Hey my dear followers, today I'm tipping my tows again into the Solana ecosystem. After Solana's 10x last year, which I failed to profit from because I fell victim to the disbelief rally dilemma, I'll try my luck by looking at which Solana projects will prove to be essential for Solana to succeed.
In 2023, Raydium, an Automated Market Making and Liquidity Provider built on Solana for the Serum decentralized exchange (DEX), has emerged as a revolutionary force in the world of Decentralized Finance (DeFi). Launched in February 2021, the token suffered during the cold crypto winter, with its token valuation dropping near to nothing. During the last 3 months of 2023, Raydium has quickly regained popularity due to its unique features, user-friendly interface, and commitment to decentralization. In my review of Raydium, I will explain why Raydium stands out as the AMM of Solana and why I believe it will play a vital role in the evolution of decentralized finance.
RaydiumProtocol was developed by AlphaRay.
Raydium Concentrated Market Making (AMM) and Liquidity Pools.
Raydium utilizes the concept of Concentrated Automated Market Making, which eliminates the need for traditional order books. Instead, it relies on liquidity pools to facilitate trading. Users can easily provide liquidity to these pools by depositing cryptocurrency pairs, earning fees in return. This approach ensures constant liquidity, reduces slippage, and provides a seamless trading experience.
Concentrated Liquidity Market Maker (CLMM) pools allow liquidity providers to select a specific price range at which liquidity is active for trades within a pool.
Compared to other AMM industry leaders, Raydium stands out by providing on-chain liquidity to a central limit order book, meaning that Raydium LPs get access to the entire order flow and liquidity of Serum.
2024: The Year of Raydium (RAY).
Raydium is Open and Permissionless.
Raydium operates on the Solana blockchain, embracing the principles of decentralization. It is open-source, meaning that anyone can inspect, contribute, or fork the code. This openness fosters innovation and allows for a diverse range of projects and developers to build upon the Raydium protocol.
Raydium's permissionless concentrated pools and farms empower project teams and users alike to effortlessly establish markets, infuse liquidity through farming emissions, and customize fee tiers for any token pair on the Solana blockchain.
Token Swapping and Accessibility on Raydium.
When users contribute to one of Raydium's liquidity pools, the AMM converts their tokens into limit orders on Serum's order book for anyone to trade against. When a user makes a swap, Raydium compares prices between Serum's order book and Raydium's AMM to execute the most cost-effective trade for the user.
This process happens directly from the users' wallets without the need for a centralized intermediary. This accessibility is democratizing access to a wide range of tokens, fostering a more inclusive financial ecosystem.
Raydium is Trustless and Secure.
Radium operates on smart contracts, ensuring a trustless and secure environment for users. The decentralized nature of the protocol mitigates the risk of hacks or unauthorized access associated with centralized exchanges. Users retain control of their private keys and funds, aligning with the principles of self-sovereignty.
Raydium: the Uniswap of Solana.
A total of 550,000,000 RAY tokens were minted at the genesis and are set to be gradually released over 3 years. The initial allocation plan for these 3 years is outlined as follows:
34% will be distributed to liquidity providers through airdrops over the 3 years.
30% is earmarked for partnerships and the expansion of the Raydium ecosystem, subject to up to 3-year lockups.
20% is allocated for team members and future employees, with a 1-year lockup and a subsequent 2-year unlock period.
8% is dedicated to liquidity provisioning, covering initial pools' liquidity bootstrapping and providing liquidity on other decentralized and centralized exchanges (DEX and CEX).
6% is reserved for seed funding and the community pool, with lockup periods ranging from 1 to 3 years.
Despite the emergence of Solana as the number one cryptocurrency surprise of 2023, with a then folding of its price, its ecosystem yet stands to follow its example. Many of the funds raised before 2023 have given the teams the necessary time to further develop their stack and it is only a matter of time before the altcoin season returns when the newbie Bitcoin investors, who by now have discovered the Spot Ethereum ETF hype, turn their attention to the important building blocks underneath several Layer 1 Blockchains.
Solana will most probably be the number 1 asset of this bull run, despite the Spot Bitcoin ETF and Spot Ethereum ETF saga, even the halving, and its underlying value comes from projects such as Pyth Network and Raydium.
I believe Ethereum is way ahead of Solana: if you want to read why Ethereum is so important, read my review: Why Larry Fink, the most powerful investment person, is bullish on an Ethereum ETF! PREPARE YOURSELF! The tech is ready and they're IN!
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