*obligatory not financial advice*
What is Orca?
Orca is the main decentralized exchange of the Solana blockchain. It allows its users to trade cryptocurrencies in a decentralized manner while taking advantage of the high speed and low cost of its blockchain.
Solana has gained a lot of popularity last year due to being extremely fast and scalable because it’s able to process ten thousands of transactions per second. This makes Solana much more user-friendly as a smart contract chain than Ethereum and many others. The blockchain is not perfect since it is very centralized at least for now, but it has still attracted many users and has a growing number of DeFi applications, Orca is one such application.
The Orca DEX works much like Uniswap or Sushiswap do. People can provide their tokens into liquidity pools for trading pairs. The tokens in the pools are then offered to traders in exchange for a trading fee. The prices at which the traders can swap their crypto are set automatically based on the ratio of the supplied tokens. That’s how any Automated Market Maker DEX works. This standard AMM enables Solana users to instantly trade their cryptocurrencies and also allows the creation of other DeFi applications that need a way to distribute or buy back a certain token in a decentralized way.
But this standard AMM doesn't work well for trading pairs of tokens that are supposed to have the same value, like two different USD stablecoins, because the slippage can be too high if the supply is too low. That’s why Orca also has a stableswap AMM for tokens with the same value. This stable AMM is based on the Curve Finance stabelcoin DEX and it keeps the slippage lower by taking in account that the value of both tokens should be the same.
Like on all DEXes you can earn trading fees for providing the much needed liquidity to the trading pairs. One unique thing about Orca, is that you have the option to supply funds to "whirlpools" which are special liquidity pools where the providers compete against each other for trading fees. When you supply liquidity via a whirlpool, you can choose a price range at which you are supplying liquidity. Should the price of a token in the trading pair fall below or rise above that range, you will not receive any trading fees, but should it reach your chosen price range again, you will get more rewards again.
The Orca DEX also has its own NFT collections that are all based on the marine ecosystem. There are NFTs called Guppy, Whale, Clownfish, Starfish and more. This NFTs have been airdropped to users of the application to encourage the adoption of the platform further by gamifying it.
Orca holds more than 400 million dollars’ worth of liquidity and is the most used application of Solana already. Should the Solana blockchain keep growing in popularity and value then so will the DEX. The only downside is that Solana itself is not fully decentralized, which also puts all its applications at risk.
The ORCA Token
Orca has a governance token with the same name. It is used to vote on proposals to change the protocol and on how to spend the DAO treasury.
Each trade has a fee of 0.3%. 0.25% are going directly to the liquidity providers, 0.04% are going to the treasury of the DAO and 0.01% are going to the Orca Impact Fund. The 0.04% for the treasury can be used in any way the DAO choses, like to fund future development or for buy backs of ORCA tokens to reward the holders. The Orca Impact Fund is a special treasury that the developers of the protocol use for donations to fight climate change.
There is a max supply of 100 million. Early liquidity providers and traders received 5.25 million tokens as retroactive rewards when the token launched, how much they got was based on how many dollars’ worth of crypto they supplied or traded. In total 66.1% of the max supply is used to reward liquidity providers and for airdrops and the like, 20% are reserved for the developers, 0.9% for their advisors and 13% were sold to investors to raise the needed funds. A fair share of the supply is going to the community. In comparison Uniswap for example is distributing 60% of its UNI tokens to its liquidity providers while Orca gives them slightly more.
The value of the token depends on how much value is held within Orcas smart contracts and on how many trades the dApp is processing. That is because the more money is affected by the voting rights, the more demand they will have and the treasury controlled by the token holders will grow with more trades. Ultimately, the dApp depends on the Solana blockchain. If the blockchain keeps rising in value and importance, then the value of its tokens will rise too and there will be more demand for decentralized trading there. Orca is in a good place as the most used dApp on Solana. However, Solana still being in a very centralized stage is a risk.
You can buy ORCA tokens on the MEXC Global exchange, but of course you can also buy it directly on the Orca DEX if you have some SOL coins. You can use a Phantom or Solflare Wallet to hold your tokens and use the dApp.
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