The Rise of Solana RWAs & stablecoins
An ecosystem analysis by @davewardonline
Alongside the recent ETFs surge, stablecoins and real-world assets (RWAs) have been the strongest paths to real-world adoption and augmenting existing financial systems with onchain economies.
Larry Fink’s mission of tokenizing the world leads as one of the most discussed memes of this cycle, a vision he’s followed up within $BUIDL, @Blackrock’s tokenized onchain fund. Stablecoins also remain central to discussions due to protocols like @ethena_labs, Stripe's reentry via USDC payments, and new EU regulations like MiCA.
Although Ethereum and Tron are stablecoin hubs, Solana has notably risen here this cycle, with daily volumes exceeding $100 billion during peaks. RWA activity is also increasing on the network, with @OndoFinance's USDY as DeFi collateral, @maplefinance's @jito_sol partnership, and @librecap's launch.
This article will dive into all these developments to understand the momentum Solana’s achieved in becoming one of the chains with the most real-world applications.
Stablecoins on Solana
Stablecoins on Solana have shown strength and continued expansion this cycle, highlighting the network’s robustness and appeal to stable issuers.
Today, Circle's USDC dominates the stablecoin arena on Solana, accounting for ~70% of the chain's total stablecoin supply, despite only holding ~30% on Ethereum.
As of this week, USDC's volume is ~19:1 compared to USDT (who comes in second on the chain), despite USDT's $114B total market cap and $31.5B daily volume on Ethereum, surpassing the top 20 ERC tokens combined. USDC's dominance on Solana stems from @circle and the @Solana Foundation’s strategies to incentivize developers and promote trading platform integration.
For instance, developer grants from platforms like @solendprotocol and @superteam in USDC have attracted more developers to Solana. Circle's Cross Chain Transfer Protocol (CCTP) launch on Solana has also boosted USDC's usability and liquidity. Additionally, Circle’s Web3 Services simplify smart contract development, meeting developer demand and fostering USDC's integration. All in all, these efforts aim to unify DeFi and establish USDC as Solana's leading stablecoin.
In third place at ~$240M circulating supply is @Paypal’s $PYUSD, which now accounts for ~11% of the total stablecoin supply on Solana after launching less than two months ago.
DeFi protocols like @KaminoFinance bolstered this growth by offering significant supply-side yields for PYUSD starting July 1st. Starting at 30%, these yields have lowered to 23%, though borrowing APY stands at 0.22%, compared to USDC’s 21% and USDT’s 16.5%, making PYUSD an attractive DeFi tool. Within a week of July 1st, PYUSD’s supply increased 88%, with 38% funneling into Kamino.
Outside of just stablecoin issuers, major financial platforms like @stripe and @Shopify integrating with Solana opens up new opportunities for developers and businesses to use the network to build trusted platforms that service everyday needs and connect Solana to mainstream finance.
Here, projects like @sphere_labs, @uselulo, @Decaf_so, and @helio_pay are already in development, simplifying crypto transactions and leveraging stablecoins such as USDC for everyday financial services like offramping to local currencies, facilitating crypto payments for e-commerce, and high-yield savings.
Overall, the stablecoin momentum seen on Solana looks primed to expand the offerings of existing financial systems with efficient, onchain solutions.
RWAs on Solana
Although quieter than Ethereum's RWA growth, Solana's integration of real-world assets is building a fertile ecosystem beyond tokenized treasuries.
Deployed on Solana in December 2023, Ondo Finance’s flagship tokenized treasury product, USDY, currently boasts a $42M market cap, which is relatively small compared to other leading stablecoins, which it is frequently categorized as. Despite its size, USDY has seen interesting developments, like integration into perps DEX @DriftProtocol as collateral.
This partnership and those to come add utility to tokenized real-world assets beyond lending and borrowing, improving capital efficiency for traders.
Some of the other most interesting RWA projects in the Solana ecosystem today include Maple and Parcl.
Maple, a marketplace for whitelisted companies to borrow from onchain liquidity pools, redeployed on Solana last year, offering yield avenues for stablecoins and altcoins through overcollateralized loan markets. Beyond this, Maple partnered with Jito for their new retail-focused lending product, Syrup. This partnership will provide flexible financing for borrowers using JitoSOL, unlocking yield sources for lenders and enhancing risk management with JitoSOL's liquidity.
@Parcl is a real estate perps DEX that allows users to invest in and trade—long or short with up to 10x leverage—specific geographical markets like Boston, Chicago, or Miami. This protocol aims to be used for directional investment and hedging strategies, democratizing access to a traditionally opaque asset class. Parcl is expanding into forex, too, with upcoming markets for the British Pound (GBP) and the Euro (EUR).
This is just the beginning of Solana’s RWA expansion, which will continue to be fueled by the recently announced Libre Fund and the upcoming launches of Jupiter’s GUM Alliance and elmnts’s exchange.
Libre Fund
Libre, a joint venture between Brevan Howard’s WebN Group and Nomura’s Laser Digital, is rolling out a suite of tokenized funds on Solana like the Hamilton Lane SCOPE fund, known for its higher yields, and the Brevan Howard Master Fund, which specializes in global macro trading strategies. With nearly $20M in TVL pre-launch, Libre's initiative intends to introduce secondary trading services for its funds later this year.
Jupiter’s GUM Alliance
@JupiterExchange's Grand Unified Markets (GUM) initiative, in partnership with the Solana Foundation and market makers like @wintermute_t and @DWFLabs, intends to create a "single atomic market" on Jupiter for all assets from forex and stocks to RWAs like credit, T-bills, and real estate and, of course, crypto.
The initiative aims to onboard tokenized assets efficiently by ensuring deep liquidity and addressing the common chicken-and-egg problem in tokenization, where issuers hesitate to tokenize assets without liquidity, and liquidity remains low until more assets are tokenized.
elmnts
@elmnts_ is an upcoming market for tokenized essential energy resources like mineral rights in the oil and gas sectors, an industry that is expected to generate over $800 billion in 2024. This approach increases transparency, access, and liquidity, addressing issues in the current market like high transaction costs and low liquidity.
To do this, the company acquires mineral rights through auctions, private sales, and networks, with specialists tracking active leasing areas and understanding the oil and gas market. This market simplifies the investment process, reduces costs, and allows more investors to participate with lower fees and minimums.
Zooming out
With significant stablecoin growth and a rising stable of RWA offerings, Solana has established a strong base for expanding real-world markets with onchain economies.
Through new and upcoming initiatives like Libre's tokenized funds, Jupiter’s GUM Alliance, and elmnts's market for essential energy resources, Solana continues to not only embed itself deeper into the RWA market but also offer a wider swath of access than most other chains to real-world assets onchain.
Indeed, @Coingecko's recent report shows that the top 2 narratives of Q2 2024 were memecoins (of course) and RWAs. If Solana captures the attention around RWAs as it has memecoins, it could attract institutional capital to the chain and solidify its place at the very top of this cycle's trends.
As existing financial systems merge with our decentralized ones, Solana’s role in facilitating the tokenization of traditional assets will continue to expand, reinforcing its status as a chain capable of feeding all appetites, whether from retail or institutions.
An ecosystem analysis by @davewardonline
Alongside the recent ETFs surge, stablecoins and real-world assets (RWAs) have been the strongest paths to real-world adoption and augmenting existing financial systems with onchain economies.
Larry Fink’s mission of tokenizing the world leads as one of the most discussed memes of this cycle, a vision he’s followed up within $BUIDL, @Blackrock’s tokenized onchain fund. Stablecoins also remain central to discussions due to protocols like @ethena_labs, Stripe's reentry via USDC payments, and new EU regulations like MiCA.
Although Ethereum and Tron are stablecoin hubs, Solana has notably risen here this cycle, with daily volumes exceeding $100 billion during peaks. RWA activity is also increasing on the network, with @OndoFinance's USDY as DeFi collateral, @maplefinance's @jito_sol partnership, and @librecap's launch.
This article will dive into all these developments to understand the momentum Solana’s achieved in becoming one of the chains with the most real-world applications.
Stablecoins on Solana
Stablecoins on Solana have shown strength and continued expansion this cycle, highlighting the network’s robustness and appeal to stable issuers.
Today, Circle's USDC dominates the stablecoin arena on Solana, accounting for ~70% of the chain's total stablecoin supply, despite only holding ~30% on Ethereum.
As of this week, USDC's volume is ~19:1 compared to USDT (who comes in second on the chain), despite USDT's $114B total market cap and $31.5B daily volume on Ethereum, surpassing the top 20 ERC tokens combined. USDC's dominance on Solana stems from @circle and the @Solana Foundation’s strategies to incentivize developers and promote trading platform integration.
For instance, developer grants from platforms like @solendprotocol and @superteam in USDC have attracted more developers to Solana. Circle's Cross Chain Transfer Protocol (CCTP) launch on Solana has also boosted USDC's usability and liquidity. Additionally, Circle’s Web3 Services simplify smart contract development, meeting developer demand and fostering USDC's integration. All in all, these efforts aim to unify DeFi and establish USDC as Solana's leading stablecoin.
In third place at ~$240M circulating supply is @Paypal’s $PYUSD, which now accounts for ~11% of the total stablecoin supply on Solana after launching less than two months ago.
DeFi protocols like @KaminoFinance bolstered this growth by offering significant supply-side yields for PYUSD starting July 1st. Starting at 30%, these yields have lowered to 23%, though borrowing APY stands at 0.22%, compared to USDC’s 21% and USDT’s 16.5%, making PYUSD an attractive DeFi tool. Within a week of July 1st, PYUSD’s supply increased 88%, with 38% funneling into Kamino.
Outside of just stablecoin issuers, major financial platforms like @stripe and @Shopify integrating with Solana opens up new opportunities for developers and businesses to use the network to build trusted platforms that service everyday needs and connect Solana to mainstream finance.
Here, projects like @sphere_labs, @uselulo, @Decaf_so, and @helio_pay are already in development, simplifying crypto transactions and leveraging stablecoins such as USDC for everyday financial services like offramping to local currencies, facilitating crypto payments for e-commerce, and high-yield savings.
Overall, the stablecoin momentum seen on Solana looks primed to expand the offerings of existing financial systems with efficient, onchain solutions.
RWAs on Solana
Although quieter than Ethereum's RWA growth, Solana's integration of real-world assets is building a fertile ecosystem beyond tokenized treasuries.
Deployed on Solana in December 2023, Ondo Finance’s flagship tokenized treasury product, USDY, currently boasts a $42M market cap, which is relatively small compared to other leading stablecoins, which it is frequently categorized as. Despite its size, USDY has seen interesting developments, like integration into perps DEX @DriftProtocol as collateral.
This partnership and those to come add utility to tokenized real-world assets beyond lending and borrowing, improving capital efficiency for traders.
Some of the other most interesting RWA projects in the Solana ecosystem today include Maple and Parcl.
Maple, a marketplace for whitelisted companies to borrow from onchain liquidity pools, redeployed on Solana last year, offering yield avenues for stablecoins and altcoins through overcollateralized loan markets. Beyond this, Maple partnered with Jito for their new retail-focused lending product, Syrup. This partnership will provide flexible financing for borrowers using JitoSOL, unlocking yield sources for lenders and enhancing risk management with JitoSOL's liquidity.
@Parcl is a real estate perps DEX that allows users to invest in and trade—long or short with up to 10x leverage—specific geographical markets like Boston, Chicago, or Miami. This protocol aims to be used for directional investment and hedging strategies, democratizing access to a traditionally opaque asset class. Parcl is expanding into forex, too, with upcoming markets for the British Pound (GBP) and the Euro (EUR).
This is just the beginning of Solana’s RWA expansion, which will continue to be fueled by the recently announced Libre Fund and the upcoming launches of Jupiter’s GUM Alliance and elmnts’s exchange.
Libre Fund
Libre, a joint venture between Brevan Howard’s WebN Group and Nomura’s Laser Digital, is rolling out a suite of tokenized funds on Solana like the Hamilton Lane SCOPE fund, known for its higher yields, and the Brevan Howard Master Fund, which specializes in global macro trading strategies. With nearly $20M in TVL pre-launch, Libre's initiative intends to introduce secondary trading services for its funds later this year.
Jupiter’s GUM Alliance
@JupiterExchange's Grand Unified Markets (GUM) initiative, in partnership with the Solana Foundation and market makers like @wintermute_t and @DWFLabs, intends to create a "single atomic market" on Jupiter for all assets from forex and stocks to RWAs like credit, T-bills, and real estate and, of course, crypto.
The initiative aims to onboard tokenized assets efficiently by ensuring deep liquidity and addressing the common chicken-and-egg problem in tokenization, where issuers hesitate to tokenize assets without liquidity, and liquidity remains low until more assets are tokenized.
elmnts
@elmnts_ is an upcoming market for tokenized essential energy resources like mineral rights in the oil and gas sectors, an industry that is expected to generate over $800 billion in 2024. This approach increases transparency, access, and liquidity, addressing issues in the current market like high transaction costs and low liquidity.
To do this, the company acquires mineral rights through auctions, private sales, and networks, with specialists tracking active leasing areas and understanding the oil and gas market. This market simplifies the investment process, reduces costs, and allows more investors to participate with lower fees and minimums.
Zooming out
With significant stablecoin growth and a rising stable of RWA offerings, Solana has established a strong base for expanding real-world markets with onchain economies.
Through new and upcoming initiatives like Libre's tokenized funds, Jupiter’s GUM Alliance, and elmnts's market for essential energy resources, Solana continues to not only embed itself deeper into the RWA market but also offer a wider swath of access than most other chains to real-world assets onchain.
Indeed, @Coingecko's recent report shows that the top 2 narratives of Q2 2024 were memecoins (of course) and RWAs. If Solana captures the attention around RWAs as it has memecoins, it could attract institutional capital to the chain and solidify its place at the very top of this cycle's trends.
As existing financial systems merge with our decentralized ones, Solana’s role in facilitating the tokenization of traditional assets will continue to expand, reinforcing its status as a chain capable of feeding all appetites, whether from retail or institutions.
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