Author: Jack Inabinet, Bankless
Translation: Felix, PANews
The oracle project Pyth Network and the DEX aggregator Jupiter launched airdrop plans at the beginning of this month. Pyth Network will airdrop PYTH tokens to over 75,000 wallets. 40% of the upcoming JUP tokens from Jupiter Exchange will be airdropped to the Jupiter Exchange community, with approximately 955,000 eligible users. Jito, the largest tokenless protocol and liquidity staking platform in the Solana ecosystem, announced the governance token JTO on November 28. 10% will be airdropped to Jito community members.
With the airdrop of tokens from three important projects, can the significant "liquidity" of ecosystem participants reverse the bleak TVL data of the Solana DeFi ecosystem? This article will discuss the impact of these airdrops and whether they herald the beginning of an airdrop frenzy in the Solana ecosystem.
Poor TVL Performance
Throughout 2023, market participants have been eager for SOL to rise, but their insatiable desire for SOL price growth has not translated into a desire to participate in Solana DeFi.
Although SOL has risen by 500% so far this year, the pace of price growth far exceeds the growth rate of TVL.
Source: DefiLlama
While a 200% increase in TVL denominated in USD may seem decent, it is still below the $1 billion level before the FTX collapse, and it is only a fig leaf for the 45% decline in TVL denominated in SOL since the beginning of the year.
The Next Chapter of Solana
Top protocols in the Solana ecosystem will distribute tokens to their most active on-chain users through airdrops. As newly acquired tokens are injected into Solana, the resulting TVL will help increase the valuation of the entire Solana ecosystem.
The arrival of Solana airdrops may not surpass the performance of SOL price in terms of TVL, as the two are positively correlated, but airdrops should improve the performance of both data sets and may lead to an increase in TVL denominated in SOL in 2024.
The sudden rise of Blast proves the ability of airdrops to attract TVL. Blast is an L2 platform that provides "points" to users who deposit funds into multisig before the project's mainnet launch in February. Despite being launched just last week and without a product, Blast's TVL has temporarily exceeded that of Solana.
Airdrops are a key component of initiating a potential super cycle for Solana and one of the simplest ways for users to join the ecosystem.
Users of EVM chains are eligible for the Pyth airdrop. However, to claim the airdrop, users must download the Solana native wallet to receive Solana native assets, which can be used in Solana native DeFi protocols. Users receiving the PYTH airdrop are likely to be new to Solana.
Airdropped tokens also help projects gain attention. Reports of Solana airdrops remind users and developers that there are "cool" applications on the chain. This is beneficial for promoting Solana as a viable ecosystem and an alternative to Ethereum.
Key Points
The arrival of "Solana Stimmy Szn" does not necessarily indicate a rebirth of the Solana DeFi ecosystem. While top projects may be preparing for large-scale airdrops, the number of successful airdropped tokens and innovative Solana protocols is few and far between.
The liquidity of Ethereum remains strong, as protocols like Blast can attract hundreds of millions of TVL with just a vague airdrop promise and questionable innovation, thereby incentivizing developers to build there. Therefore, Solana will face a tough game in terms of protocols, liquidity, and users.
With its low fees, global state machine, and ability to provide consensus quickly, Solana is poised to unlock new application areas that are impossible on Ethereum.
While the hype cycle of airdrops and the wealth effect they generate may attract new participants to join Solana and improve key data metrics, for Solana to truly rise through airdrops, it must cultivate its own DeFi ecosystem and prepare a series of protocol tokens available for airdrops.
Perhaps airdrops will help propel a new wave of growth for Solana protocols, but unfortunately, the lack of tokenized protocols on the network greatly diminishes the potential benefits of airdrops for the Solana ecosystem.
Related reading: The upcoming season of large-scale Solana airdrops? An article detailing seven potential protocols and interaction strategies
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