Introduction

DeFi on Solana has drawn a lot of attention. In my recent article, I discussed MarginFi, a lending-borrowing protocol, and explained its recent rapid growth. In this article, I will look into another DeFi protocol on Solana that focuses on perpetual trading: Drift Protocol V2.

What is Drift Protocol?

Drift Protocol is a decentralized exchange built on the Solana blockchain. The V1 version was introduced in November 2021, and then in June 2022, Drift V2 was launched with two innovative features aimed at enhancing liquidity for perpetual trading: the Just-In-Time (JIT) liquidity mechanism and the Passive Liquidity Pool.

In Drift V2, users can engage in various activities by depositing collateral into the Drift Protocol, including trading, borrowing or lending, staking, and providing liquidity.

Trending on Drift V2 can be done as perpetual and spot swaps with leverage of up to 10x, and normal swapping tokens.

Drift Then and Now

TVL

As the data shows, TVL for Drift Protocol has experienced a significant surge in November 2023 and met its all-time high at 37.5M. The growing trend already started in June when the V2 was launched. JitoSol, SOL, and USDC are the three main tokens that constitute the current TVL. We can see the growth of the share of JitoSOL in the past weeks. The dominance of JitoSol was clear in the TVL of MarginFi as well. The Jito project needs special attention.

The trading volume is on an upward trajectory, although a part of this resulted from the recent upsurge of SOL price as indicated in the TVL chart in SOL.

Users

To date, Drift V2 protocol has seen the onboarding of 14,480 unique addresses. The data reveals a significant rise in both daily active users (DAU) and new users since mid-October 2013. In the last 7 days, the average daily activity encompasses 1,100 active users on Drift V2, with 266 users newly onboarded each day.

Drift Market Share

Drift Protocol is the third most significant DEX on Solana, trailing behind Orca and Raydium based on the current TVL.

Regarding user activity and adoption, Drift is positioned among the top three DeFi protocols on Solana after Orca and Raydium.

Despite these positive indicators, it's worth noting that Drift has yet to capture a major share of the market in terms of swap volume on Solana.

Endnotes

• You can see the detail of the analysis presented above and get more insight into the Drift Protocol using our analytic dashboard.
• Perpetual and spot trading with leverage carries inherent risks. As the data indicates, the number of liquidators is increasing alongside the protocol's growth. This trend highlights the importance of careful risk management and thorough understanding of the potential consequences of leveraged trading.
• To delve deeper into Drift Protocol's features, and functionalities, explore the Learn section of their website.