Kamino: A Powerhouse in the Making

Solana’s DeFi Opportunity

Solana has become the most vibrant ecosystem outside of Ethereum by several meaningful onchain metrics. In the past year:

1. Solana fees have increased by 35x. Relative to Ethereum, they have grown from less than 2% to 29%, hitting a peak of 66% at the beginning of September. This figure doesn't include Jito tips, which usually represent between 40% and 50% of the value captured by validators. Cumulative Jito tips paid to validators YTD are nearing $250M and can hit $350M by the end of the year with current activity levels. In this regard, Solana's REV (Real Economic Value, defined as fees + MEV tips) for 2024 is on track to hit upwards of $850M. 

1. Solana's DEX trading volumes have increased by 30x. Relative to Ethereum and its L2s, they have grown from 4% to 44%, hitting a peak of 58% in July. Memecoin volumes have played a critical role in this surge, as they routinely represent over 60% of Solana's DEX trading volumes. Memecoins' prevalence on Solana shows that the network has become a consumer hub, able to onboard new users through its integrated approach. Despite the urge to label Solana as a "retail chain," the entry of traditional payment giants such as Visa, PayPal, and Stripe into the Solana ecosystem suggests that the chain is also ripe for institutional adoption.

1. Solana's TVL has grown by 18x. Relative to Ethereum and its L2s, it has grown from 1.4% to 11%. While TVL has its flaws, particularly for high-volume applications like perps and spot DEXs (as it ignores capital efficiency), this metric is still useful insofar as it measures the capital users are willing to risk on a given platform. Solana's growth in TVL over the past year eclipses that of Ethereum and popular L2s like Arbitrum, Base, and OP Mainnet. An important note, however, is that TVL is highly correlated with the native asset's price – when normalized by SOL terms, Solana's TVL has "only" increased by ~3x over the past year.