably matches the shipping speed quite easily. They were constantly shipping in July, sponsored bounties on Earn, shared a LOT of yield alpha on their socials, and also got mentioned by Syndica in their Solana DeFi report as one of the projects to watch out for. We agree a 100%.

De Charge

Huge news from the De Charge camp — their beast chargers are live and kicking with shipping underway across the US. The process is simple:

• Install the Charger

• Set your price

• Earn your crypto!

We absolutely, wholeheartedly love to see it.

GreenkWh

A constant in the Ws column — GreenKWh has been working hard at literally the grassroots level and powering rural livelihoods with clean energy infrastructure. Check out a glimpse of their work below:

MetEngine

As mentioned above, the MetEngine boys are cooking in SF.

And guess what, you can now LP together with your friends using MetEngine.

Told you their cooking.

You are not bullish enough.

Encifher

The Encifher team has been crushing it left, right, and centre — shipping features and updates on their app and also sharing some high-quality content on encryption and privacy.

We also did a small feature on them. Check it out here:

Tinydancer

And this is a win too good not to include in the July update — OGs Anoushk and Harsh are back with Tinydancer and they just launched their own Solana validator on mainnet.

Stake your SOL to support not just the network, but also all the amazing OSS work they do for the ecosystem.

Content Mafia

This is the section where we talk about two teams that produce some of the highest quality of content across different geographies at unmatched speeds. Presenting the two GOATs in the content mafia of Superteam India:

Little Unusual

It was just another month full of shipping bangers for the Little Unusual kitchen. Along with their banger launch of usuals.ai, here are some more highlights:

• Shipped the final episode of their series with Superteam Singapore.

• Shipped the launch video for our friends at Codigo.

• Recap video for Ignition Season 3 Demo Day, again with Superteam Singapore.

• More Superteam Singapore action — also shipped the launch video for Ignition season 4.

• A video for the Marinade x Zeus Network collab.

• Our friends getting together — they worked on an ad for Decharge.

• And finally, multiple bangers for the Ignition Founder stories series.

Goatfish

And of course, the cooks at Goatfish — they took shipping fast a little too literally, shipping 13 videos in 13 days for Forma City (not an exaggeration) along with so much more:

• Shipped their first shoot in Europe with the Bitget wallet.

• Launched the first video of the Solana Summit Narrative series — 3 more to go.

• Bunch of content for Jupiter and Meteora

• One video delivered within 10 hours (?? how?)

• Covered the LP Army event in Malaysia, along with their amazing photo-finder software.

News You Can Use

Probably the biggest news of July that you should definitely use — Solana APEX is coming to Mumbai.

And there's more:

• Two marquee conferences: a developer-focused conference called OnlyDevs on 4th October & APEX on the 6th

• A dedicated Shipyard Popup on 3rd October

• [redacted] on the 5th

Register today, and if you'd like to speak at any of the conferences, reach out to @shek_dev or @AdityaShetts right now. See you all in Bombay!

And, if you have not booked your tickets for Breakpoint in December, this is a reminder to do it right now. And if you'd like to present on-stage, check out the tweet for more details below:

The Content Kitchen

As always, we have been cooking over at the content kitchen. The Internet Capital Markets podcast, the OnlyDevs podcast, Wins of the Week, and so much more:

The Internet Capital Markets Podcast with @AdityaShetts:

• with Badi Sudhakaran about @VALRdotcom.

• with Kieran (@whatsallthiss) from @BonkAdvisory

The OnlyDevs pod with the Encifher team:

And more:

• Episode #1 of News You Can Use

• Wins of the week from the last week of July

• And our BAM 101 with Het

And that is a wrap. The second half of 2025 is up and running, and it has taken off like a tracer bullet.

August is already turning out to be a banger, and we'll do our best to highlight the best from the community and celebrate the overflowing wins every week. See you next month!

If you want to get involved or have any questions about getting involved, reach out to us or DM @paarugsethi on X.

Ws flowing in from left, right, and centre — hackathon wins, product launches, new earnings, and a whole lot of shipping. June was a whirlwind, and this update attempts to cover everything from the month.

So grab a coffee, strap in, and get your mid-week reading fix with this June 2025 update from the Superteam India community. We've got:

• Member Wins

• Community Contributions

• State of Superteam India

• Project Updates

• News You Can Use

• The Content Kitchen

• Thoughts from the Frontier: Audiences Post, Communities Host

This blog is also available as an article on X. Check it out here.

Member Wins

First up, Colosseum announced the results of the Solana Breakout Hackathon, and India absolutely crushed it.

The community showed up with 231 submissions (it's highest ever), with six winners (highest ever) and five honourable mentions (highest ever).

A huge shoutout to:

• MetEngine, Encifher, and PayStream — all winning in the DeFi track;

• Aquanode winning the University Prize in the Infrastructure track;

• Lana Roads by Send Arcade came in 5th in the Gaming track.

• SoulBoard (Grantee and member project) took fourth place in the DePIN track.

• and shoutout to Umbra, Cleopetra, @realTrumpFun, Remlo, and Dollar Wallet for the honourable mentions.

And an even bigger shoutout to everyone (231 folks) who participated and submitted something. You are all in the arena, so even if you did not win on paper, you are all winners who are getting things done. You all are the reason why this ecosystem is so special, so go after it and keep shipping.

Special shoutout to MetEngine for becoming the only team from India to enter Colosseum's 3rd Accelerator cohort. Congratulations to Harsh, Shubh, Neel, Vraj, and team!

Apart from crushing it on the hackathon stage, Indian members were also spotted crushing it on International turf at the Solana Summit APAC in Da Nang.

• Sitesh presented Asgard and earning yields in a workshop

• Paarug also gave a workshop on X poasting (DM if you need access)

• Pratik from Superteam Earn spoke about earning, not buying your crypto!

• and Harsh gave a workshop on how to build on top of Sonic SVM

Kirat launched the Superdev Fellowship 2025 — a cohort for new developers to build the future on Solana.

Over 2200 people applied in the next few days, and after two rounds of screening (including a very interesting quiz), we now have a cohort who will spend the next few weeks learning Solana development by shipping real projects.

Congratulations to everyone who has made it — looking forward to seeing what you all build.

Speaking of shipping, this is the part where we dedicate a significant part of the wins section to the SendAI team:

• First up, the third wing (yet) of the SEND ecosystem is live: Send Mobile, which is their new Mobile Apps Studio

• Send Mobile also started its shipping arc with a bang by launching Pluto, a mobile wallet they vibecoded in a couple of weeks (???)

• Meanwhile, the second wing, Send Arcade keeps on winning — their game, Lana Roads won Magicblock's Real-Time Hackathon

• Send Arcade also launched a new game, Send Guys, which is obviously doing the rounds on Solana Twitter!

• And from SendAI, their Agent Kit now has access to OpenAI Agents SDK, integrated with Magic Eden, and has something special cooking with SendAI MCP.

It's incredible how the Send team continues to dominate the Wins section month after month — incredible cooking by Yash, Aryan, Srinivasa, Semi, MYSTIC, Arpit, Kanish and co (please add your name if we missed you)

And to top it off, here's Yash's piece on how to curate a banger team in the AI age.

Speaking of banger teams, Asgard launched their Public Beta a couple of weeks ago. God Mode for DeFi is very much alive and kicking!

If you haven't checked it out yet, reach out to the team and get your invite code:

More launches — along with winning in the hackathon, the chads at Encifher also launched their beta with private swaps via Jupiter. Shoutout to Rishabh, Nitansh and team. We love to see it. So much.

Privacy is going to be huge as crypto grows wider, and India is leading the way here. Another hackathon mention, Umbra launched their [Private] Beta on Devnet.

Shoutout to Kru and team — DM them to get your hands on Umbra!

More and more launches. Another member project Plutus went live on Testflight, and you should really check this one out. Arpita and team has cooked another banger DeFi app. DM her for access and let them know what you think!

Results of the 100xDevs x Superteam Mini Hackathon came out with members Pratik Kale and Priyansh taking the podium.

We could honestly keep this going forever, but here are some more notable wins by members in June:

• OG member and fellow chad Harsh launched Kairos — A Variable Rate Gradual Dutch Auction (VRGDA) on Solana.

• Along with shipping code, both Priyansh and Ayush Jha have been shipping a ton of content, and both of their blogs got featured in Colosseum’s Codex Newsletter.

• And finally, our boy Mani came on Kirat’s Podcast and spoke about his journey!

Community Contributions

If the #just-shipped-it channel keeps flowing, you know the Chads have been shipping. Proof is in the pudding:

Just Shipped It is the essence of Superteam. A bunch of producers who keep contributing to the ecosystem in the form of code or content. Here are some noteworthy ones from the last two months:

• As mentioned above, Priyansh shipped a bunch of dev content on X and his blog.

• Avhi has been shipping some high-quality content for Solana devs as well.

• Grantee and OSS contributor Divyansh shipped TaskFi. Check it out here!

• Along with a bunch of other cool things, Pratik Kale shipped v0 of his project CrowdLens, a human feedback layer for AI & creators.

• Prince has been on a streak of shipping awesome code throughout June. Here's an all-in-one staking contract he shipped, among other things.

• More shipping — Arjun shipped Chio, a tool to setup Pinocchio projects fast.

• Aniket Sahu shipped MemeVault, a meme-sharing app here.

• @x0rc1ph3r shipped his project SageGuard. Check it out here!

State of Superteam India

Community GDP

As mentioned earlier, India's community GDP stands at $4.32M (~37 crore INR). It represents the value created for & by community members who found earning opportunities through Superteam.

Open Earning Opportunities

Find bounties to compete in, longer-term projects to apply for, and grants for your project, if you're a founder. There is only one place to find the best earning opportunities in the Solana ecosystem, and that place is Superteam Earn.

Bounties are the best way to get started with earning your crypto. They are permissionless, show high effort and intent, introduce you to top projects in Solana, and help you build your proof of work regardless of whether you win a reward or not.

Some opportunities you can apply for TODAY:

• Civic Auth has a React Native hackathon running alongside the Solana Mobile Hackathon with rewards worth $3000

• $1000 Twitter Thread bounty on the Messari Report Featuring Dabba

• $1000 Product Roast bounty by Badchain

• A $500 Dev Bounty by our friends at Venta

• $300 Deep Dive Thread/Long Post bouny by Shaga

Cherry on top: we have two deep dive research bounties live right now for you to attempt. A $1000 up for grabs in each one — check them out below:

More opportunities

• Arcium has started a $65K Developer Fellowship on Earn — a 4-week paid program for folks building applications using Arcium's infrastructure.

• MetaDAO has launched their Founders Residency — each team will get paired with creators and growth experts to land their first users. Reach out to our OG Abbas Shaikh for more info!

Project Updates

Asgard

As mentioned in the Wins, our friends at Asgard launched their Public Beta in June — God Mode on DeFi is finally on mainnet.

Shoutout to Prastut Kumar, Deep, Sitesh and the entire team. Extra love to see DeFi teams from India crushing it on mainnet!

De Charge

Busy month for our friends at De Charge again —Mohan delivered a lightning talk at PGP (Pretty Good Policy) hosted by Coinbase at USC. They were also present and leading conversations at the APAC Solana Summit in Da Nang, especially on DePIN Day.

GreenkWh

There's a lot of noise on Crypto Twitter but the GreenkWh team keeps shipping and growing their energy network at the grassroots level in India. Here's more on what they've been up to recently:

Cleopetra

The Cleopetra team (h/t Umang) was shipping in full flow at Superteam Singapore's Ignition Season 3, and also became the first TG bot to be fully audited.

MetEngine

If there's one team that had a banger month of June, it was MetEngine. They onboarded users on users on users, won in the Solana Breakout hackathon, and also became the only team from India to enter Colosseum's 3rd Accelerator cohort.

Off to SF next!

Encifher

Speaking of having a great June, our friends at Encifher crushed it last month as well. Launched on mainnet, won in the hackathon, growing users everyday. Upwards only!

Content Mafia

This is a section we have introduced while talking about wins — two teams that produce some of the highest quality of content across different geographies at unmatched speeds. Presenting the two GOATs in the content mafia of Superteam India:

Little Unusual

A team allergic to shipping slowly, Little Unusual was at its top-tier usual self, shipping the best content in the game (and also launching some pretty insane code). Here are some highlights:

• Creative a Reality TV series for Ignition S3 (?!)

• Shipped a bunch of videos for @SuperteamMY (h/t @littleunusualMY)

• Shipped the 100k video for Superteam Earn

• More and more AI content for Marinade Finance

• Shipped a video for Solana ID in NYC

• Cooking a banger aftermovie for Solana Summit APAC 2025!

• Shipped videos for Meteorite Collective

• Shipped the Launch Video for our friends at Codigo

• Made the video for the Solana Trade Mission in Kazakhstan by Forma

And probably the biggest update yet, Tushar announced usuals.ai — an AI-powered editing tool of the future. SO ready for LU's code arc!

Goatfish

And finally, the team literally has GOAT in its name. The Goatfish team shipped a ton of great content, but also shipped code and pushed the boundaries of event coverage like they always do.

• A WHOLE lot of videos for Forma in Kazakhstan and beyond

• Live-streamed of the entire SEZ Kazakhstan event

• Took care of the entire Solana Summit APAC

• More videos for Meteora and the Jupiter team

And this might be the most banger event coverage-related update ever — they shipped solanasummit.photos which enabled you to:

• Take a selfie

• Wait for 5 seconds

• Find all your photos from the event!

News You Can Use

• The Solana Mobile Hackathon is live right now!

  • $100K up for grabs

  • July 1st to Aug 4th

  • And a shot at real distribution on 150K+ Seeker mobile phones

• Kunal and gang are hosting Capture the Flag — a premier Cybersecurity Competition in Bengaluru on 26th July. If you're a developer interested in security, you should definitely not miss this. More information below!

  

• Everyone on Internet Capital Markets can now access US public stocks via @xStocksFi on Solana. Absolutely huge!

• Our friends at Magicblock shipped Magicnet — allowing devs to permissionlessly integrate MagicBlock into their Solana applications.

• Helius published a HUGE Solana H1 Ecosystem Report and it has everything you need to know. Shoutout to @0xIchigo for the excellent work.

  (TLDR; chain is gud)

The Content Kitchen

As always, we have been cooking over at the content kitchen. A new podcast is in town, wins of the week, and so much more:

The Internet Capital Markets Podcast with Aditya Shetty:

• With Raagulam Patty, founder of KAST

• With Henry, founder of AgriDex

June also saw the start of Wins of the Week, a regular feature showcasing weekly wins from the Superteam India community.

Thoughts from the Frontier

Audiences Post, Communities Host

Bringing back an older thread to reiterate the importance of a community whose nodes are always actively engaging, attending, and hosting together.

There are profound differences in how participants of a community and an audience interact, broadly:

• an audience sits in rows but a community flows

• an audience hears one voice but a community makes noise

• an audience subscribes but a community vibes

• an audience has only silent lurkers but a community also has workers

• an audience just retweets but a community also meets and greets

• an audience just views but a community also brews

• an audience just posts but a community also hosts

The default way for a Superteam member to interact with their community is via Discord. And while these are likely some of the highest signal conversations in all of crypto, they’re just the tip of the Superteam iceberg.

The optimal way to participate in Superteam is to use that signal & trust to find your niche interest and the people you can collaborate with to create weekend projects, products, or companies around it. Those who do it right will find themselves in more group chats than they can count, spontaneously joining Zoom calls and taking cabs/trains/planes to meet their internet friends.

The pipeline from strangers to co-founders/roommates is not intuitive or obvious, but it happens through some combination of shared interests, complementary skills & common goals discovered through repeated organic interactions. This has played out successfully multiple times in different forms over the last three years of Superteam's existence. Strangers who became friends with each other on Discord are now flatmates, co-founders, and colleagues.

So if you're a new member in the Superteam discord (or any other community), your best bet to find people you will resonate with is to double down on topics you are genuinely curious about & constructively engage with the community.

With this in mind, events now become an active exercise to engage with other producers, instead of broadcasting to a bunch of consumers. These can take the form of (non-exhaustive list):

1. Virtual Events: Host up-skilling sessions, flow co-working hours, or trivia/game nights.

   

2. Education & Workshops: Host a technical workshop or seminar at your local university/blockchain club.

3. Outreach & onboarding: Host a meetup over coffee, pizza, or an outdoor activity with people in your city or neighbourhood.

   

If you're a Superteam member who would like to host an event, reach out to Paarug, and he'll get you on the Superteam calendar ASAP.

And that is a wrap. The first half of 2025 is in the books, and it is pretty insane that we're only getting started.

Solana Summer is in full flow, and July promises to be a banger. We'll do our best to highlight the best from the community and celebrate the overflowing wins every week. See you next month!

If you want to get involved or have any questions about getting involved, reach out to us or DM @paarugsethi on X.

Enabling talent from around the world with an internet connection to earn at U.S. dollar rates has been the driving force behind Superteam, the talent layer of the Solana Ecosystem.

Crypto uniquely facilitates this by being inherently global and natively remote-first. With just a crypto wallet (eg. Phantom), one can now start earning in USDC and access all global opportunities.

Crypto goes through its own cycles, and despite the ups and downs, the total market cap of crypto projects remains above $2 trillion, reflecting the abundance of capital. With giants like Stripe, Visa, PayPal, and BlackRock now heavily focused on crypto, it reflects that this space is more than just a giant online casino — it’s the foundation for next-gen financial infra.

Personally, I'm able to earn in USDC at U.S. rates while collaborating with talent from around the world, all from one of the most remote corners of the globe — a small town on the India-Bhutan border.

Now, I want to help 1000s of talent across the globe to start earning in crypto and make their way up in crypto careers.

This essay is a guide for anyone looking to get into crypto from an earning perspective. It covers various earning opportunities and provides practical tips on how to pursue them.

Throughout, we’ll include links to real-life examples, actionable tips, and resources. This guide is the culmination of numerous interviews and insights from talent earning in crypto.

Broadly the structure of the essay is:

1. Why work in Crypto? [Things to keep in mind]

2. Different Ways to Earn [first $1k, $10k, $100k, and $500k]

3. Making a Career in Crypto [Pro tips to land and negotiate jobs]

4. Be Crypto-native [Actionable tips]

Firstly, why not just trade crypto first, instead of earning?

While crypto might seem like just another asset for trading, earning in crypto helps you see it as much more than that. Earning forces you to develop skills and be valuable to a project. While one can always invest or trade their way up or down, earning your first crypto makes a significant difference. It helps you develop the judgment; ultimately, investing is just leverage on that judgment. By contributing (to earn) in crypto, you try out new products (to earn) and realize the value of crypto beyond just trading.

It's worth developing judgment first; because once you have it, trading or investing becomes much easier. Earn by applying your talents and contributing to the ecosystem. You’ll gain skills, earn money, and, in the process, inadvertently pick up the instincts needed to avoid losing money in obvious ways. That is the real 'crypto onboarding.'

Why Even Work in Crypto?

Apart from high $$ (for eg. fresher developers getting paid $100k-$200k/year), crypto offers unique pros and cons:

1. Contextual – Crypto is highly contextual. While many skills overlap with non-crypto/Web2 jobs, a solid grasp of crypto concepts (e.g., AMMs) and staying updated with developments (mostly via Twitter/X) is essential.
   Companies or startups are called “projects” in crypto; “protocols” are underlying tech.

2. Portfolio > Pedigree: Pedigree matters much less in crypto. Obviously, you'll have an advantage in most roles if you're based in the US and studied at Harvard, but it’s not the only path to success here. The work you’ve done so far matters more.

3. Identity: While it's possible to remain pseudonymous for part-time commitments, most full-time roles will require you to verify your identity while maintaining a pseudonym publicly. You can build a reputation by networking, building, tweeting, trading, etc. If you prove you're capable, people will hire you without knowing your name, age, gender, race, or background.

4. Ecosystem Matters: Think of each blockchain ecosystem (e.g., Solana or Base) as a city. Just like every city has roads, hospitals, and schools, but the economic activity varies, with some being more bustling and developed, each blockchain has its own set of apps. While you can keep traveling, you need at least one city as your home base. Naturally, you'd want to live in a city with the best quality of life and the most opportunities.
   
   Similarly, you have to pick an ecosystem you truly believe in and a specific sector (e.g., Solana DeFi). The more specific your ecosystem and sector, the faster you become an expert in that niche –– you can also pick up a specific protocol (eg. Jupiter) to focus on. Remember, concentrated bets yield higher rewards!

5. Inherently Remote and 24/7: Since crypto operates 24/7, you'll be mentally plugged in around the clock, which can be quite stressful, especially with prices constantly fluctuating. Anecdotally, people find it hard to disconnect from crypto, even on vacations, partly because it's highly entertaining.
   
   The price volatility greatly impacts the overall sentiment of the crypto community— at one moment, it feels like the 'future of finance,' and at another, a 'giant online casino.'
   
   However, this also comes with much higher flexibility than any other industry as 80-90% is remote. Once you are ingrained well in the industry, it feels like a game you play with your friends.

6. Free range: Freelancing in crypto is easier due to the fluid nature of the work, where output is what matters most. You can work on 2-3 projects simultaneously, making it simpler to earn from multiple income streams.
   
   Crypto teams are typically very lean (around 7-8 people) and therefore, tend to outsource tasks like teaser videos, branding, landing page design, and other smaller projects.

7. Super-approachable Founders: It's easy to reach out to founders in crypto since they're active on Twitter and Telegram. A simple hack is to DM them with product feedback or suggestions for improvement — they’ll respond most of the time.

8. Types of Roles: In any skill-centric task, where you get rewarded for your skills and time while having almost no downsides. Based on skills, major roles can be:

   1. Development: Frontend, Backend, and Smart Contract

   2. Design: UI/UX or Product design, Video Editor/Motion graphics 

   3. Marketing: Content/Research/Writing, Community Moderation, GTM/Strategy folks, Analytics, and Business Development

Getting Started: Different Ways to Earn

Just like life, crypto is a non-linear journey. However, for simplicity, we can divide this into the following stages:

For simplicity, all earning opportunities will be categorized as: First $1,000, $10,000, $100,000, and then $500,000. However, there are always exceptions and one can earn way up or below.

First $1000+:

1. Bounties:

Publicly available and competitive tasks that pay to complete certain tasks. For example, projects on Superteam Earn have been offering thread bounties, where any participant (typically 50-100 submissions) can write a thread, and the top 3 winners receive a total of $1,000-$1,500.

Tip: Superteam Earn is currently the best platform to discover Solana-focused bounties. While bounties were quite popular during the ‘21-22 bull cycle, their popularity has significantly declined, with many bounty platforms shutting down.

However, a few other platforms like BountyCaster, Bepro, Taikai, Dework, and Researchhub (for core sciences) are worth checking out. For data analysts particularly, worth checking platforms like Dune or Flipside Crypto.

2. Learn-to-Earn:

There are also learn-to-earn platforms like Layer3, Intract, and Zealy which allow you to learn about different projects through quests, sometimes incentivized by the projects themselves.

Tip: Learn-to-Earn platforms do take time, but are definitely worth to try out new projects/products and realize the value of crypto as a user.

3. Ambassador Programs:

Aka “Fellowship” or “Contributor” Programs. One of the most underrated ways to earn your way up, particularly, when you are uncertain of how exactly you can contribute in Crypto and you aren’t a developer.

Why Ambassador Programs?
Community is the foundation of any ecosystem’s growth flywheel and every crypto project wants to build an active community. When community members evangelize a project, it attracts more app developers to join the ecosystem. Ambassador programs provide an easy way to kickstart an early community.

Tips:

1. Pick 4-5 favorite protocols of the sector of your interest, which have high-quality teams or VC backing. 

2. Ideally, pick pre-token launch projects as they can potentially include you in airdrop lists while launching tokens.

3. Study the protocol deeply and make sure the application is top-notch. Preferably, contribute (eg. write content or make memes to help other discord members or develop tooling) before even applying; shows your genuine interest. A clean Twitter/X with 500+ followers gives good leverage in applications.

For instance, 10-15 members from Superteam were Wormhole Fellows, helping Wormhole with content and developer tooling and each Wormhole fellow received an airdrop of 14k W ($18K at launch price). Back in 2022, Solana India fellows received $2.5k as a stipend for learning Solana development and building a project for 2 months –– most fellows are now working full-time for top projects in the Solana ecosystem! There are some top-tier advanced fellowships like Turbine3 fellowships, TLDR fellowship for DeFi, and Paradigm Fellowship.

4. DePIN – Earn tokens to contribute:

With a market cap of $30 billion+, DePIN (Decentralised Physical Infra Network) is one of the hottest sectors, where there are two sides:

1. Supply Side: Incentivised by tokens, contributors contribute to the network. For Helium, this means contributors adding more hotspots.

2. Demand Side: can be either individuals or companies. For Helium, this is adding more consumers buying mobile data.

I have previously written a comprehensive deep dive on DePIN; read this for a market overview, particularly for DePIN on Solana.

There are two major ways of earning in DePIN:

1. Non-Device Dependent (Passive): Anyone with a mobile phone or laptop can start earning this. For instance, you can start earning passive grass points by simply downloading the web extension and connecting your browser. The Grass network uses the device's unused internet bandwidth for web data scraping, offering rewards in return. These points might be converted to tokens, earning you $$ if you truly believe in the project.
   
   Another example is Superteam’s DePIN project, Proto, where users can map via mobile devices. It has enabled users to earn points in return for data collected ($1.2 million in value), which will be potentially converted into tokens. Besides, users have also earned via reward drops and for conducting mapathons ($200 on average). Holding Solana Mobile Pass also keeps giving various ecosystem airdrops (eg. SEND airdrop)

   More examples: Synesis, Uprock, Ambient, Brave

2. Hardware/Device Dependent (Active): These require specialized hardware devices and are generally more rewarding as they involve higher friction/cost to set up. Examples:

   1. Hivemapper is a global mapping network that collects up-to-date, high-resolution data (4K street-level imagery) using vehicle dashcam. Hivemapper offers dashcams priced between $300 and $650, which reward contributors with $HONEY tokens for sharing footage and metadata with the network (can be also on-demand via bounties, also called bursts). This model allows contributors to earn a share of the value generated by the demand for mapping data.

   2. GPU-based networks like Render, Ionet, Akash, Aethir, and Nosana, where you supply your idle GPU computing resource and earn their native tokens.

You can discover more DePIN projects via DePIN Hub.

5. X to Earn Apps – Earn for fun tasks:

Similar to DePIN, here also you get rewarded for engaging – Low effort. Low reward. This can range from tap-to-earn (eg. Hamster Kombat) to vape-to-earn (eg. puffpaw).

Further, there are content monetization protocols as well like DRiP and Access Protocol which allow creators to earn. Referrals are another great way to earn, especially if you have strong distribution—almost every popular crypto app has a referral program. Due to the high transaction values in crypto, referrals can generate a sizable side income.

Next $10,000+:

1. Freelancing:

This is one of the best ways for anyone to earn their first $1,000, $10,000, and beyond. Typically, the process looks like this: build a strong portfolio (you can initially include your non-crypto credentials) → find opportunities → strengthen your portfolio and referral network → earn more.

You can find freelancing opportunities via:

1. Open gigs at platforms like Superteam Earn

2. Twitter – Build your personal distribution by sharing your work publicly and engaging with potential clients’ posts. For example, 0xdesigner shares design prototypes/mockups of various dApps, making him one of the top designers in the space and leading to a lot of inbound work.

3. Referrals –– Major source to acquire and convert maximum clients.

Tip: It’s essential to let a few very well-connected folks (eg. your friends who work as BD on a project) that you are open to freelancing and share a portfolio with them. This way, they can refer you whenever they come across a good opportunity.

Getting paid in crypto is much easier than fiat. If you want a 2-5x premium in pay, you can also get paid in tokens (locked or liquid) as these projects always have surplus tokens in their foundation/treasury and want to distribute to the most aligned folks.

Creating an agency
Agencies are a natural extension of freelancing, where you essentially play the arbitrage game by leveraging your brand, distribution, and connections—for example, charging $50/hour while paying sub-talent $25/hour.

For instance, Superteam India members Tushar and Aditya each freelanced on 10+ projects before joining forces to form Little Unusual, a media production house that has now become the go-to agency for launching videos and events on Solana. Content researchers/creators like Ignas (Pink Brains) and Gumshoe (Dotpivot) began by posting insightful threads and posts and later started their own agencies.

A few popular agencies for inspiration include:

1. Content/Marketing: Scrib3, Myosin, Fortyiq

2. Development:  Builderz, Hoodies, Humandone, Solana Turbine

3. GTM: Renaud Partners, Dotpivot 

4. Design and Branding: Dacoit Design, Invisible North

5. Events, production, and video: Goatfish, Little Unusual

6. General Consulting: Blast Ctrl

If you're looking to freelance or eventually build your own agency, working for an existing agency is a great entry point to hone your skills, build your network, and learn the inner workings of the business.

2. Grants:

Grants are a critical component of crypto, where the grant provider wants to encourage and support talented people to build things that benefit the ecosystem. The major source of grants can be:

1.  Blockchain i.e L1 or L2 foundations (eg. Solana Foundation Grants) –– if you are a project building on a blockchain, particularly, public goods (like critical infra/app or research content) that benefit the ecosystem.

2. Protocol DAOs or foundations (eg. Jupiter Grants) –– building tooling or making content, which helps the protocol.

These can be divided into:

1. Short-term grants ($1K to $100K), which include non-protocol grants, like writing content or building open-source tooling.
   
   For example, Superteam has been running instagrants for almost 2 years now, where anyone can apply for grants up to $10k and get the results in 48-72 hours.

2. Long-term grants ($100K to $10 Million), which are typically given out by blockchains (L1/L2s) or protocols with huge treasury –– ideally funded by foundations with > $100 million treasuries. These are generally given out for long-term research grants (eg. Tinydancer), where you have to dedicate 6 to 24 months, and are often milestone-based. Blockchains often also give out huge BD grants to attract protocols or big brands to adopt them (sometimes in millions; non-equity - eg. zksync x lens grants).

   Tips:  

   1. Just like with jobs, always seek referrals, especially for above $10K grants.  

   2. Don’t hesitate to request grants for public goods (e.g., content or tools that benefit the ecosystem positively without clear paths to monetization).  

   3. Newer blockchains or ecosystems often offer larger grants to projects building on them, but at the end of the day, you should genuinely believe in the ecosystem.

   4. If you're serious about scaling your project 100x, don’t rely solely on grants. Grants do put constraints on your projects. Think of grants as salary equivalents, particularly when you have a set grants milestone. You’re essentially getting paid (let’s say, $50k in 6 months) to complete those milestones.

Check out all Superteam Earn Grants or just go to the respective project’s site and you will find the grants section, particularly, if they have set up a foundation or DAO (eg. drift.foundation/grants). Here’s another story of a contributor getting a grant from JUP DAO.

3. Hackathons:

Hackathons are another great way to earn your first $$, particularly, if you’re someone who loves building products. Almost every ecosystem keeps conducting hackathons and they typically have a total prize pool, ranging from $5k to $5 Million. You can think of hackathons as competitive alternatives to grants, where teams compete to build products/protocols. Particularly for Solana Hackathons, hackathon.superteam.fun is a great resource to get started.

Tip: If you're a developer or looking to start your own project, hackathons are one of the best places to build your side project or MVP, with the added motivation to compete and win prizes.

4. Open-source or Permissionless Contribution:

Some projects are very good at rewarding open-source or permissionless contributions (e.g., solving open issues on GitHub or writing a thread/blog about the project without being asked). In addition to landing jobs or gigs with these projects, such contributions can also lead to inclusion in airdrop lists. For instance, BONK airdropped 25 Billion BONK (~$500k at current prices) to Superteam/LamportDAO members who were actively contributing to the Solana ecosystem (though, unfortunately, almost everyone sold it at around $1k :/). Jupiter also had goodcats, where they airdropped JUP tokens to top permissionless contributors (e.g., writing threads or integrating Jupiter SDKs).

Next $100,000+:

1. Jobs – Joining Projects Full Time:

The endgame for anyone to work in crypto full-time. While one can be independent and freelance for/take grants from multiple projects and across range of functions (like design and content), many might still prefer to work for a project full-time as it offers:

1. Stability and more sense of ownership

2. Token upside (10x opportunity)

3. Learn from hugely talented founders and teammates.

Tips: 

1. Kirat, another Superteam member has a great video on his journey to get a job of $400k+ annual salary in less than 1 year and freelance for multiple clients.

2. Apart from job aggregator portals, almost every company, VCs (eg. jobs.multicoin.capital/jobs), and Ecosystem (eg. jobs.solana.com) have a job portal –– applying directly on this will rarely lead to any conversion. Like traditional jobs, it’s always better to directly reach out to founders (via Twitter) or via referrals (via Telegram) –– typically crypto founders are much easier to reach out to.

We'll have a dedicated section on making a career in crypto/web3 later in the essay.

2. Content Creator aka KOL:

KOL (Key Opinion Leader), is a term widely used to describe anyone who has sufficient followers, generally 10k+ on Twitter/YouTube. Generally, they have good reach, influence, and respect and projects use them as a marketing strategy to acquire users or build a narrative. If you’re a KOL, you typically get paid per post or receive advisory token allocations to shill (promote) a particular project.

3. Airdrop/Yield Farming:

Airdrops essentially involve giving tokens to early users or the community for FREE! (Though, not entirely free.) For projects, airdrops are a cost of user acquisition (CAC), where they spend tokens (typically 10% of the allocation) on early users who help the project achieve a specific KPI, like TVL or volumes.

With the prospect of fat airdrops, industrial-level airdrop farmers have emerged, creating thousands of wallets to simulate real users. This practice is known as a Sybil attack—Sybil meaning fake users. If you see an airdrop being farmed by Sybils, it's best to stay away!

Tips: 

1. Be early to a new ecosystem with a novel mechanism. For example, Jito, Celestia, and Arbitrum were category leaders who launched their tokens unexpectedly, resulting in sizable airdrops. Farming the 69th L2 will likely disappoint you, as millions of Sybil wallets and market saturation often lead to lower valuations. For example, holding $500 worth of JitoSOL for one month resulted in a $15K+ airdrop at launch, as there were fewer than 10k wallet addresses, while Jito was a $3 billion+ protocol. Surprise airdrops are always the best.

2. Think of airdrop farming or yield farming as a bet on the project (and its ecosystem) with your time and money. The earlier you participate, the riskier it is, and therefore the rewards are higher—typical risk-reward ratio. The larger your capital, the greater the potential reward. You don’t need to farm hundreds of protocols; just keep using new ones you like organically, as a user. Build your on-chain footprint, and you’ll receive airdrops sooner or later. The meta keeps changing—airdrop farming has been the trend for the last few months, and the next method of community token distribution may be different. But the basic principle remains the same: make concentrated early bets on underrated projects.

4. Running a Validator/Node:

Most blockchains are inherently Proof-of-stake (eg. Ethereum or Solana) and hence, require validators for running the blockchain. Solana validators, for instance, are earning high profits due to Solana Network generating huge fees. In return, they get rewards. Running testnet validators also give good rewards in the form of airdrops as soon as these networks launch their mainnet and native token (for eg. Celestia or Avail).

Next $500K+:

While not very relevant to this piece, this typically involves angel investing/advisory token allocation, Yield Farming, Market Making, VC investing, or taking CXO roles at the projects. In crypto (or in life), to earn a bigger amount, you have to take higher risks. The rule of thumb here is: that if you genuinely believe in a project’s potential and that it’s underrated, it’s worth taking the risk. The ROI here can be insane sometimes i.e you earn a huge amount for the effort you put in.

To summarise, we can also divide the earning opportunities into two major categories (or opposite sides of the spectrum):

1. Structured and Non-Speculative (skill-centric) – Jobs, Bounties, Grants, Fellowships, and Open-source/Permissionless contribution.

2. Unstructured and Speculative (more riskier) – DePIN, Airdrop Farming, and Yield Farming.

Making Career in Crypto/Web3:

Here are some practical tips to help you get started in your crypto career:

How Much Can I Make in Crypto?

Highly subjective, but it pays well and since it’s denominated in USD, you get global rates.  It’s simply a good proxy for working for a Silicon Valley startup while working from anywhere in the world. The 2023 Crypto Compensation Report gives a rough idea about compensation ranges (once you’re skilled enough) i.e typically you will get between $80k to $300k, depending on role, experience, credibility, and location.

Few observations:

1. US-based companies tend to offer higher compensations across all roles, but they have a preference for US-based employees.

2. Avoid “cost of living bias” i.e adjusting salaries based on the geography, particularly if you are from non-US/Europe geographies to bag maximum compensation –– generally quality early-stage companies don’t have cost of living bias. 

3. Most companies are comfortable paying in fiat (your local currency) via Deel or Gusto, if you are employed full-time –– i.e technically, you will be getting paid and paying taxes just like any other job. 

Role-specific Insights:

A brief overview of key insights you'll need to land roles in specific functions:

1. Marketing:

   In crypto, marketing is primarily Twitter/X marketing. Twitter is the town hall for Crypto and the primary communication channel for crypto projects.
   
   An important caveat: Attention is very scarce, with fewer than a million active on-chain users. The consumer target audience can be divided into the following groups:

   1. Whales: Individuals with a net worth of more than $1 million.

   2. Degens: Power users of DeFi, typically making transactions in the $5-10k range.

   3. Retail: Users who take small memecoin trades or are mostly here for airdrop farming (<$1k average transaction size).

   4. Normies: Newcomers to crypto.

   While normies and retail traders are important for protocols like pump.fun (memecoin-focussed), whales and degens help pump your TVL/volume figures, hence, if you nail marketing for whales and degens, you would be a huge asset to the project. For 25-30% of crypto projects like Infra or dev tooling (eg. Helius), developers are also major target users.

   Key tasks for a marketer are:

   1. Twitter Content: Typically involves writing threads or posts on:

      1. Product launches

      2. Educational content

      3. Reply guy’ing (replying and shilling to popular accounts to get attention — doing this effectively without being perceived as spammy is an art). 

         A few favorite project accounts to take inspiration from: Jumper, Phantom, and Solana.

   2. KOL Campaigns: Key Opinion Leader (KOL), a fancy term for influencers (eg. Ansem or Gumshoe) is a critical way of marketing. One has to: identify relevant KOLs -> talk to them: strategize the way of marketing and decide on the incentives -> engage and help them put out content.

   3. Blogs and Documentation: Particularly, for DeFi and Infra-based projects, maintaining documentation (eg: docs.jup.ag) is critical as this is the primary source of truth for any power users/developers.
      
      Marketing Presentation by a16z Crypto is a good resource to get started.

• Product Management: Unfortunately, very few projects hire product managers in crypto. Only a few consumer products (eg. Phantom) hire product managers. Old but this guide by Lenny on Web3 PM is a good read.
  
  However, with a focus on consumers rising in crypto, I genuinely believe Crypto PMs will be in high demand in the coming months.

• Business Development: Apart from conventional BD functions, BD in Crypto is mostly coordinating with different teams on Telegram to figure out integration and representing your projects in conferences. Having a strong market understanding and connections is a huge plus for any BD role.
  
  Do watch Seraphim’s candid talk for BD tips.

In lean teams (7-8 members), BD and Marketing is handled by a single team member and sometimes the combo is also called “growth” role.

There are also other non-development roles, such as VC analysts, researchers, and more.

2. Development: Unsurprisingly, developers are the most in-demand and highest-paying roles and are the lifeblood, especially in a space where everything is driven by code. Broadly, there are three major components:

   1. Frontend –– Quite similar to Web2.

   2. Backend –– Similar to Web2, but requires an understanding of how various on-chain components and integrations with different protocols/smart contracts work.

   3. Smart Contracts –– While the language of smart contracts depends on the blockchain (e.g., Rust for Solana, Move for Aptos/Sui, Solidity for Ethereum), having a solid grasp of smart contract logic and developing that acumen goes a long way in the hiring process.

   Every chain offers plenty of resources to start learning development (for example, Solana has Intro to Solana Development and there’s a curated Solana development guide along with a Backend/Frontend curated guide as well). Once you’ve mastered the basics, reviewing open-source protocol codebases and contributing to OSS is the best next step.

   Tip: Crypto inherently sets a higher bar for quality developers but is equally rewarding. If you're a strong developer with solid math skills, becoming a DeFi/infra smart contract developer is your best shot at maximizing your earnings. A research-oriented approach can further boost your salary to $150k+/year. That said, frontend and backend developers with basic crypto knowledge are also in high demand ($50-150k/year).

3. DevRel: Another important role in Crypto, particularly for Infra and dev tooling projects, whose target audience is developers. As a DevRel, your job is to attract developers to build on top of your protocol or use your tooling. You’ll be responsible for maintaining documentation, conducting technical workshops, and serving as the interface between the protocol and external developers.

Proof of Work – How to Bag Roles

Proof of Work is essentially your pitch or portfolio. It refers to anything you do that:

1. Is created or displayed in public

2. Demonstrates your knowledge of crypto

This includes writing, recording, or tweeting about your work. Superteam Earn Profile

Proof of work can be:

1. For developers –– Build side projects and share a demo (eg. Blinks or Aryan’s Telegram Mini Apps projects).

2. For marketers –– writing blogs/threads or growing a Twitter/X account.

3. For BD – your twitter/X feed or how connected you are.

Figuring out how to build Proof of Work can be tricky—it can simply be a Notion file that includes all your work, as well as links to your Medium/Behance profiles, portfolio website, and more. The best advice is to keep working and sharing publicly. For example, promote your work by replying to popular accounts or permissionlessly completing a task (e.g., creating designs for a project).

On Tokens vs Traditional Equity:

Firstly, there are differences in allocation. For eg:

1. Traditional startup equity –– 20% founders, 20% ESOPs, and 60% investors.

2. Crypto tokens –– 20% team (founders+employees), 30% investors. 50% treasury/community

While the team and investor allocation are way less in a crypto project, higher valuation multiples (FDV) make it a lucrative deal for all early backers. Tokens do have some inherent benefits as compared to traditional equity:

1. Faster time-to-market and liquidity (Token launch is typically done in 12-36 months, as opposed to typical 8-10 years for IPO). Typically, the cliff is 6 months as opposed to 1 year for startup equity.

2. More globally accessible.

3. Liquid unlocked tokens come with benefits like – lending, staking, yield farming, etc in DeFi. The infamous Curve founder using their tokens as collateral for borrowing is an example.

4. No dilution – for fixed supply tokens i.e your 0.1% of the total token allocation remains 0.1%, whereas, for traditional startups, equity keeps getting diluted with each new round.

5. At the time of token launch, most good projects are lean teams (~10-15 folks), which gives better token allocation. For instance, tensor was just 7-8 folks when they launched their token at $1 billion FDV! While the token allocation hugely varies, on average an employee is given 0.1 to 0.3% of the total token allocation.

While it’s easier for DeFi and Infra projects (eg. blockchain or DEXs or Lending/Borrowing projects) to offer tokens, for projects like Wallets (eg. Phantom), offering tokens can be tricky and as an employee, you will be offered equity (with an option to convert tokens if they launch one).

Tips: Before negotiating for token allocation vs base salary, just put yourself in the shoes of an investor and think if you would genuinely bet on this project or not.

How to Decide on Joining a Project (company)?

1. Pre-token launch: It’s quite similar to vetting any company i.e you check the founder’s background and the quality of VCs and angels. However, for crypto-specific projects, here’s how you can evaluate whether it’s worth joining a project or not –– as Kash notes previously:

   1. Community –– Community is the ultimate moat in Web3. However, building a community is difficult, so some founders take ill-advised shortcuts. If the company's Twitter page has 30,000 followers but only gets 5-10 “likes” per Tweet, they’ve likely purchased fake followers. Similarly, if Discord has 20,000 members but only a few messages a day, they’ve likely purchased bots to add to their numbers. Both are red flags.
      
      Also, how engaged is the community? Most Web3 projects have communities in Telegram or Discord. As you vet projects, make sure to spend some time on those servers. Are the founding team members active? Is the community supportive of the project’s mission, or are they just saying “wen airdrop”? How are the vibes? Projects that make their communities a priority tend to beat those that don’t, so it’s worthwhile to invest time into understanding how engaged the community actually is.

   2. What is the token unlock/vesting schedule? One easy way to spot get-rich-quick schemes is to look at the rate at which investors and founders will receive their tokens. Ideally, early supporters should have long horizons (e.g. their tokens vest over 3-5 years). This aligns the founders and investors to the long-term viability of the project. On the other hand, if investors and the founding team have many tokens unlocked in the first 12-18 months, it’s a red flag.

   3. Who are the project’s investors? Good Tier-1 VCs (e.g. a16z crypto, Electric Capital, Placeholder, Multicoin, Dragonfly, AllianceDAO, etc.) are always a green flag. Of course, there have been amazing projects like Jupiter or Flash Trade, which haven’t raised any VC funding and are tier-1 projects.

2. Post-token launch: 

   1. Look for the market cap and FDV at Coingecko; prices typically reflect the future potential and the community sentiment. Sometimes, a simple chart tells you the whole story.

   2. Most post-token projects have two entities setup:

      1. Foundation or DAO setup (eg. JupDAO) –– more focussed on community and ecosystem development

      2. Labs –– more focussed on innovation and product developed

      It’s important to note which entity you are getting employed at and it aligns with your vision.

   A typical job duration in crypto is typically 6-12 months, which is generally shorter compared to traditional startups –– which makes it a bit unstable, while at the same time, there is higher room for role promotion/salary increment due to faster iteration cycles.

Getting Started on Solana –– The best ecosystem for Crypto Startups

While choosing an ecosystem can be tricky, Solana is the San Francisco of crypto—home to the most ambitious, product-oriented founders and a vibrant creative community. And everyone knows SF is one of the best places to be for startups!

Here are a few stories to help you get inspired on how to get started on Solana:

1. Scroll through the replies on this post.

2. Some of our members and friend’s stories –– Mert, Solandy, Akshat, Aditya Mallick, and Brian Friel

3. Watch stories of people who earned their first crypto (Youtube)

If you’re new to crypto or Solana, I would highly recommend downloading Phantom wallet or just follow Welcome to Solana by Jupiter –– it’s the first step.

Go Earn Your First Dollars – Be a Crypto Native:

Pick your strength (eg. design) and focus on earning your first $$ –– it helps you be crypto-native. Here’s how to be crypto-native faster:

1. Identity hottest narratives –– follow the right people on Twitter and see what they are talking about or just listen to popular podcasts like Lightspeed, Bankless, Bellcurve, and Unchained/Chopping Block.

2. Crypto Twitter/X –– Spend time, and understand the main characters (follow project founders), and the ongoing lore/culture. 

3. Network –– Join communities (eg. Superteam), make friends, and go to quality conferences (eg. token2049).

4. Favorite Projects and Sectors –– Pick 4-5 projects to admire; you should be able to say why they’re awesome. Have a good sense of what different verticals are:

   1. Consumer –– DRiP (Social), Pump (Memecoins), Code (Payments)

   2. NFTs –– Tensor

   3. DePIN –– Helium

   4. DeFi – Jupiter

   5. Infra –– Jito (MEV), Sonic (Layer-2s), Helius (Dev tooling)

5. Subject Interest: Read the state of the ecosystem deep dives of the sector of your interest (eg. Solana DeFi) or read docs and code of the protocols you are interested in. Start writing threads/essays, make open-source contributions, and ship small projects.

6. Time in Market – Use apps and start making an on-chain footprint; the more time you spend using the apps and being part of a community, the more crypto-native you become.

Always be shilling – Make sure you keep posting your work on Twitter/X, and especially keep replying to popular accounts. The more surface area your work has, the greater the opportunities.

That’s it! If you've followed me through this entire guide, it’s now your turn to go out and earn.

This piece was hugely inspired by the “How to Start Earning in Web3” article Kash Dhanda wrote 2 years ago; consider it an updated version of that article. Check out the YouTube version of How to Get a Job in web3 as well.

Feel free to contact me at Yash Agarwal (@yashhsm on Twitter) or Yash (Linkedin); if you’re someone who needs genuine help. Go share it with your friends –– who knows it might help earn their first $$ and transform their lives. 

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Special thanks to Kash (Superteam), Aryan (Superteam), Pratik (Superteam Earn), Akshay (Superteam), Sitesh (Shoal Research), Ruchil, and Geoff (Renaud Partners) who reviewed and provided insights at different stages of the draft.

Solana is going to have and needs to have L2s and/or rollups

His frustration arose because DRiP has been leaking significant value (~$20K/week) to the base layer, thanks to rising SOL prices and network congestion. Increased activity on Solana leads to:

• Pros – Enhanced liquidity, capital, and transaction volumes (owing to composability)

• Cons – Elevated infrastructure costs, poor user experience, and congestion

However, DRiP, which primarily uses Solana just as infra to distribute millions of NFTs weekly from artists to thousands of wallets, does not benefit from high composability. The growth in Solana’s TVL and capital influx has little impact on DRiP, which primarily suffers from drawbacks, such as high infra costs.

Vibhu points out, “Composability has diminishing returns.” He also notes that Solana app developers are discussing privately their desire for rollups because of:

1. Increased transaction throughput, less block space competition, and reduced fees.

2. Greater control over the economic value their businesses generate.

Over the past few months, Solana has experienced multiple congestion incidents, ranging from airdrops like JUP to ORE mining and peak memecoin trading. While one might argue that the Firedancer can resolve all these issues, let's be realistic: the timeline remains uncertain, and it cannot scale beyond 10x for now. Despite this, it's true that among all the major chains that have been battle-tested, Solana stands as the last remaining true monolith.

Should Solana remain a monolith or become modular? Will Solana also evolve like Ethereum with fragmented L2 and L3 solutions, among others? What is the current landscape of appchains and rollups on Solana?

To address these questions and summarize the entire debate, this essay will explore all possibilities, discuss various projects, and evaluate their pros and cons.

This article won’t delve deeply into technicalities but will instead adopt a more market-oriented and practical perspective in discussing various scaling approaches to provide an overview.

All insights, no fluff – plus plenty of alpha.

In a nutshell, we will discuss:

1. Solana and the Congestion

2. Making Solana Modular

3. Solana Appchains - with examples

4. Sollana Layer-2s and Rollups (RollApps) – with examples

5. Infra Powering Rollups and Appchains

Solana and the Congestion:

Let's start by addressing the elephant in the room: the Solana network has been highly congested lately (now mostly resolved) due to airdrops, a substantial amount of memecoin trading activity, and so forth, leading to high ping times, a high percentage of failed transactions, and increased network fees due to higher priority fees. Despite all of this, Solana has consistently processed around 1-2k TPS, more than all EVM chains combined. I would say it’s a good problem for a blockchain to have, and it has also put Solana’s monolithic thesis to the test.

The Solana Foundation recently published a blog urging projects to take immediate actions to enhance network performance, including:

• Implementing priority fees – critical to avoiding delayed or dropped transactions.

• Optimizing Program Compute Unit (CU) usage – using only what is necessary.

• Implementing stake-weighted Quality of Service (QoS) – allowing apps to prioritize their users’ transaction processing.

However, all these measures only somewhat improve transaction completion and do not guarantee a smooth transaction UX. One immediate fix to this issue is the much-anticipated new Transaction Scheduler, slated for release in version 1.18 targeted for late April. It will be introduced alongside the current scheduler but will not be enabled by default, allowing validators to monitor the performance of the new scheduler and easily revert to the old one if any problems arise. This new scheduler aims to fill blocks more efficiently and economically, improving upon the old scheduler's inefficiencies. Read this article to learn more in-depth about the new Scheduler.

Anza (a spinoff entity from Solana Labs) has been continuously trying to solve the network congestion which has been identified as issues related to QUIC implementation, and the behavior of the Agave (Solana Labs) validator client, when asked to process a large number of requests.

While proponents of modularity have strongly advocated for a 'modular roadmap' for Solana, Solana Labs/Anza (the core maintainer of the Solana protocol) remains focused on optimizing the base layer's throughput and latency. Some potential improvements include:

1. Overhauling the fee markets and increasing the base fees (currently set at 5,000 Lamports or 0.000005 SOL).

2. Implementing an exponential write-lock fee for accounts, i.e., incrementally increasing fees over time to discourage spamming.

3. Optimizing CU budget requests through a penalty system.

4. Enhancing the overall network architecture.

Even with these improvements in vertical scaling (single chain), we can't dismiss the possibility of Solana adopting horizontal scaling (rollups). The reality is that Solana can become a hybrid of both – it could serve as an excellent base layer for rollups, boasting super low latency block times (~400 ms) that would significantly benefit rollups, such as enabling super-fast soft confirmation from sequencers. The best part is that Solana has historically been quick to implement changes, potentially making it a more efficient layer for rollups than Ethereum.

Update: Anza has now pushed some patches help alleviate some of the ongoing network congestion, and will be followed by further enhancements in v1.18.

Making Solana Modular:

The efforts to make Solana modular have already been started. As Anza DevRel's post indicates, the Solana validator and the SVM (execution environment that processes transactions and smart contracts/programs) are tightly coupled and maintained by Anza (a spin-off entity from Solana Labs). However, the validator client and the SVM runtime will be separated over the next few months. This separation will facilitate forking off the SVM and easily creating 'Solana appchains.'

For rollups, the benefit could come from optimizing the Data Availability (DA)/blob layer of Solana, although this may happen at a later stage.

Joe C (engineer at Anza) also unveiled the plans for making SVM modular, where the transactions processing pipeline will be taken out of the validator and put into SVM. This will enable developers to run the implementation of SVM and operate independently of any validator.

The isolated SVM will be an assembly of entirely independent modules. Any SVM implementation could drive these modules through well-defined interfaces, further reducing the barriers for SVM-compatible projects by significantly decreasing the overhead required to architect custom solutions. Teams could implement only the modules they are interested in, while utilizing established implementations for the rest, such as those from Agave or Firedancer.

In short, Solana would be more plug-and-play, making Solana appchains and rollups much easier.

Broadly, there are two directions, where this can go: Layer-2s/Rollups and Appchains. We will have a look at both – one by one.

Solana Appchains:

Also known as SVM forks, these are essentially forks of the Solana chain dedicated to specific applications. Pyth was the first Solana appchain, but the concept truly gained attention when Rune, the founder of one of the largest DeFi protocols, Maker, caused quite a stir with his proposal to develop a Maker appchain (for governance) based on the Solana (SVM) codebase. He chose SVM due to its strong developer community and technical superiority over other VMs, aiming to fork the most performant chain to better meet consumer needs. Although nothing has been implemented yet, this move sparked a much-needed debate on Solana appchains.

Broadly, it can be of two types:

1. Permissionless – Anyone can join the network, similar to the current Solana mainnet.

2. Permissioned – Packaged as 'Solana Permissioned Environments (SPEs)' by the Solana Foundation for institutions, it allows entities to build and maintain their own chain instance, powered by the SVM.

Pyth – The OG Solana Appchain:
At one time, Pyth accounted for 10-20% of all transactions on the Solana mainnet. However, it didn’t require any composability, so they simply forked the Solana codebase. This allowed them to leverage Solana’s fast block time of 400 ms for high-frequency price updates. Pythnet was the first network to adopt SVM for its appchain.

The Pythnet appchain is a Proof-of-Authority fork of Solana’s mainnet, serving as a computational base layer for processing and aggregating data provided by Pyth’s network of data publishers.

Why did Pyth move?
-It didn’t require high composability (particularly for non-Solana apps) and was thus free from mainnet congestion.
- It needed a permissioned environment for publishing data.
- Reducing infra costs by internalizing the fees, which was previously leaked to the base layer (Solana).

Cube Exchange is another example, a hybrid CEX deployed as a sovereign SVM appchain (with a completely off-chain order book and settlement on their SVM appchain)

Some examples of Solana Appchains could be:

1. Perp DEXs: Like Hyperliquid, Perp DEXs can operate as separate L1 networks. Additionally, for trading use cases, the number of transactions per block can be customized, or conditional logic can be implemented, such as integrating the execution of a stop-loss order directly into the L1, ensuring it is enforced as a state transition, or introducing atomic logic specific to the app.

2. AI and DePIN: These can feature a controlled list of service providers like Pyth. For example, Akash operates as a compute marketplace via a Cosmos appchain.

3. Governance appchains: Validated by MakerDAO's interest in an SVM app-chain, a sovereign governance appchain can be compelling. Governance in crypto is still evolving, and having a dedicated chain-to-fork can be a useful coordination mechanism.

4. Future Enterprise appchains: Potential applications include funds (like BlackRock) or payment systems (like Visa or CBDCs).

5. Gaming Appchains: A casino gaming project on Solana is considering its appchain.

6. Modified forks of Solana: Similar to how Monad or Sei offer optimized EVMs (parallelized), someone could build a more optimized version of Solana. This trend might become more prevalent in the coming years, especially as the Solana mainnet begins to explore new design architectures.

Envisioning the Solana Appchain Stack:

While establishing an appchain may be relatively straightforward, ensuring connectivity across all appchains is crucial for interoperability. Taking inspiration from Avalanche Subnets (connected by native Avalanche Warp Messaging) and Cosmos appchains (connected by IBC), Solana could also create a native messaging framework to connect these appchains.

One could also create a Cosmos-SDK-like middleware, offering a turnkey solution for creating appchains with built-in support for oracles (like Pyth or Switchboard), RPCs (like Helius), and messaging connectivity (like Wormhole), among others.

Polygon AggLayer would also be an interesting approach, where devs can connect any L1 or L2 chain to the AggLayer, which aggregates ZK proofs from all connected chains.

Is an Appchain Net Positive for the Solana Ecosystem?

Although appchains do not directly accrue value to SOL, as they would not pay fees in SOL or use SOL as the gas token—unless the re-staked SOL is used for economic security—they do greatly benefit the SVM ecosystem. Just as there are 'EVM network effects,' more SVM forks and appchains will strengthen SVM network effects. The same logic that makes Eclipse (SVM L2 on Ethereum) bullish for SVM applies, even though it is a direct competitor to the Solana mainnet.

Solana Layer-2s:

Solana Layer-2s, or rollups, are logically separate chains that post data to their host chain's Data Availability (DA) layer and reuse the host chain’s consensus mechanism. They can also use other DA Layers like Celestia, however, it doesn’t remain a true rollup. “RollApp” is a term generally used for Application-specific Rollups (which most Solana applications are exploring).

Would Solana Rollups be the same as Ethereum?
Apparently No. For Solana, Rollups would be mostly abstracted away for the end user. On the ideological front, Ethereum rollups were top-down, where the Ethereum Foundation and leaders decided that the best way to scale was through rollups, and they started supporting various L2s after the CryptoKitties fiasco. Whereas on Solana, the demand is bottom-up, i.e., coming from application developers with significant consumer adoption. As a result, most of the current roll-up plays are marketing plays and are more narrative-driven than consumer demand-driven. This is a significant difference and may lead to a different future for rollups than what we saw on Ethereum.

Are Compression = Rollups?

L2s scale base layer blockchains (L1s) by executing transactions on the L2, batching the transaction data, and compressing it. The compressed data is then sent to the L1 and used in either the fraud proof (optimistic rollup) or validity proof (zk rollup). This proving process is referred to as 'settlement.' Similarly, compression offloads transactions from the mainnet, reducing contention for state on the base layer. Notably, Grass L2 will be leveraging State Compression for its rollup.

Rollups Landscape on Solana:

Two ‘somewhat rollapps’ are live currently:

1. GetCode:

A payments app with a micropayments SDK enables anyone to pay and accept payments instantly and also uses a pseudo-rollup for its application. It creates intents for all transactions and employs a rollup-like sequencer, which settles on Solana after N intervals.

Using a rollup-like structure enables:

1. Flexibility: Intents can represent various future activities, not just payment transactions. Moreover, Solana as a chain can also be replaced if necessary.

2. Instant and Private: Given the soft finality of the sequencer, payments are instant even during Solana congestion. While transactions are visible on-chain, the exact value and intent remain obscured, ensuring user privacy.

2. Ephermal Rollups by MagicBlocks

MagicBlocks, a web3 gaming infra has developed Ephermal (or temporary) rollups, particularly for games. It uses SVM’s account structure and the game state is split into clusters. It temporarily transfers the state to an auxiliary layer or the “ephemeral rollup”, a configurable dedicated layer. The ephemeral rollup operates as a specialized SVM runtime or rollup to facilitate transaction processing at an elevated throughput.

Using a rollup-like structure enables:

1. Customization of the specialized runtime to include features like gasless transactions, quicker block times, and the incorporation of a ticking mechanism (e.g., an integrated transaction scheduling system like clockwork, operated without fees).

2. Developers to deploy programs to the base layer (e.g., Solana) rather than on a separate chain or rollup. ERs don’t fragment the existing ecosystem and allow the acceleration of targeted operations without creating an isolated environment. This means all existing Solana infrastructure can be utilized.

This approach facilitates a highly scalable system capable of launching rollups on demand and auto-scaling horizontally to accommodate users performing millions of transactions, without the trade-offs typical of traditional L2s. While MagicBlock is specifically focused on gaming, this approach can be applied to other applications like payments.

Upcoming Solana Rollups:

1. Grass: A DePIN project aimed at solving AI data problems through verified scraping. When Grass nodes scrape the web for AI training data, validators will store the data on-chain, tracking precisely where the data originated and which node was responsible for scraping it, rewarding them proportionately.
   

   Grass requires 1 million web requests per second, which is unfeasible on the Solana mainnet. Therefore, they plan to make ZK proofs of the origin data for all datasets and batch them for settlement on Solana L1. They are considering using state compression from another cluster and settling roots on the mainnet-beta.
   

   This development will position Grass as a base layer for a wide range of applications that are only possible atop Grass (note that platforms and infrastructure often command much higher valuations and Grass is launching the token soon :P).

2. Zeta: One of the oldest perp DEX on Solana which had a completely on-chain perp order book is also planning to move its matching off-chain via the Solana rollup.
   
   Perp DEXs have an immediate PMF for rollups as they significantly improve UX. Just ask someone who has traded on Hyperliquid or Aevo versus Solana perp DEXs, where you have to sign each transaction, a wallet pops up, and you have to wait ~10-20 seconds. Furthermore, perps don’t require synced execution and offer high composability with the rest of DeFi, particularly in the trade matching aspect.

   

Interestingly, Armani (Co-Founder of Backpack) also tweeted they are now tending to L2.

Sonic is also building a modular SVM chain (Hypergrid) that will enable games to deploy their own chains on Solana. There are also SVM-based Ethereum rollups like Eclipse and NitroVM that use SVM as the execution engine. Neon functions as an EVM-compatible L2 on Solana. Additionally, there are projects at the idea stage, such as Molecule (an SVM Bitcoin Layer 2).

Sovereign SDK is another framework similar to node.js, but for building rollups. Users bring their Rust code, and we turn it into an Optimistic or ZK rollup that can be deployed on any blockchain. The Rust code can be your specific app logic, or any VM.

A few theses on Rollups:

1. Rollups = Being SOL-Aligned:
   The term 'ETH-Aligned,' or a better word for 'ETH Bag Biases,' has become a popular meme. Why do you think Layer 2s and Restaking/EigenLayer have become the hottest narrative? It's because they increase the 'Moneyness of ETH,' with ETH being used as the core asset everywhere.
   

   The same principle applies to Solana. The Solana community will rally around any solution that boosts their SOL holdings – it’s that simple. As the Solana ecosystem expands, the once-overlooked 'Moneyness of SOL' will come into significance. Remember, most Rollups are anyway “Marketing Play” and give better token value accrual as markets still value Infra more than Applications.

2. Rollups will feel like an extension to Solana:
   Beyond security benefits (i.e., inheriting security from the base layer), easy access to Solana users and assets will be a significant advantage. As Jon Charbonneau notes, Ethereum Rollups such as Base, Optimism, and Arbitrum feel more like extensions of Ethereum. Users maintain the same wallets and addresses, the native gas token is a single canonical version of ETH, ETH dominates DeFi with all trading pairs, social apps price NFTs in ETH and pay creators in ETH (e.g., friend.tech), and deposits into the L2 are instant, etc.

   
   Similarly, this will happen with Solana. Learning from Ethereum, most Solana Rollapps will not make users feel like they are using a separate chain (e.g., Getcode).

3. Solana will see more “RollApps” than “Rollups”

   Solana doesn’t have a scaling problem like Ethereum where the mainnet is simply unusable due to high gas fees, it’s highly optimized. However, some apps which need dedicated blockspace will create their rollups. While general-purpose Rollups on Solana don't make sense to me, economically it does make sense for the projects. For instance, Base users generated $2 million in revenue for Coinbase in just one day! The incentives for builders are heavily skewed towards L2. However, as observed, every EVM rollup appears to be a vanilla roll-up, and many, like Linea, Scroll, or zkSync, have become ghost chains with only farmers conducting a few transactions for token airdrops.
   

   Furthermore, I feel general-purpose L2s on Solana may lead to the same old Ethereum problems, i.e., centralized rollups, congestion, and liquidity fragmentation.

4. Why would some apps want to move to Rollapps/appchain?

   Every app will initially start on the Solana Mainnet, as hosting more apps on shared infrastructure significantly reduces developer and user complexity. However, as these apps grow, they might seek to:

   1. Value Capture: It's more challenging to internalize value on a shared Solana layer not designed with just one application in mind. MEV capture can be another lucrative option for DEXs.

   2. Dedicated Blockspace

   3. Customizability in use-cases like:

      • Privacy: For example, Getcode uses a sequencer to facilitate private payments for its users.

      • Fee Market Experimentations

      • Encrypted mempools to minimize MEV

      • Tailored order books

   
   However, not all apps will want to launch their own Rollup, especially those that have not reached a certain escape velocity (for example, sufficient TVL, users, volume). Launching your own chain today involves painful and unnecessary trade-offs (complexity, cost, worse UX, fragmented liquidity, etc.), which most apps, particularly those in the early stage, cannot justify for the incremental benefits. Solana remains the heart and soul of SVM development, and many new applications will likely be deployed as a result.

   For App Builders: Solana Mainnet or Appchain or Rollup

   Completely depends. If there is not a strong need for composability with all other apps, taking a few different components off-chain (either appchain or rollup) completely makes sense. A user shouldn’t need to know they are even using a rollup or appchain. Grass, Zeta, and Getcode all abstract any rollup-type infra they are using for their users.
   
   For permissioned and customization use cases, Token Extension also serves most of the needs like KYC/transfer logic while retaining the composability.

   So, Will DRiP be an L2/appchain?

   Currently, DRiP uses Solana for:

   • User-creating wallets (can be on L2/appchain)

   • Distributing Compressed NFTs (can be on L2/appchain)

   • Trading of Compressed NFTs (can be on L2/appchain, but funds need to be bridged)
     

   We can clearly see there isn’t a strong need to be on Solana Layer 1, besides the tech which L2s/appchains can also provide. Since the primary target of DRiP has always been web2 users, it can very well onboard them directly to their chain, which gives it much higher control in the long term as it won’t be leaking all the value to the base chain (Solana). Further, DRiP has reached the escape velocity (largest consumer app on Solana) to now move to their own chain. A pseudo-rollup structure like Getcode completely makes sense for DRiP.

Infrastructure Powering Rollups and Appchains:

If the rollapp/appchain thesis expands, existing infrastructure providers will benefit greatly as they tap into new markets:

1. Existing Rollup as a Service (RaaS) providers like Caldera can easily enter the SVM market as demand emerges. SVM Ethereum rollups like Eclipse and NitroVM are also keenly watching this opportunity. Additionally, Sovereign Labs offers a Sovereign SDK Solana adapter that enables rollups on Solana (not yet production-ready). Helius is another company well-suited to build infrastructure for Solana L2s, as Mert has hinted at multiple times.

2. Shared Sequencers like Rome Protocol and the need for Light Clients like Tinydancer. Shared sequencers can be interesting for rollups as they enable activities such as atomic arbitrage, MEV, and seamless bridging, decreasing liquidity fragmentation.

3. Wallets like Phantom, Backpack, and Solflare. Multi-sig and smart contract wallet infrastructure like Squads. Squads have always been positioned as “The definitive smart contract wallet infrastructure layer for Solana and SVM.”

4. SOL Restaking: The modular thesis also promotes restaking as these rollups/appchains might require SOL shared security and become more aligned with Solana. This leads to:

   1. Early-stage players like Cambrian, Picaso, and Solayer

   2. Jito via Stakenet and LSTs like Sanctum

   3. Validators — increased revenue

Closing Thoughts: Can Solana Handle the Entire World’s Demand?

Definitely not. Let’s be realistic: even considering Moore's Law (that hardware performance will continue to improve, and Solana is optimized for such hardware advancements), it's impractical. I believe that all less critical transactions (like DRiP sending NFTs) will eventually move to their own chains, while the most valuable transactions will remain on the main chain, where true composability is essential (e.g., Spot DEXs).

And no, this doesn’t mean that Solana has lost in the monolith and composability battle; it will manage cases that depend on composability and low latency better than other chains. And no, Sui/Aptos/Sei/Monad, etc etc aren’t any better yet, as we don’t know and they are yet to be battle-tested for the high real user activity.

Unlike Ethereum, the Solana Mainnet is not aiming to be the “B2B chain”; it was and always will be the consumer chain. Building distributed systems at scale is incredibly challenging, and Solana has the best potential to become the global shared ledger for the most valuable transactions.

Solana Needs Soulmates: Could Appchains and Rollups Be Its Perfect Match?

Feel free to contact me at Yash Agarwal (@yashhsm on Twitter) for any suggestions or if you have any opinions. If you find this even slightly insightful, please share it — justifies my weeks of effort and gets more eyeballs :)

Special thanks to Karthik (PepperDEX), Brian Breslow (Dorahacks), Parth (Arana Ventures), Rex (Anza), Het Dagli (Superteam),  Kash (Superteam), and Akshay (Superteam), who reviewed and provided insights at different stages of the draft.

However, the new teams entering the Solana DeFi ecosystem have been somewhat underwhelming, partly due to a lack of new narratives and a smaller number of teams focusing on new Only Possible on Solana (OPOS) mechanisms.

It’s time to focus on new DeFi ideas and encourage more teams to build in the DeFi sector, which drives economic activity in Solana.

Here’s my attempt to showcase the top 10 themes, with relevant ideas in each worth exploring. While we are focusing on Solana, some of these themes can be applied to other high-performance chains as well.

This article will be on an intermediate/advanced level; if you are looking to understand Solana DeFi – I have written a 7k Word report on the “State of Solana DeFi”. In a nutshell, we will discuss:

1. DeFi Stablecoins

2. LSTs, MEV, and Restaking

3. Money Markets

4. Interest Rate Derivatives

5. RWAs and DeFi Composability

6. Perp and Derivatives

7. DeFi Infra

8. MemeFi and Social DeFi

9. Protocols Tending to Become Platforms

10. Interfaces (UX Agreggators)

Theme 1: DeFi Stablecoins Mechanisms Will Get Wilder

We need more DeFi-native stablecoins acting as DeFi money, forming liquidity pairs in DEXs and lending/borrowing projects. Primarily, their utility is yield-driven. DeFi stablecoins lack utility as they are not a good medium of exchange (i.e. used for transactions).

Stablecoins, or synthetic dollars, can be widely categorized as follows:

1. Fiat-backed stablecoins, such as USDC, USDT, and EURC. M0 is another upcoming stablecoin player on Ethereum.

2. CDP stablecoins, like DAI and Frax.

3. LST-backed stablecoins, including:

   1. CDP structures like eUSD by Lybra and mkUSD by Prisma.

   2. Delta-neutral projects like Ethena and Resolv Labs (UXD on Solana was a precursor).

4. RWA-backed stablecoins, such as USDV, USDY, USDM and ISC.

5. Perp DEXs that offer their synthetic versions, like Synthetix (sUSD) and Aevo (aUSD).

6. Algorithmic stablecoins, like Gyroscope, use isolated vault reserves to reduce correlation risks and implement a Dynamic Stability Mechanism, utilizing a decreasing bonding curve for redemption.

On Solana, two LST-backed stablecoins are emerging: MarginFi’s YBX and Jupiter’s SUSD, along with very early projects like Surge Finance emerging.

Alpha for Solana builders:

1. Newer design mechanisms, taking inspiration from Ethereum stablecoins.

2. Go-To-Market – Most stablecoins struggle with initial liquidity and traction; since the primary utility is yields – it can be an interesting play to leverage. For instance, increasing DAI-enabled Enhanced DAI Savings Rate (EDSR) led to a boost in DAI’s circulation i.e. increase in ~$1.5 billion of DAI deposits (~30% of the total DAI supply). USDV gives yield to verified minters like DeFi projects to boost circulation, which can then also give incentives to its users (think of how Arbritrum DAO gives ARB to projects that distribute it to users).

3. The hottest Ethereum stablecoin — Ethena ($1.3 billion+ in issuance) is also coming to Solana soon. One can also build a ‘Solena’, where it’s Ethena-like mechanics, but with SOL. However, CEX listings of Solana LSTs and depths of SOL perps are a major hindrance; slowly but surely will get there.

The Case for an On-chain Foreign Exchange (FX) Market

The FX market is huge, with over $6 trillion in daily volume. The availability of fiat-backed stablecoins with adequate liquidity could pave the way for on-chain spot FX markets through order books and AMMs. Envision a scenario where a merchant can accept payments in USDX and instantly convert them to YENX, with Jupiter routing the transaction through multiple liquidity venues. Someone will sooner or later build a spot Forex trading platform on Solana.

Theme 2: (Re)Staking and LSTs – Moneyness of SOL

Solana’s LST scene has now consolidated into three major players — Jito, Solblaze, and Marinade. Sanctum is another interesting player in the LST space, solving for liquidity and building LST-as-a-service. However, the number of LSTs is still way less, and more LSTs are beneficial for network decentralization too. Further, LSTs are a major contributor to DeFi, and increasing their deposits in lending/borrowing markets or LP pools leads to higher chain TVL.

Alpha for builders:

1. More LSTs — There’s still an opportunity for new LSTs to enter the market and capture a significant share of LSTs on the back of token launch hype and incentives. For instance, Solblaze went from $30k SOL to $3 million SOL in just 8 months, leveraging BLZE incentives and focussing on DeFi integrations.
   
   Another strategy for newer LSTs would be to follow newer design mechanisms — for instance, follow the two-token model like Frax Ether ($1 billion+ TVL), where it has two tokens:

   1. frxETH – 1:1 pegged to ETH and doesn’t accrue staking yields.

   2. sfrxETH – accrues staking yields.

   
   This allows for a higher yield for staked ETH while ensuring deep liquidity for frxETH with ecosystem-wide integrations. frxETH also has higher DeFi TVL compared to peers like rETH, due to Fraxlend integration and liquidity incentives.

2. Validators launching LSTs — With increasing MEV and priority fees, we will very well see validators launching their own LSTs and sharing more rewards with stakers to attract stakers. Sanctum is a key player catalysing this.

3. Yield Maximisers for LSTs – For instance, Kamino Multiply has one-click vault products designed for leveraged yields for LSTs through looping (lending LST and borrowing SOL –> Staking SOL for LST → repeat). There can be a huge array of products in this space (more on this later).

4. SOL Restaking — There’s also an opportunity for Solana to embrace an equivalent to Ethereum’s shared security / restaking layer, enabling projects with access to the best validators to further increase their yields via restaking. Unlike Ethereum, where the AVS are rollups/appchains/bridges that require economic security, the same doesn’t apply to Solana, as it doesn’t have a modular thesis yet.
   
   However, it’s still worth exploring as AVS on Solana can be — Clockwork-type Keeper networks Pythnet-style appchains, or any networks like DePIN which is ‘SOL-aligned’ and requires economic security. Further, if the Rollapp/appchain thesis on Solana picks up, the SOL restaking narrative can be huge!

5. On MEV – Recently, Jito Labs suspended its mempool services provided by the Jito Block Engine due to an increase in sandwich attacks. The decision has sparked mixed reactions within the community, with some appreciating Jito's proactive stance, while critics argue it could lead to private deals and potentially a new, private mempool being developed in response.
   
   With increasing DeFi activity, MEV is only going to increase, and projects (and LSTs) can leverage this to their fullest.

   

The amount of SOL in LSTs is still underwhelming (< 5%), compared to Ethereum (>20%) which needs to be solved. Overall, it’s now time to increase the moneyness of SOL and ensure the upside of SOL prices is also captured by the DeFi ecosystem.

Theme 3: The Next Generation of Money Markets

While the core money markets (lending & borrowing), such as Solend ($300 million), MarginFi ($800 million, and Kamino ($1.1 billion), are established, it’s now time to innovate on the design mechanisms that make them more efficient. For instance, MarginFi still lacks the eMode (a feature by Aave v3), which increases capital efficiency.

Focus on higher capital efficiency: As the blue-chip lending/borrowing like MarginFi and Kamino, exhaust their points and launch tokens; users will want higher capital efficiency, especially for leveraged yield farming.

Alpha for builders:

1. New Design Mechanisms: For instance, a few interesting ones explored by EVM projects are:

   1. Alchemix which are self-repaying loans allows you to leverage a range of tokens without risk of liquidation.

   2. Modular architecture like Euler v2 which consists of ERC-4626 credit vaults (lending pools), connected via Ethereum Vault Connector (EVC) contract. This also enables developers to permissionlessly create & activate lending vaults with all kinds of configurations like selecting any collateral, choosing oracles setting TVL, interest rates, etc. This can have network effects and compound liquidity as one vault’s shares can be used as collateral for any other vault inside the Euler ecosystem.

   3. Morpho Blue for higher capital efficiency

   
   There’s no harm in taking inspiration from upcoming Ethereum protocols with innovative designs; better than just creating Aave v3 forks.

2. Optimizers on Existing Money Markets: Taking MarginFi’s SOL market as an example, there is a considerable spread between lending and borrowing yields — a situation that applies to almost all markets. This is due to the liquidity pool mechanism, where the pools are underutilized, leading to lower yields – [ supply rate = borrow rate * utilization ratio ].

   

   A potential solution could be to build something like the Morpho Optimizer,, where the supplied liquidity is dynamically matched peer-to-peer as borrowers come and go (effectively 100% utilization rate). For matched liquidity, the lender's yield is the same as the borrower's rate: matched lenders do not share interests. In cases where the liquidity is not matched, it will tap into the underlying lending pool, such as MarginFi or Kamino. Altitude is also a good reference. Flexlend and JuicerFi are well suited to build this.

3. Fixed Rate Lending: Most of the current Peer-to-Pool lending protocols like MarginFi and Solend follow floating (variable) rates and a low utilization rate results in a high spread, essentially creating a TradFi-like banking system with high spreads but with a pool as the intermediary. Fixed Rate Lending is a way to fix this.
   
   The DeFi fixed rate market share is below 1%, while the TradFi dominance of fixed rate is ~98%, and this is there for a few reasons:

   1. Passive: Peer-to-pool models do not have expiry dates and, hence, require far less maintenance.

   2. Lindy Effect: Floating rates have been battle-tested, which leads to the lindy effect like sticky TVL.

As Delphi Report notes, Fixed-rate lending in DeFi remains nonexistent. Yield protocol shut down, and Notional Finance’s v2 shutdown (it started with bang with $1 billion TVL and now dropped to $17 million) shows underwhelming demand. Notional Finance’s v3 launch shifts to variable lending and leveraged vaults. Exactly Finance gathered some momentum and brought fresh ideas, but usage was heavily incentivized by OP incentives and native token emissions. Term Finance is another player to watch. A team solving for all hard problems like easy maintanence of loans, kickstarted by incentives can win a potentially big market here.

Lulo Finance (same team as Flexlend) has been trying to solve this on Solana, but still yet to see any significant traction. While Fixed Rates have their share of problems and “ahead of its time idea”, it’s worth exploring.

4. Gearbox for Solana: Gearbox is a composable leverage protocol (leverage via lending/borrowing, but with ecosystem-wide integrations). Solana being highly composable in nature, one can integrate with a wide range of protocols like AMMs and LSTs, particularly for farming points. Assuming a bullish market, more projects will launch with high APY incentive programs that can integrated into this protocol for leveraged yield farming.

An adjacent idea can also be Corporate Debt where on-chain revenue generating companies can start issuing bonds to raise funds. Think of it as revenue-based financing (RBF), but on-chain and fully transparent. This ensures profitable on-chain companies don’t dilute their tokens, while raising funds at the same time.

Theme 4: Interest Rate Derivatives — Unchartered Territory

Interest Rate Derivatives (IRD) are the second-largest market after Forex, with a notional value of $450–600 trillion. Comparing the absolute numbers with TradFi may not be directly relevant; however, the emerging nature of this market in DeFi, particularly on Solana, presents a significant opportunity. This could facilitate the generation of organic yield in addition to the money market (lending/borrowing) yield through asset management contracts.

Alpha for builders:

Taking inspiration from TradFi, some interesting ideas to explore would be:

1. Interest Rate Swaps for LSTs: It’s a forward contract, which typically allows parties to exchange a fixed interest rate for a floating rate or vice versa. Simply put, if you want a fixed staking rate, you can enter into an agreement with someone ready to take the risks of variable staking rates.
   
   This would be attractive to a new class of institutional and retail clients looking to gain DeFi exposure without much speculation. In TradFi, the contract is between two financial institutions, while in DeFi, it would be peer-to-pool. One can either pay fixed yields or receive fixed yields. LSTs like JitoSOL or mSOL via Stake Rate Swaps (SRS) are the best assets to target, as they are considered the native “Risk-free Rate” for SOL in DeFi — more on SRS.

2. ERC-4626 is a yield-bearing Tokenized Vaults standard on Ethereum, ensuring composability of all yield vaults with over $10 billion TVL. Building this on Solana and ensuring it’s adoption can be the key. This can open a range of vaults products like Sommelier.

3. Yield Stripping (Pendle for Solana): Yield stripping is a discounted cash flow play. Users can take a predictable return on the future value of an instrument, while speculators can get the future asset at a discounted value. It involves separating a bond's interest payments from its principal payments. Pendle’s yield tokenization is an implementation of this.
   
   Some examples of Solana yields that can be traded: Liquid-staked SOL, Lifinity Revenue, Meteora Pool yields, Kamino_Finance kTokens, and Solend Protocol’s cTokens (yield-bearing deposit receipts).
   
   An early-stage project called Exponent is exploring this direction, starting with trading lending yields at MarginFi and then expanding to other yield derivatives. A [redacted] Solana DEX is also exploring “Pendle for Solana”.

5: Making RWAs composable with DeFi

With more RWAs coming on-chain, particularly liquid and yield-bearing ones like T-bills. Logically, all RWAs are permissioned due to KYC and regulatory constraints. However, Ondo's launch of USDY (a tokenized wrapper for tokenized T-bills) and making it permissionless opens up a whole new design space. Ondo also unveiled an intriguing mechanism for tokenized stocks, which, if implemented well, could usher in another wave of DeFi composability.

Alpha for builders:

1. Token Extensions: There are numerous opportunities in RWAs, particularly leveraging Token Extensions. Our essay delves into the details of these.

2. TradFi Giants: With giants like Franklin Templeton, BlackRock, and Fidelity looking to pilot RWAs on Solana, this can unlock a huge opportunity in the next 1-2 years. These can be permissioned, to begin with, but building permissionless wrappers and more DeFi integrations, like Flux Finance for lending and borrowing can be a significant opportunity. For instance, holders may have the opportunity to earn a higher yield on their U.S. Treasuries by tokenizing them, offering them as collateral in a DeFi lending market, borrowing stablecoins, purchasing more Treasuries, and repeating this cycle.
   
   The best part is, BlackRock fund is allegedly composable with USDC

   

Theme 6: Time for Derivatives to Shine!

Structured products and on-chain derivatives (excluding Perps) were all the rage during the previous bull run. Solana, in particular, experienced a surge of over $500 million in TVL in DeFi Option Vaults (DOVs) through protocols like Ribbon, Katana, and Friktion until the bear market took hold. However, with the bull market returning and the demand for yields increasing, it's no surprise that these products will make a comeback.

Alpha for builders:

1. Vertical Perps or Prediction Markets: Just like Parcl enables one to go long/short, one can build perps for different niches like commodities. This is highly a category creation game and Parcl has done an excellent job at creating the hype and amassing $100 million+ TVL (though it’s heavily farmed and real demand is unknown).

2. Power Perps: An idea by Paradigm in 2021 didn’t quite take off in the last cycle due to timing, but is worth trying this cycle — a few protocols like Exponents are trying this on Berachain. Another adjacent idea would be to explore Everlasting Options (think how perps are to futures, this is for options), proposed by one and only, SBF!

3. Perp Aggregator: Just as we have aggregators for lending and spot DEXs, it’s a big enough opportunity to build perp aggregators, despite the challenges posed by varying design mechanisms. With the emergence of perp aggregators like Rage Trade and MUX, a similar trend could arise on Solana — particularly for designs akin to Flash and Jupiter.

4. Perps as Solana Appchains: In the EVM world, most perp DEXs, especially those based on order books like Aevo, dYdX, and Hyperliquid, are transitioning to their own appchain. In the future, Solana perp DEXs could also build their own chains, which could offer several benefits:

   • Freedom from any mainnet congestion.

   • An enhanced trading experience for users (trades could be gas-free for traders).

   In fact, Zeta has already started moving in this direction.

5. Structured Products – Build a Friktion-type product — In fact, the Friktion code is still available for anyone to fork and use. Asset management protocols like Investin (a previous project by the Flash team) can also be a good idea to revive. Order books like Phoenix or Drift require active liquidity provisioning, which can be achieved via Market-Making Vaults. This ensures decentralized Market Making, else all the liquidity will be at the mercy of Market Maker (which we saw during Alameda flight after FTX crash).

6. On-chain options – Protocols like Ribbon, Ava, and Gravity Markets serve as examples of existing on-chain options trading platforms. One can also build binary options (i.e. if prices go up or down) like Decalls, however getting traction and building a moat is important.

7. HXRO — Being the base layer for derivatives and betting liquidity on Solana, builders can build on top of the:

   • Dexterity, Hxro's derivatives protocol, provides fundamental building blocks of derivatives (whether a traditional DEX interface, advanced trading terminal, API, etc.), underpinning all necessary risk and exchange infrastructure to securely scale expiring, perpetual, and zero-day futures (ZDFs), as well as other margin-based derivative markets on-chain.

   • Hxro’s parimutuel protocol is the backbone for on-chain betting applications, enabling event wagering with constant liquidity courtesy of the network’s “smart” AMM. The protocol can support a wide variety of betting markets on-chain across gaming, sports betting, crypto, and other event markets.

Theme 7: Building Infra and Tooling for DeFi Protocols

With many billion-dollar DeFi protocols on Solana it’s the perfect time to build infra and tooling for these DeFi protocols, given there is a significant immediate TAM.

Alpha for builders:

1. OEV: A subset of MEV, Oracle Extractable Value (OEV) is when applications rely on an Oracle update for arbitrageurs or liquidators to capitalize on this state inconsistency. As multicoin notes, there is an opportunity for the application to capture the OEV; the design space is still being explored.

2. DeFi Infra as a Service: A few protocols like Aave/Compound are forked multiple times; the same for Solana where protocols fork Solana Lab’s reference implementations. There is substantial cost when it comes to development, audit, and maintenance. One can standardize and build a sustainable development firm out of this offering “DeFi protocols in a box” – one can also think of it as “Metaplex for DeFi”, creating multiple standards. Rari Capital (now dead) had a similar vision and created vaults infra. A low-hanging fruit is to build ERC-4626 equivalent infra for Solana and ride the complete yield hype on Solana by offering services to DeFi projects.

3. A risk management organization: this can be structured as a Risk DAO or an advisory board, which does research and risk analysis for DeFi protocols. These entities can publish public “Risk Analysis Dashboards” with key metrics for the Solana ecosystem and offer paid research, risk assessment frameworks, and risk rating services to DeFi projects.

4. Bribe Aggregator or Marketplace: In EVM, Curve Finance lets their token holders determine how much of their token incentives go to each of their pools. This creates a dynamic where projects will "bribe" token holders to vote for pools containing their tokens. Votium Protocol aggregates these bribes and automatically delegates token holders' voting power to maximize the incentives received. Having an aggregator makes coordinating activity between bribers and voters much more convenient and leads to greater market efficiency. On Solana, this can be applied to:

   1. LSTs via governance token to direct stake to validators.

   2. Jupiter LFG Launchpad, where projects can bribe their voters and give token allocation in return.
      – inspired by Durden’s tweet.

5. Privacy for DeFi: Privacy finds PMF in unexpected places like airdrop farming. For example, CEXs are also used by whales to anonymize their transactions, and protocols like Elusiv were hence heavily used by farmers.

Theme 8: MemeFi and Making DEXs More Vertical:

Memecoins are culture on financial steroids. Their value comes purely from attention and social consensus, not from a DCF model. We might be in a Memecoin Supercycle with Solana at the forefront.

Further, DeFi apps will also become inherently more social. We are already seeing some early trends:

1. Buying through telegram bots like Bonkbot doing $250 million in daily volumes!

2. Projects like Zeta or Kamino have public points leaderboards.

It's highly possible that the next front end of DEXs won’t be a Jupiter-type swapping interface, but rather a live streaming platform where creators and audiences bet alongside each other, a social feed with trading integrations, or a group of friends who instantly raise funds for the next network state, among other possibilities.

UI-Layer Composability — Telegrams bots makes UI composable for DEXs. Previously people would learn about information somewhere on the internet (X, Reddit, news, Telegram groups, etc), and then navigate to a separate UI to trade (e.g., Drift, Binance, Coinbase, etc.). Telegram bots bring trading to Telegram, where people are already hanging out, socializing, and exchanging information (eg. Ansem’s group).

Alpha for builders:

1. Continuous Prediction Markets Powered by Memecoins:

   The existing prediction markets like Polymarket are binary and discrete, hence the upsides are very limited. Most people want continuous, unlimited upside. A crypto-native prediction market can be in fact, memecoins (eg. $BIDEN, $TRUMP). One can build a niche platform for trading memecoins (eg. a political platform where you can trade all political memecoins and predict who’s winning). In fact, MetaDAO is an example of vertical and continuous prediction markets, but only for governance.

   

2. Memecoin Frontends: The memecoin trading UX is still not the best — one has to discover the memecoins, check all its details at Birdeye or DEXscreener, and then trade at Jupiter, while for many early memecoins wallets don’t even have basic support. One can simply make a birdeye, but specialized for memecoins and much more social, where influencers can also shill and copy trade each other. Pump.fun is another interesting platform, where one can ape-in memecoins very early (till $69k market cap). Another adjacent idea to explore would be a DEX, particularly suited for memecoins (currently, it’s Raydium, but the experience isn’t the best).

3. Vertical DEXs: More experimentations in DEX designs for a use-case like Memecoins or LSTs. For instance, Sanctum’s Infinity is essentially a AMM for LSTs.

Cross-chain aggregators for high-performance chains – With activity increasingly spread across different L1s like Aptos, and Sui – building cross-chain aggregators are a good opportunity with significant first mover advantage. Intents-based DEXs (tending to order books) are also an interesting direction for better quotes for users.

Theme 9: Protocols Tending to Become Platforms

Platforms enable the creation of new products. Amazon is a platform, while a brand on Amazon is a product. The launch of Uniswap v4 hooks marked DeFi’s first platform moment, enabling developers to launch their product on top of these protocols. Not just Uniswap, all blue-chip DeFi protocols, like Jupiter, have begun to build ecosystems atop their protocols.

Project Serum (now Openbook) exemplified ecosystem building as a platform, with over 30+ projects developing on top of it. The platformization of Solana DeFi projects is still in its infancy but is expected to surge in the coming months. It is advantageous for builders to identify such protocols, position themselves strategically, and be early participants in the ecosystem.

Alpha for builders:

Some projects of note include:

1. Jupiter — Initially an aggregator, Jupiter is rapidly evolving into an ecosystem. Adrastea is a prime example, offering leveraged yield on JLP.

2. Drift — The largest perpetual DEX on Solana. Circuit trade features market-making vaults for Drift DEXs, and similar products can be developed around DLP.

3. Phoenix — Still nascent, but as an orderbook, Phoenix has the potential to develop a comprehensive ecosystem. It's a matter of time until the team focuses. For example, Root Exchange, built on Phoenix, provides enhanced limit orders.

Structured products and strategy vaults present clear opportunities for more product development on these platforms. While transitioning to a platform is a long-term endeavor, it greatly benefits value accrual (a reason why Layer 1/Layer 2 solutions are valued significantly higher than apps) and shifts the revenue generation responsibility to applications built on them. This also benefits the token holders of the platform protocol.

Theme 10: Interfaces (UX Agreggators) will become stronger

Attention is scarce in crypto, and aggregators command it. Whether they are DEX aggregators (like Jupiter/1inch), bridge aggregators (like Jumper/Bungee), or even chain aggregators (like Polygon), they have emerged as the new, attractive narrative.

The principle is straightforward — aggregators control demand and capture user attention. Although they currently don't accrue much value (most charge no fees), it’s likely that the underlying protocols they abstract will soon offer them fees or profit-sharing to gain priority or remain featured (similar to how brands pay Amazon for advertising).

Interfaces add extra value on top of the on-chain protocols they facilitate transactions for. With additional tools like UniswapX or Jupiter’s DCA tool, interfaces can win customer acquisition battles and capture value.

In fact, Solana boasts one of the strongest aggregators, with Jupiter leading the pack, and others like Flexlend aggregating yields.

Alpha for builders:

Opportunities in aggregation include:

1. Yield Aggregators

2. Perp Aggregators

3. Memecoin Aggregators

4. Instadapp-like everything DeFi aggregator for leveraging, Refinancing, and migrating positions

While there may appear to be a blurred line between “Platforms” and “Aggregators,” the distinction is that aggregators are front-ends, whereas platforms are the base upon which products are built. A protocol can serve as both, as is the case with Jupiter.

Closing Thoughts: Time to seed Solana DeFi 3.0

It’s high time newer protocols on Solana get built. While EVM definitely serves as an inspiration, protocols should focus on core design innovations, participate in research discussions, and build truly OPOS like Sanctum or Phoenix. We will the Solana DeFi getting more divergent from the Ethereum Take inspiration from TradFi, and see what can be built on-chain, leveraging the high capital velocity and speculation.

The infra has finally reached a point where it can withstand a high scale of activity. Many DeFi primitives that previously failed due to being too early are now viable again. It will be exciting to see how this will unfold over the coming years.

Feel free to contact me at Yash Agarwal (@yashhsm on Twitter) for any suggestions or if you have any opinions. If you find this even slightly insightful, please share it — justifies my weeks of effort and gets more eyeballs :)

Special thanks to  Sitesh (Superteam), Kash (Superteam), Apoorv (Stella),  Akshay (Superteam), Anas (Flash Trade) who reviewed and provided insights at different stages of the draft.

Disclaimer:

This essay is completely my perspective and thoughts on the Solana DeFi Ecosystem and in no way represents any organization. Given the comprehensive and informal nature of the essay, some amazing projects might have been missed or received lesser attention as compared to other projects. None of this is financial advice or any recommendation towards a particular project. As usual, everything discussed is Not Financial Advice, please Do Your Own Research.

While 2023 may have seemed like an uneventful year for Solana DeFi, it was crucial. The year began with many people dancing on its grave, declaring Solana DeFi dead. However, it ended with Solana DEXs surpassing Ethereum DEXs in weekly trading volumes!

This was made possible by about 50 top-notch teams, led by blue-chip protocols like Marinade, Phoenix, Jito, MarginFi, Kamino, BlazeStake, Solend, Jupiter, Meteora, Orca, Raydium, Lifinity, and Drift, who were building during the bear market. Now, Solana DeFi boasts a family of over 100 quality projects.

Last year, at one of the lowest points (SOL was $20), we wrote an essay titled “State of Solana DeFi 2023.” Many of the theses we proposed in that essay did indeed come to fruition and were well appreciated by the community. Inspired by the previous piece, writing the same for 2024 — dividing this into two parts:

1. State of Solana DeFi

2. What to build for Solana DeFi?

In the part 1, we will briefly explore an overview of Solana DeFi, look at various DeFi categories, discuss various Solana projects in brief, and finally conclude with what lies ahead. By the end of this essay, you will have gained all the necessary insights about Solana DeFi.

If anyone asks what's happening in Solana or about the top Solana DeFi projects, just forward them this essay. All insights, no froth.

Solana DeFi Overview:

While the entire DeFi ecosystem suffered significantly due to the FTX collapse, Solana DeFi was particularly declared as 'dead' when its TVL plummeted to a mere $200 million at the beginning of 2023. It remained around $300 million until SOL prices began to rise again towards the end of October. In the last four months, it has surged to an impressive $3.3 billion TVL, primarily driven by SOL prices. A healthy stablecoin market cap of ~$2.5 billion is also a good indication of liquid capital available in the ecosystem.

The Most Capital-Efficient Chain:

Popularised last year, while TVL might be a vanity metric; DeFi velocity (Daily DEX trading volume/chain’s TVL) is a metric Solana DEXs have been truly ruling by a huge margin.

Is Solana DeFi truly OPOS?

In the bear market, the phrase 'Only Possible on Solana' (OPOS) became a widespread rallying cry within the community, but what truly makes Solana deserving of this title? The straightforward answer lies in its low fees and high throughput.

Low fees and high throughput make possible OPOS like:

1. On-chain Order Book: Two order books consistently handling over $150 million in volumes, a feat not feasible on Ethereum or even Layer 2s due to the high frequency of placing and canceling orders. Furthermore, perpetual order books like Zeta exemplify OPOS.

2. DEX Aggregators like Jupiter: A $100 order on Jupiter is split, routed through 4-5 DEXs, and then recombined. On a Layer 2 platform like Arbitrum, this process would incur over $20 in fees alone, rendering it impractical.

3. Anything high frequency like – rebalancing, faster liquidations, and more.

While Move chains like Aptos and Sui, also offer high throughput and low fees, these advantages may not remain exclusive as Layer 2 solutions become more affordable and parallelized EVMs like Monad emerge. However, Solana's vibrant community and its high-caliber builders truly set it apart.

The memecoin phenomenon perfectly illustrates the combination of Community/Culture with High Throughput/Low Fees. Consider this: would you be willing to pay $100 in fees for each swap if you were ape-ing $1000 in a cat coin? Solana enables users to ape with as little as $1, supported by fast transaction speeds, seamless bridging frontends like Jupiter, efficient DEXs, and ample liquidity.

Why are Solana airdrops so hyped? It's because Solana is home to a group of exceptionally talented builders, and who wouldn't want to seize the opportunity to farm their potentially high FDV tokens?

Solana DeFi Sectors:

Just like any DeFi ecosystem, Solana boasts a broad spectrum of sectors, with the majority of TVL contributions coming from LSTs, DEXs, Lending/Borrowing platforms, and Perps.

Let's dive into each DeFi category to analyze their strengths, limitations, and the opportunities that exist. We will try to proceed in chronological order, following the typical DeFi user journey – from beginner to advanced level; also giving some tips/alpha on the way.

Wallets and Bridges:

Starting with wallets, the wallet wars have now consolidated into the three most DeFi-friendly wallets, each equipped with all the necessary features for DeFi: Backpack, Phantom, and Solflare. Phantom's browser feature acts as an excellent discovery tool for DeFi apps and tokens.

In the interoperability space, Wormhole stands out as the dominant messaging layer, enabling the sending of messages between Solana and over 25 other chains. Wormhole supports several major bridges:

1. Portal bridge (by the Wormhole team) — one of the oldest bridges, boasting an all-time volume of over $40 billion, but with very poor UX.

2. Mayan Finance — one of the fastest-growing bridges, featuring a cross-chain swap protocol built on Solana that allows for native asset swapping between chains like Arbitrum, Polygon, Optimism, Avalanche, and BSC.

3. Allbridge — Another liquidity pool-based bridge, facilitating connections between Solana and Ethereum, Ethereum L2s, BNB Chain, and Tron.

LiFi, the bridge aggregator, has also made its way into Solana, powering Phantom’s cross-chain swapper while integrating Solana into its bridging aggregator frontend — Jumper. Currently, this is powered by Allbridge, with plans to incorporate more bridges.

deBridge stands out as one of the fastest bridges with an intent-based architecture, powered by its own messaging layer. Hashflow and Carrier are two other bridges, though they are less frequently used.

Circle’s CCTP is also set to launch by the end of March 2024, with some of the aforementioned bridges as launch partners. This will enable anyone to bridge USDC in any amount with a very low fixed fee, significantly improving bridging liquidity. The launch of LayerZero is also highly anticipated in Q2; which can be a game-changer for cross-chain Apps on Solana as LayerZero has a much bigger ecosystem and community than Wormhole.

Jupiter has also developed a bridge comparator to assist users in choosing the optimal bridge. However, it only facilitates transfers from Ethereum to Solana and does not include all bridges.

User tip — Bridging to/from Solana: For Ethereum, Sui, and Aptos, use the Portal bridge. For Ethereum L2s, compare between Jumper, deBridge, and Mayan.

Spot DEXs:

Solana's DEXs have been recording peaks of $2-3 billion in daily volumes, $12 billion in weekly volumes, and $28 billion in monthly volumes – flipping Ethereum on good days and weeks. Approximately 60% of total DEX volumes are facilitated by Jupiter, the leading DEX aggregator on Solana and the largest DeFi project on the platform. Using Jupiter as a proxy for insights into DEX activity for February:

1. The top 10 tokens by volume are predominantly:

   1. ~82% blue-chip tokens – SOL, USDC, and USDT.

   2. ~10% meme coins — WIF, MYRO, SILLY, and BONK.

   3. ~6% LSTs — JitoSOL, mSOL, and bSOL.

2. Unique Wallets: Over 840K | Total Transactions: More than 29 Million.

Unlike the EVM ecosystem, where Uniswap dominates, Solana's spot DEXs remain highly competitive, with top DEXs fiercely vying for market share. Orca, which held over 50% of the market at the beginning of the year, remains the leading DEX despite a slight decline in market share. Raydium and Openbook are achieving significant volumes, particularly during periods of meme coin popularity

DEX Aggregators:

Jupiter stands as the undisputed leader, not only within Solana but across the entire crypto sector, surpassing the volumes of EVM counterparts like 1inch and Matcha. Jupiter, the premier Solana aggregator, manages approximately 80% of the trade flow (after excluding bot activity). This contrasts sharply with the Ethereum mainnet, where a significant portion of trade still occurs through DEX frontends, and multiple aggregators share ~40-50% of the order flow.

Leveraging its sophisticated routing algorithm (Metis), Jupiter identifies the best prices across 30+ integrated DEXs, it also offers features like:

1. Limit Orders — enabling buying/selling at predetermined prices through the use of filler bots.

2. Dollar Cost Averaging — facilitating the periodic buying or selling of tokens over a set duration.

For developers, Jupiter provides a Payments API (allowing merchants to accept payments in any token while receiving the final amount in USDC) and a Terminal feature (enabling any dApp to incorporate swapping functionality within their interface). To date, Jupiter has facilitated over $100 billion in transaction volumes.

Prism, an OG protocol in the field, also features a DEX aggregator (doing insignificant volumes as compared to Jupiter) along with Prism Pro, a frontend for trading on Openbook. It plans to make its aggregator open-source.

Dflow, a potential contender to Jupiter, is being built by a solid team (which secured $5.5 million in funding last year, with possibly more since then). Dflow has developed a routing algorithm akin to Jupiter's, named Segmenter, with notable product distinctions:

1. A mobile-first approach and an integrated non-custodial wallet.

2. A mechanism for liquidity venues like AMMs to identify and apply higher fee rates to toxic order flows (such as bot activity and HFT firms).

Though not yet fully operational, Dflow has activated deposits and is running a points program, hinting at a possible token launch soon. Will be exciting to watch, if they manage to take any significant share away from Jupiter.

CLOBs (Central Limit Order Books):

CLOBs represent the first iteration of on-chain Order Positioning Systems (OPOS). Among the inaugural major DeFi ventures on Solana was Project Serum, initiated by FTX, which introduced the first fully on-chain order book, boasting unified liquidity across the ecosystem. Project Serum (and FTX too) played a pivotal role in sparking the initial momentum for Solana's DeFi sector, drawing numerous projects to the platform that are now considered blue chips within the Solana ecosystem. It's important to acknowledge and give credit where it's due.

Following the collapse of FTX, the DeFi community forked the Serum code, transforming it into a public asset and rebranding it as OpenBook. OpenBook might well be Solana's most underappreciated public resource, maintaining daily volumes of $50-100 million, imposing no trading fees, and allowing for the creation of markets without requiring permissions. For more on Openbook — read an essay I wrote previously.

Yet, the most prominent order book on Solana at present is Phoenix built by a strong team, with daily volumes ranging between $100-150 million. It currently operates markets with permissions (with plans to transition to a permissionless model) and derives the bulk of its volume from trading pairs such as SOL/USDC (~70%), SOL/USDT (~10%), and BONK/USDC (~10%).

In comparison to OpenBook, Phoenix offers:

1. Instant settlement (i.e., without the need for cranks).

2. More streamlined on-chain data, such as market events (e.g., placement and cancellation of limit orders, order fills) and more compact on-chain account sizes.

Root Exchange serves as another user interface built atop Phoenix, providing enhanced functionality for limit orders.

AMMs:

Despite the innovation of order books, the top four Solana AMMs continue to dominate the majority of trading volumes.

1. Orca — Drawing inspiration from Uni v3, Orca has emerged as a Concentrated Liquidity Automated Market Maker (CLAMM) and is now the most dominant DEX on Solana, focusing on developing the ecosystem's foundational liquidity. As of 2024 year-to-date, Orca has facilitated over $26 billion in trading volume, generating more than $40 million in LP fees. It is dedicated to being the most user-friendly liquidity integration platform with open-source and verified smart contract deployments.

2. Raydium — Diverging from other CLAMMs, Raydium also utilizes a CLOB (i.e., Openbook), adopting a hybrid model. Moreover, it supports permissionless farms, allowing anyone to create a pool and bootstrap liquidity for tokens. This feature has enabled the launch of thousands of meme coins on Solana, making Raydium the go-to DEX for meme coin launches.

3. Meteora — Modeled after Trader Joe's Liquidity Book, Meteora's DLMM (Dynamic Liquidity Market Maker) system arranges an asset pair's liquidity into distinct price bins. Each bin is defined by a specific price and liquidity amount, eliminating slippage for swaps occurring within that bin.

   
   Meteora's DLMM can be viewed as a blend between an order book and an AMM, thus necessitating active liquidity provision and allowing for varied liquidity distributions based on strategies like Spot (uniform distribution), Curve (concentrated approach for low volatility), and bid-ask (inverse Curve distribution for high volatility). It’s particularly helpful for dynamic fee capture for LPs. i.e LPs earn more fees in periods of high volatility.
   
   In addition to its DLMM, Meteora also offers AMM Pools (formerly known as Mercurial Pools), which include Dynamic Pools, Multitoken Pools, and FX and LST Pools.

4. Lifinity — This platform operates as an oracle-based AMM. Unlike other DEXs that rely on arbitrageurs for price adjustments and use the pool's asset balance for pricing, Lifinity employs its own market maker. Furthermore, it does not depend on liquidity from LPs but instead utilizes protocol-owned liquidity (PoL), distributing generated revenue to its token holders. For example, in the last monthly cycle, it generated approximately $550K in revenue. Among all AMMs, Lifinity stands out as an OPOS and the most capital-efficient DEX, achieving $100-200 million in daily volumes with just about $800K in TVL (total TVL of approximately $7.5 million, including the Market Maker).

Fluxbeam is the sole AMM specializing in token extensions, poised to launch its launchpad soon. Other AMMs like Invariant and Saber (now SaberDAO) may not be as actively developed but still account for significant volumes.

Hybrid Exchanges:

Backpack Exchange — A centralized exchange developed by the team behind Backpack and Mad Lads. It is regulated under Dubai's VARA, with additional licenses forthcoming. The exchange currently offers spot trading and plans to introduce margin trading, derivatives, and cross-collateral options soon. It has successfully attracted over $70 million in deposits, spurred by anticipation of a potential snapshot.

Cube Exchange — Another centralized exchange, created by former members of the Solana Labs team. It boasts a latency of just 0.2 ms, which is lower than that of Binance (5 ms). The exchange maintains an off-chain order book, while settlements are executed on CubeNet, a meta-L2 blockchain that is reportedly a fork of SVM.

My Predictions:

1. Order books will continue to gain market share, especially for blue-chip asset pairs.

2. The specialization of DEXs will increase, with trading frontends becoming more social (e.g., Bonkbot, Fluxbot, or Dialect).
   

Given the token launch frenzy, the Solana ecosystem has two token launch tools:

1. Armada — This platform offers a suite of open-source protocols encompassing three key aspects of token launches: Token Launch (customizable auction and pool-based launches), Liquidity Provision (via CLMM vaults), and Tokenomics (automated protocol reward distribution and token staking). Projects like Flowmatic and Pepper are among the first to launch via Armada.

Jupiter’s LFG Launchpad — The top DeFi project on Solana has also established a launchpad, capitalizing on its existing ecosystem and community:

1. Features a customizable launch pool powered by the MeteoraAG DLMM.

2. Provides full trading functionalities, with a focus on the pre-ordering process and price discovery.

3. Includes a mechanism for voting on projects to be launched via the JUP DAO.

Projects like Zeus and Sharky are among the first to be launched via Jupiter.

Solana Assets:

Assets (or Tokens) on Solana can be broadly categorized into:

1. SOL and LSTs

2. Project tokens such as JUP and RNDR

3. Memecoins

4. Stablecoins and RWAs

Memecoins:

Memecoins are culture on financial steroids. They serve as the lifeblood of DEXs on Solana and have garnered significant attention. Many speculate that we might be experiencing a Memecoin Supercycle, with Solana leading the charge.

Solana has become synonymous with memecoins due to:

1. A fun community that embraces a unified meme culture, led by influencers like Ansem.

2. Low-cost and swift transactions foster inclusivity, removing the need to mentally factor in gas fees before trading.

3. A seamless user experience for memecoin trading through aggregators like Jupiter, supported by robust liquidity across DEXs.

Here’s the typical journey of a memecoin enthusiast:

1. Discover newly listed pools on Orca or Raydium, hear about a memecoin from friends or Twitter, or get insights from Ansem’s group.

2. Use DEXScreener and Birdeye to view charts and statistics on memecoins — the best part being that both platforms have integrated Jupiter into their interfaces, allowing users to directly invest in memecoins. One can also perform a quick check on a token's risk parameters using Rugcheck.

3. Continuously monitor your portfolio and share your findings with friends!

The adage "bet where the retail is" holds true — and the retail degens are on Solana.

My predictions:

1. Culture will become more fungible — I believe memecoins, as "Tokenized Culture," offer greater liquidity and inclusivity than NFTs, providing them with a significant advantage.

2. Vertical memecoin platforms will emerge; for example, a political platform featuring all politics-related memecoins like Tremp and Boden. Memecoins will lead us into the 'Metaverse' that was promised.

User Tips — Portfolio Trackers:
Solana supports three major portfolio trackers (or address stalkers): Step Finance, Sonar Watch, and Asset Dash. While Sonar Watch excels with DeFi integrations, Asset Dash and Step Finance are preferable for those seeking mobile-friendly options and better NFT support. For analyzing or monitoring any wallet, these portfolio trackers, along with Phantom's watch wallet feature, can be incredibly useful. From the two primary explorers, Solscan and SolanaFM, SolanaFM is much more advanced in terms of transaction analysis.

Stablecoins:

Solana now boasts a diverse array of fiat-backed stablecoins.

🇺🇸 USD – USDC, USDT, USDP, USDY, ZUSD

🇪🇺 EUR – EURC, EUROe, VEUR

🇯🇵 GYEN, 🇨🇦 QCAD, 🇨🇭 VCHF, 🇹🇷 TRYB, 🇮🇸 ISKT, 🇧🇷 BRZ, 🇲🇽 Etherfuse CETES, 🇳🇬 NGNC

Currently, Solana has approximately $2.5 billion in stablecoin market cap, with USDC (67.5%) and USDT (31.5%) commanding the majority of the market share, followed by a long tail of other stablecoins each with a market cap of less than $10 million. Despite the recent launch of many fiat-backed stablecoins, aside from USDT and USDC, most others face challenges with low liquidity and limited DeFi integrations. To address this, Meteora has introduced FX Pools (currently only for the EURC - USDC pool with a TVL of $20K), which is still in its nascent stages but represents a step in the right direction.

UXD (backed by overcollateralized lending positions, real-world assets, and delta-neutral positions) and USDH (CDP-backed) are the two decentralized stablecoins on Solana.

The Case for an On-chain Foreign Exchange (FX) Market

The FX market is huge, with over $6 trillion in daily volume. The availability of fiat-backed stablecoins with adequate liquidity could pave the way for on-chain spot FX markets through order books and AMMs. Envision a scenario where a merchant can accept payments in USDX and instantly convert them to YENX, with Jupiter routing the transaction through multiple liquidity venues. Someone will sooner or later build a spot Forex trading platform on Solana.

There are two LST-backed pseudo-stablecoins as well to be launched on Solana — MarginFi's YBX and Jupiter's SUSD. These are essentially CDP stablecoins but utilize LST as collateral (comparable to Ethereum's eUSD by Lybra and mkUSD by Prisma).

My Predictions:

1. Taking inspiration from Ethena, someone will develop UXD v2 (mirroring UXD’s previous model, akin to Ethena).

2. DeFi stablecoin mechanisms will become increasingly innovative in the quest to offer yields to holders and enhance the liquidity of lending positions.

User Tip — Not all stablecoins are created equal. Fiat-backed stablecoins are generally the safest, while other DeFi stablecoins, often termed “Synthetic Dollars,” carry inherent DeFi risks and are best suited for DeFi applications. Always verify liquidity and redeemability before holding any significant amount of stablecoins.

Bitcoin 🤝 Solana

In recent efforts to scale Bitcoin, several projects have embarked on creating Bitcoin <> Solana interoperability solutions to enable seamless Bitcoin usage via Solana:

1. Atomiq — A cross-chain DEX that facilitates the swapping of Solana assets (SOL and USDC) with Bitcoin (both on-chain and on the Lightning Network). Their payment demo, showcasing a Solana-to-Bitcoin transaction at a store accepting BTC, is notably innovative.

2. Zeus Network — An open communication layer bridging Solana and Bitcoin. It introduces zBTC (a wrapped version of BTC), allowing users to stake or lend it on Solana to earn yields. The project has ambitious plans, including deep integration of BTC into Solana's DeFi ecosystem with offerings like BTC-backed stablecoins, cross-chain lending between Solana and Bitcoin, Layer 2 integrations like Stacks, and more.

3. Sobit Bridge — SoBit functions as a token bridge where users can initiate the bridging process by depositing BRC20 tokens into a SoBit-specific address. The platform verifies these deposits and then mints equivalent tokens on Solana.

These initiatives are still in their infancy and have yet to fully launch. The Threshold Network's tBTC also provides a tokenized version of Bitcoin on Solana, facilitated by Wormhole Crypto.

For more insights and predictions, check out my thread on the Bitcoin x Solana thesis!

Real World Assets:

Tokenizing RWA (Real World Assets) brings off-chain financial assets on-chain. For example, real estate, private credit, T-bills, green bonds, gold, and other commodities.

Apart from stablecoin, Solana hosts a wide range of RWAs, ranging from:

1. Tokenised T-bills (Ondo and Maple Finance)

2. Real Estate (Homebase and Liquidprop)

3. Physical Goods (BAXUS and CollectorCrypt)

4. Private Credit (Credix and Credible)

My Predictions:

1. DeFi Composability: For example, holders could earn higher yields on their U.S. Treasuries by tokenizing them, using them as collateral in a DeFi lending market, borrowing stablecoins, buying more Treasuries, and repeating the cycle. This scenario is just one illustration: integrating Real World Assets (RWAs) into the Solana DeFi ecosystem opens the door to creating valuable new products, some of which can only come to life through crypto-native mechanisms.

2. Expanding into more assets and markets will introduce more high-quality tokenized assets to DeFi.

I've composed a comprehensive essay on Real World Assets, which encapsulates all RWAs on Solana along with my thesis.

LSTs (Liquid Staking Tokens)

On Solana, ~400k wallets stake their SOL. As an asset class, liquid staking tokens (LSTs) contribute the most to the protocol's total value locked (TVL). Take any lending/borrowing protocol, and you will see LSTs dominate the TVL. However, Solana's LST adoption remains low at 4-5% of the total SOL supply, compared to Ethereum, where the staking rate is an impressive ~24%. While most LSTs offer similar yields, it is the higher secondary market liquidity and broader utility in DeFi that make them stand out. On DeFi integrations, Money markets dominate, with platforms like Solend, Kamino, and Marginfi becoming central hubs for LST activity, partly propelled by the anticipation of an airdrop.

On Solana, all LSTs generate yield, meaning their value increases as yields accrue. In contrast, popular Ethereum LSTs like Lido's stETH undergo daily rebasing (that means the number of stETH in your wallet keeps increasing, while the price remains roughly the same as ETH).

1. Marinade [mSOL]: Marinade, a pioneer among Solana's LST protocols, was established in 2021 from a merger of two teams at a Solana Hackathon. The project launched its MNDE token in November 2021 and transitioned to an on-chain DAO in April 2022. Its TVL is distributed between:

   1. Native staking (35% at 3.5 SOL)

   2. Liquid staking (75% at 6.72 SOL)

   
   Marinade Native stands out by offering institutions the option to stake directly to a decentralized selection of top-performing validators without smart contract exposure, appealing to those hesitant about participating in DeFi.

2. BlazeStake (bSOL): Initiated by an anonymous developer known as solblaze, BlazeStake quickly gained traction, amassing a TVL of 2.7 million SOL (approximately $400 million) in under a year, driven by token-incentivized rewards and extensive DeFi integrations. This approach has provided bSOL holders with additional yield opportunities.

3. Jito (JitoSOL): Although Marinade led initially, Jito emerged as a formidable competitor by late 2023, partly due to its effective use of points and airdrops for increased visibility. JitoSOL sets itself apart with a focus on MEV, delegating SOL to high-quality MEV-enabled validators. These validators, equipped with Jito Labs' software, earn additional MEV rewards by auctioning block space, which Jito redistributes as extra APY to its users.
   
   Jito Boosted Yields = Standard Staking Yields + MEV Rewards
   
   Jito's Stakenet: When we stake SOL using any LST solution, the staking program is operated by a hot wallet managed by an off-chain bot that decides to:
   - add or remove validators

   - delegate or undelegate stake
   This introduces centralization risks. Stakenet addresses this issue by moving all delegation logic on-chain, transforming a previously trusted and opaque system into a transparent one.
   
   Recently, Jito Labs suspended its mempool services provided by the Jito Block Engine due to an increase in sandwich attacks. The decision has sparked mixed reactions within the community, with some appreciating Jito's proactive stance, while critics argue it could lead to private deals and potentially a new, private mempool being developed in response.

   

   While LSTs represent one use case, StakeNet can be particularly interesting for scenarios such as restaking networks, liquid restaking protocols, oracle networks, and more. In these instances, StakeNet can autonomously allocate assets across a decentralized network of Actively Validated Services (AVS) and high-performance node operators. It combines the best of both worlds: automation (by moving processes on-chain) and governance (allowing configuration parameters to be set via governance).