Decentralized finance (DeFi) projects built on the Solana network are having a field day. According to data aggregator DeFiLlama, the total value locked (TVL) of all DeFi projects built on the network has hit a record value of $12.7 billion at press time.
TVL is a common—albeit slightly controversial—metric that tracks how much money is locked inside a specific protocol, in the form of liquidity pools, collateral held, or simple deposits.
The most dominant project is Raydium, a popular decentralized exchange (DEX) for the Solana ecosystem. Of the $12.7 billion figure, Raydium is responsible for more than 14% of that value, or $1.8 billion.
There are now six DeFi protocols built on the network that all enjoy a TVL greater than $1 billion.
And with Solana hosting another 568 projects during its latest hackathon called Ignition, many believe that the next batch of DeFi unicorns could arrive very soon.
🔥 Submissions for the IGNITION Hackathon are closed, with 568 projects formed 🔥
Probably nothing https://t.co/TmZqEB8O5e pic.twitter.com/UUyaUvMZUy
— Solana (@solana) October 18, 2021
Solana token takes flight
To use any of these DeFi projects, users must also hold the SOL token, the network’s native cryptocurrency. Like Ethereum, transacting on Solana means users must pay fees in this native token for each operation.
Trades on Raydium, for example, would also cost speculators a fee in SOL. It should be said, however, that these fees are much lower than those on Ethereum.
A brief glimpse at Solana Beach, a dashboard that shows various stats about the network, shows that most transactions on the network cost just 0.000005 SOL, or $0.00095985.
Despite these low fees, prospective users may be stocking up on SOL pending the launch of the next popular DeFi project.
Others may simply be hoping to invest in yet another fast-growing “Ethereum-killer.”