Solana is an amazing blockchain platform that has supported a variety of DeFi projects since it was launched. Today, the Solana-based DeFi projects hold a massive $8.6 billion in total value locked (TVL). It shows just how Solana is becoming a go-to blockchain platform among DeFi projects, next only to Ethereum.
Thanks to its capability of processing up to 65,000 transactions per second and cheaper transaction cost, which is as low as $0.00025 per transaction, the interest in Solana-based DeFi projects is at an all-time high. Despite this, it is very difficult to single out the most promising Solana-based DeFi projects without putting in your valuable time to research the market extensively. Thus, we have prepared a list of new Solana-based DeFi projects that you must watch in 2022. Let’s dive into it now.
Nezha: A Game-Changing Prediction Market Protocol
What comes to your mind when you hear the word 'prediction market'? Is it the high reward opportunities that prediction markets offer? Or, is it the losses that users might face in case their numbers do not match with the drawn number? For most people, the thought of losing their hard-earned money seems to be playing a dampener effect, turning away the masses from participating in the promising prediction markets. Nezha, a DeFi protocol built on Solana, is solving this issue once and for all.
Nezha’s reimagined prediction market, which is rightly called prediction market 2.0, has put in place a mechanism ensuring a user does not lose their principal amount. It’s because, in Nezha, users do not wager their principal amount. Instead, Nezha users wager the interest their funds earn while in Nezha’s liquidity pool.
As for how Nezha earns this interest, it does so by directing its entire user funds to high-yield generating external DeFi protocols, such as Solend or Tulip. In return, Nezha receives a high yield daily from these external protocols, which is deposited to Nezha's liquidity pools every week. But, before directing the user funds to external protocols, the entire user funds are aggregated in one place by the liquidity engine of Nezha.
As Nezha depends on external DeFi protocols to earn a high yield, there is a risk of default. But, Nezha’s experts manage it by hedging against the risks. So, you can rest assured that your funds are safe with Nezha, despite them directing your funds to external DeFi protocols.
In the initial draws, a user that enters a game will receive six numbers per entry, where the number of entries will depend on the amount you stake on Nezha. This mechanism will change in the coming days once Nezha starts seeing spikes in its userbase. With such an amazing concept and innovative technology, Nezha will change the prediction market for good.
Hubble Protocol: Supercharging Liquidity on Solana
Hubble Protocol is an upcoming Solana-based DeFi project aimed at 'supercharging liquidity on Solana'. Recently, Hubble raised $10 million in funding before its mainnet launch, which is set for scheduled to take place later this month.
In its initial phase, Hubble will issue USDH stablecoin at a 0% interest rate to all users who deposit various crypto assets like Bitcoin, Ethereum, and more. The Loan-to-Value (LTV) ratio to obtain USDH from the Hubble protocol is as high as 90.0%. Another interesting aspect of Hubble Protocol \is that users minting USDH will also earn a yield on their deposits. Besides these, a user who deposits USDH in the stability pool will receive Hubble’s governance token known as HBB.
If you are wondering about the bad loans, there is a stability pool that consists of USDH deposits, which guarantees these borrowings. In case there are any bad loans, these will be paid off through this stability pool, and in return, the stability pool providers will earn 10% of the difference amount of the liquidated assets.
Zebec Protocol: Powering Real-Time Transactions
Solana-powered DeFi protocol, Zebec, provides real-time transaction settlement. It aims to make sending and receiving payments easy and hassle-free. So far, Zebec has raised funding twice successfully. The first funding that Zebec raised was in November 2021, when the DeFi protocol raised $6 million in pre-seed funding round. That’s when Zebec had rolled out Zebec Payroll, a complaint payroll app.
Zebec Payroll allows employees to automatically convert a part of their salary into a cryptocurrency of their choice. Besides this, it allows them to contribute to crypto-based pension programs, invest regularly in DeFi products, and make commission-free fiat bank withdrawals. Another crucial feature of Zebec is its yield farming option, which enables users to participate in its partner yield farming and staking protocols.
Recently, the protocol raised $15 million in a Series A funding round, with the likes of Coinbase Ventures, Lightspeed, Alameda Research, Solana Ventures and Distributed Global taking part in it.
MarginFi Protocol: Bringing CeFi Margin Trading Capabilities to DeFi
Margin trading, though popular in the centralized finance space, is yet to see similar traction in the decentralized finance space. It is all because of the complexities and intricacies involved in margin trading when it comes to DeFi.
Another spoilsport is the lack of liquidity partly because of the 'N' number of protocols, as the current fragmented DeFi market is leading to capital inefficiency. This, in turn, is preventing traders from combining their positions and bringing them to one place.
That’s where MarginFi comes into the picture, as its cross-margining engine enables traders to manage multiple derivative positions through one single programming interface. Recently, MarginFi raised $3 million from the likes of Sino Global Capital and Solana Ventures.
Ratio Finance: De-Risking DeFi
Despite the many risks associated with yield farming, only the rosy picture of it has been presented to the masses. No doubt that yield farming has been tremendously beneficial in the growth of the DeFi space, but does it mean that it’s fine to brush aside its risks? Not at all!
There is a risk when one provides liquidity on DeFi protocols or stake tokens in these DApps. Besides this, DeFi applications are known for mechanisms that result in capital inefficiencies. It includes over-collateralization, regardless of whether it is required or not, and the lesser we speak about the settlement times the better, as it is quite slow. Then comes the lack of composability, which is one of the major minus points in most of the DeFi applications in existence today.
Shunning the centralized space in its entirety isn’t a good idea, as consumer protection, risk management and modern portfolio theory of the traditional finance industry can make the DeFi applications better in the long run. This is where Ratio Finance is aiming to make a difference by creating an efficient DeFi protocol.
The first thing that Ratio does is that it shows any investors the risk involved before they take on the liquidity provider position. This feature will help Ratio attract institutional investors. At the same time, users can turn to Ratio to obtain a crypto-backed loan while earning yield on their deposited collateral. Now, this yield can be used by them to clear off a part of their dues on Ratio.
As for the Loan-to-Value ratio (LTV) of your collateral, it will be decided on a real-time basis. So, basically, Ratio Finance is combining the good aspects of the DeFi and TradeFi concepts to de-risk the DeFi space. Currently, Ratio Finance is raising funds on Republic, and so far, it has raised over $2.8 million.
