Decentralized Finance
Could Solar Dex Become the Uniswap of Solana?
The potential of a new project with surprising traction before it’s even tradeable
By Hogefather, aka Jesse J Rogers. Sponsored by Solar Dex. Not financial advice, do your own research.
Wait… What is Solana, First of All?
One of the arguments against cryptocurrency that I constantly see trotted out is with regard to energy use and environmental impact. What people fail to realize is that this problem exclusively afflicts the old-model Proof of Work (PoW) protocols such as Bitcoin and Ethereum.
The popular new class of blockchain technology called Proof of Stake (PoS) can secure a network far more efficiently. PoS is used by projects such as the now-famous Crypto.com.
Proof of Stake is far better than existing centralized (Visa, Mastercard) or decentralized (Bitcoin, Ethereum) transaction networks. As an example, sending $5,000 from the USA to a relative in El Salvador is instantaneous and can be done for pennies using a Proof of Stake network like Algorand. By contrast, according to their estimator, Western Union would charge between $33 and $222 for that same transaction!
But if the Binance Smart Chain — also a Proof of Stake network — is any guide, then even the highly efficient PoS architecture can run into some cost efficiency problems as adoption soars. Sometimes my most complicated trades still cost me more than $2.50.
For many types of applications that’s fine. Proof of Stake has a wide range of uses. I invest heavily in many such protocols. But for something like blockchain-based NFT gaming, even faster and lower cost transactions become vital for maintaining a smooth user experience. That’s where Solana might have the edge.
Solana is a layer 1 blockchain released in 2019 that uses a unique Proof of History (PoH) protocol which allows even faster confirmation times. It can process tens of thousands of transactions per second (TPS) at almost no cost. Compare that to the 13 TPS that clunky old Ethereum can handle (to be clear, I’m still bullish on ETH too, despite its many failings).
If you’re pretty new to crypto and want an idea of how to get started, click here.
Okay, Then What is Uniswap?
Uniswap is a massively disruptive decentralized finance platform that’s sort of like an online vending machine for crypto. It creates a way for new projects to emerge in a permissionless way, without having to go through gatekeepers like Coinbase or Crypto.com (both of which I also remain bullish on). The Uniswap token has a marketcap of over $13.6 Billion as of this writing, and in only 3 years has generated more than $1 Billion in fee revenue for its liquidity providers.
Now here’s where things get interesting. When you divide Uniswap’s marketcap by Ethereum’s you see that the DEX its about 2.7% of the Mainnet’s value. A similar pattern seems to emerge with Binance and Polygon (Matic). We can expect the primary DEX to be worth somewhere between 1% to 4% of the Mainnet it serves.
That can change quickly, of course. DEX usage could overtake centralized exchanges and become 5% or more. Or, rivals could chip away at that market dominance and DEX platforms might have a hard time creating a moat. This is all too new to know.
Solana in particular is too new to have a dominant DEX that’s taken hold. Whichever project ends up getting enough adoption stands to have a market cap of at least 1% of Solana’s, which is around $1.12 Billion.
Could Solar Dex Win?
Solar Dex aims to be the first American-based Solana decentralized exchange. Whether it can reach Uniswap levels of dominance on Solana is extremely speculative considering the governance token and its platform aren’t even tradeable or useable yet.
Even so, Solar Dex has already gotten followings on Twitter and Telegram that number in the tens of thousands, and there are articles written up in major outlets, including Yahoo!, MarketWatch, and Bloomberg. Moreover, coinmarketcap has a page ready to go for monitoring price, as soon as the transactions start. If you’ve been in crypto for a while, then you know how difficult and uncommon these things are even after a project is launched, let alone beforehand.
Additionally, Solar Dex is a sponsor of J.P. Deese & Associates, an advocate of decentralized finance that has been actively lobbying in Congress on behalf of the entire crypto industry.
I’ve had a chance to sit down with Joshua Deese, the principle lobbyist of the firm, as well as the doxxed Solar Dex team, you can watch the episodes below.
Right now, Solar Dex is arranging private presales on their website. The project expects to be valued at around $3 million to begin with. If it cuts through the competition as hoped, and succeeds in its ambition of becoming the primary DeFi hub for Solana, then my estimate is that the Solar Dex valuation could be anywhere from $1.12–4.48 Billion. That would mean 400x to 1600x returns in the most optimistic scenario.
The probability of success is hard to determine in a space this competitive, which is why I’m personally going only going to put in 1 SOL for now. We’ll see what happens, but it is very important to know that there are no guarantees and this is a highly volatile space. That’s why you should never put in more than you can afford to lose.
If you’re intrigued by the opportunity, download the Fantom Wallet and visit the Solar Dex website for presale information and links to social media.
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