Best Solana DeFi Protocols Coming into 2024

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17 Jan 2024

As we stride into 2024, the decentralized finance (DeFi) landscape on Solana continues to grow, offering opportunities for both seasoned investors and newcomers alike. In a follow-up to last week’s deep dive into the best Solana liquid staking token, I will shed light on the broader Solana DeFi ecosystem as a whole. Whether you’re looking to maximize your staking rewards, engage in savvy token swaps, explore lending and borrowing options, delve into the vibrant world of NFTs, or dabble in the high-stakes arena of derivatives, Solana’s ecosystem has something to cater to every investor’s needs.

Staking SOL

I wrote about the best liquid staking tokens (LSTs) in Solana last week if you want to check that out here. If not, here is the basic recap:

If you want the least amount of risk: stick with staking directly to validators, gives you higher yields than most LSTs (~7.5% APY)
The highest LST APY: Marginfi has 8.74% APY on their website. They are taking advantage of Jito’s MEV boost and 0% commission staking validators to get this type of APY
If you want to lend/borrow: Marginfi is giving the best Lending APY for any of the LSTs (.14–2.5% APY)
If you want the highest APY: Marinade Finance has a LP giving 99% APY on mSOL / SOL

Marinade Liquidity Pool
Bonus: You can boost your LST APY by lending, looping, or depositing into liquidity pools (LPs). My previous article talks more about it here.

Decentralized Exchanges (DEXs)

If you are looking for the best place to swap your tokens, the best answer is usually always the largest DEXs. In this case, it is Orca and Raydium with $189M and $131M in TVL, respectively. By having the largest liquidity pools, they can offer the best swap prices.
Bonus: Just make sure to check against a couple of DEXs before making a trade. Just because the DEX is large, doesn’t mean it can swap your exact tokens for a good price. See example below:
Marginfi (right) was offering a better ETH to SOL trade than Orca (left).

Lending/Borrowing

If you want to deposit your crypto to earn a little extra APY or you want to borrow, then there are really only three major players in Solana right now:

Kamino: #1 on the list because of its ease of use and better yield / lower borrow rates. If you are used to lending protocols like Aave, then you will feel right at home with Kamino. Simple and straight forward. Kamino is also offering the best APY and borrow rates for most of the crypto assets compared to the others.
Marginfi: #2 on the list because it is similar to Kamino in the user interface. Marginfi has the highest TVL at $332M but a tiny bit lower rates than Kamino.
Solend: #3 but last on the list because of the user interface. It is not as intuitive to figure out what pool you should deposit your funds in, if it is actually a liquidity pool, or where to go to see your deposited assets. They really need to make this better before I’d consider depositing into it.

Bonus: Marginfi will probably have an airdrop in the future so staking/depositing/borrowing in that protocol will yield you points towards that airdrop

NFTs

If you have or are looking for some new NFTs to add to your collection, there are four main areas to go for NFTs on Solana:

Just take a look at all of them to see which marketplace is easiest for you and has the best collection. I’m not going to tell you which one is best because it really depends on what you are looking for.

Derivatives

For the Degens trying to yeet it…. You can trade derivatives or add leverage to your trades if you are looking for big pay offs. For the derivatives market, the best is Drift. To enter the app you need to acknowledge you know the risks so this is definitely the right place for Degenerate gamblers.
Drift
Another place to look is Kamino to go long / short on a position or if you want to multiply your staking yield.

Conclusion

This was just a quick and dirty synopsis to help you navigate through the chaos and start you off in the right direction. My advice is to check out as many protocols as you can. Just look around and see what interests you. If you want the cheat sheet to find the best protocols, use DefiLlama. They are incredible for figuring out what protocols are where and how best to navigate DeFi.
-Just Another Crypto Analyst
Doing this for fun but if you want to leave a tip: 0xa33aE4207466cD866D13fA587067B1F824C06d4A

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