The Solidly Summer: 1 Year later
Solidly-based DEXs were one of the biggest narratives last year, allowing users to earn some of the top yields in DeFi thanks to bribes.
Now that the hype has died down, how are they faring?
Ultimate 🧵 Review of Solidly forks👇
Before we go in deep, it's important to understand how a Solidly-based DEX works.
At its core, a Solidly-based DEX will have
- veNFT
- Gauge Voting determining flow of LP rewards
- Bribe Marketplace (additional rewards supplied to attract votes)
veNFT is a representation of voting power, acquired when a User locks up the DEX's utility token for a chosen period of time.
Like all other NFTs, veNFTs can be traded on a marketplace, allowing a user to instantly enter or exit a position.
Having a veNFT grants you the right to vote for a Liquidity Pool. An LP that has received votes will have an amount of the utility token directed to the Liquidity Providers as a reward for providing liquidity.
veNFT holders then receive the trading fees generated from the Liquidity Pool(s) that they have voted for + any bribes assigned to the Liquidity Pool
TLDR
🔵 Liquidity Providers earn utility token emission rewards
🔵 veNFT voters earn trading fees + bribe
Since the Solidly concept was birthed, many protocols have improved on its flaws and added their own unique flavors into it.
Out of the countless forks, 6 of them have risen to the top of their ranks thanks to their innovations.
@VelodromeFi is the only Solidly variant that had main support from its home chain (optimism) in the form of $OP grants.
The grants were utilized in their unique and well-designed incentive program: Tour De OP.
gov.optimism.io/t/velodrome-grant-performance-update/5998
The result?
$8 in value to liquidity providers and veVELO voters for every $1 in OP spent, allowing velodrome to achieve the highest TVL out of the 6 of them.
@ThenaFi_ incorporated additional features on top of what the OG Solidly had:
🟣 theNFT collection that can be staked to earn a portion of protocol fees.
🟣 Referral code system to attract traders.
They aren't just stopping there. More utility is coming to veTHE:
🟣 Increased revenue to holders via ALPHA, their Perps Platform
🟣 Early access to new tokens via WARP, their LaunchPad Accelerator
twitter.com/ThenaFi_/status/1659539012842037248
@narratoor's thread provided coverage on Thena's present and future growth
twitter.com/narratoor/status/1660257894795993089?s=20
Similar to Thena, @ChronosFi_ also has an NFT collection that can earn protocol fees: chrNFT.
What sets them apart is their Maturity-Adjusted Returns, allowing liquidity providers to earn more emission rewards the longer they provide liquidity.
LP providers that have staked their LP tokens to earn $CHR will also receive maNFTs which matures as more time passes.
The more the maNFT matures, the more emission rewards LP providers get, up to a 3x boost after 12 weeks.
@arndxt_xo laid out a great thread on @ChronosFi_ V2
twitter.com/arndxt_xo/status/1689307736910278656?s=20
@PearlFi_ places emphasis on being the liquidity hub for RWAs.
They are also the only one among the 6 that has a sustainable source of bribes that it uses to incentivize voters.
This is made possible as all of the listed assets are paired with @tangibleDAO's $USDR, a yield-bearing stablecoin.
Yields generated from $USDR are redirected into bribes.
This also allows the amount of bribes to increase as the TVL of Pearl grows.
You may read on my thread explainer on how USDR works and how it derives its yield.
twitter.com/0xsurferboy/status/1678392491886907395?s=20
@RamsesExchange added a unique variation to their tokenomics with the inclusion of xRAM, which works similarly to $RDNT from @RDNTCapital.
xRAM can either be immediately converted to $RAM/veRAM for a haircut or at a 1:1 ratio over a 90-day period.
@Equalizer0x's veEQUAL holders earn fees not only from their AMM Dex but from their Perps platform (Equity) as well.
@ThenaFi_ is also looking to launch its intent-based perps platform (ALPHA) via @symm_io as another revenue source for veTHE holders.
Among the 6, @VelodromeFi is the undisputed King of the Solidly variants.
Only @ThenaFi_ exceeds Velodrome in trading volume for the past month.
@VelodromeFi is also the only Solidly Variant that has broken into the top 10 DEXs in terms of TVL in the whole of DeFi.
However, it is worth noting that apart from @PearlFi_ which is about 2 months old, all of the Solidly Variants are experiencing declining TVLs, with @VelodromeFi bleeding out at the slowest speed.
@ChronosFi_ had the largest bleed, losing 95% of its All-Time-High TVL in just 3 months.
Solidly metrics comparison by Eliteness Network @FTM1337
Other Notable Mentions
Excluded in this 🧵 to make the comparison fair for older DEXes
@Retro_finance with their oTokens and bribing via @Stabl_Fi
@VelocimeterDEX for their rapid execution for different chains from Canto to Base + oTokens
@aerodromefi just completed their snapshot and will be launching soon. A thread by @Slappjakke covers it well
twitter.com/Slappjakke/status/1695362998565781541?s=20
Closing thoughts:
The Solidly model has left an impact on DeFi and will continue to be a DEX ever-evolving experiment, due to its ability to align token emissions and trading vols.
The current low yield low vol bera market, will be the greatest test for builders.
To maintain the incentive flywheel, project will need to find ways to:
⬆️ product rev: Perps (Thena)
⬆️ bribe rev: RWA yields (Pearl), OP grants (Velo)
⬆️ capital efficiency: @GammaStrategies vaults w Conc liq
⬇️ emission exp: Dynamic emissions (Velo)
Surf
@0xsurferboy
Analyst | Deep Dive Threadooor Covering Untapped and Overlooked Projects and Narratives Twitter 👇