Liquid Stake with compassSOL for an 7.50% APY from staking, MEV + fees

Enjoy the freedom of liquid staking in Solana Defi while delegating your stake to the high performance Solana Compass validator. Stake or unstake at any time here, or with a Jupiter swap.

Benefit from our high staking returns and over 2 years experience operating a Solana validator, and receive additional yield from priority fees + MEV tips

Earn 6.8% APY staking with Solana Compass

Help decentralize and secure the Solana network delegating your stake to us and earn an impressive 6.8% APY yield on your SOL, while supporting us to create new guides and tools. Learn more

Stake your SOL

  1. Click to connect your wallet
  2. Enter the amount you wish to stake
  3. Kick back and enjoy your returns
  4. Unstake from your wallet or our staking dashboard

Earn 6.8% APY staking with Solana Compass

Help decentralize and secure the Solana network delegating your stake to us and earn an impressive 6.8% APY yield on your SOL, while supporting us to create new guides and tools.

Learn more

Solana's Emergence as a Payments Hub | Roundup

By Lightspeed

Published on 2023-09-08

Explore Solana's growing prominence in crypto payments, featuring Visa's USDC settlement, Shopify integration, and the evolution of DeFi on the blockchain.

The notes below are AI generated and may not be 100% accurate. Watch the video to be sure!

Solana's Emergence as a Payments Hub: A Deep Dive into Recent Developments

In the rapidly evolving world of blockchain and cryptocurrency, Solana has been making significant strides, particularly in the realm of payments. This article explores the recent developments that have solidified Solana's position as a leading blockchain for payment solutions, including major announcements from Visa and Shopify, as well as the evolving landscape of decentralized finance (DeFi) on the platform.

Visa's USDC Settlement on Solana

One of the most significant developments for Solana in recent times has been Visa's announcement of USDC settlement on the Solana blockchain. This move by one of the world's largest payment processing networks marks a major milestone for both Solana and the broader crypto ecosystem.

Visa's decision to utilize Solana for USDC settlements is a testament to the blockchain's efficiency and scalability. With an average transaction fee of just $0.00025 and block times of around 400 milliseconds, Solana offers near-instantaneous, cost-effective transactions that are ideal for large-scale payment processing.

The integration with Visa is particularly noteworthy when considering cross-border payments. Traditional international money transfers often involve multiple intermediaries, resulting in higher fees and longer processing times. By leveraging Solana's blockchain, Visa can potentially streamline these processes, offering faster and cheaper cross-border transactions.

Moreover, this partnership serves as a significant endorsement for Solana. As Mert, one of the podcast hosts, points out, "To see a company that's essentially the leading provider in payments and rails in the world... To see them utilize Solana is a huge stamp of approval." This sentiment is echoed throughout the crypto community, as it signals growing institutional confidence in Solana's technology.

The Implications for Global E-commerce

The Visa-Solana integration has far-reaching implications for global e-commerce. By enabling USDC settlements on Solana, Visa is paving the way for more efficient international transactions. This could be particularly beneficial for businesses operating across multiple jurisdictions, as it simplifies the process of dealing with various currencies and reduces the associated costs.

Furthermore, this development could accelerate the adoption of cryptocurrency payments in everyday transactions. While the current focus appears to be on B2B transactions, the groundwork is being laid for potential retail-level applications in the future. As more users become comfortable holding and transacting with USDC, we may see a shift towards crypto-based payments for everyday purchases.

Shopify's Solana Integration

Another significant development in Solana's payment ecosystem is the integration with Shopify, one of the world's leading e-commerce platforms. While it's important to note that this is not a direct partnership but rather an open app integration, it still represents a major step forward for Solana in the e-commerce space.

The Shopify integration allows merchants to create plugins that enable Solana-based transactions on their online stores. This opens up new possibilities for businesses looking to accept cryptocurrency payments, potentially tapping into a growing market of crypto-savvy consumers.

What makes this integration particularly exciting is its potential to bring Solana-based payments to a wide array of businesses, from small independent retailers to larger e-commerce operations. By lowering the barriers to entry for crypto payments, Shopify's Solana integration could play a crucial role in driving mainstream adoption of blockchain-based transactions.

The Unique Advantages of Solana for Payments

Solana's emergence as a preferred blockchain for payment solutions is not coincidental. The blockchain's architecture offers several key advantages that make it particularly well-suited for payment applications:

  1. High throughput: Solana can process thousands of transactions per second, making it capable of handling high-volume payment scenarios.

  2. Low fees: With transaction costs averaging around $0.00025, Solana offers a cost-effective solution for both large-scale and micro-transactions.

  3. Fast finality: Transactions on Solana reach finality in a matter of seconds, enabling near-instant payments.

  4. Scalability: Solana's architecture is designed to scale with improvements in hardware, ensuring long-term viability for payment applications.

These features combine to create a blockchain environment that is highly conducive to payment solutions, offering advantages over both traditional financial systems and other blockchain networks.

Solana DeFi 2.0: A New Era of Decentralized Finance

While payments have been a significant focus for Solana, the blockchain is also seeing exciting developments in the realm of decentralized finance (DeFi). The concept of "Solana DeFi 2.0" has emerged, signaling a new phase in the evolution of DeFi on the Solana blockchain.

Solana DeFi 2.0 represents a maturation of the DeFi ecosystem on Solana, characterized by improved infrastructure, more robust protocols, and a focus on sustainable growth. This new phase comes after the challenges faced by the crypto industry in late 2022, including the collapse of FTX, which had significant ties to the Solana ecosystem.

One of the key aspects of Solana DeFi 2.0 is the emphasis on building more resilient and user-friendly protocols. As Tristan, one of the developers mentioned in the podcast, noted, "Back in the day in 2020, our protocol was held together by silly string... now our protocol is 10 times better."

This improvement in protocol quality and stability is crucial for attracting both users and institutional players to the Solana DeFi ecosystem. With more robust infrastructure in place, Solana is positioning itself as a serious contender in the DeFi space, offering alternatives to Ethereum-based protocols.

The Role of Liquid Staking in Solana's DeFi Ecosystem

An important component of Solana's evolving DeFi landscape is the growing focus on liquid staking. Liquid staking allows users to stake their SOL tokens while receiving a liquid representation of their staked assets, which can then be used in other DeFi applications.

Currently, Solana has a relatively low ratio of liquid staked tokens compared to the total amount of staked SOL. As mentioned in the podcast, only about 3% of staked SOL is currently in liquid staking protocols, compared to 45% on Ethereum. This presents a significant opportunity for growth in Solana's DeFi ecosystem.

Several protocols are working to increase liquid staking adoption on Solana, including Marinade Finance, Jito, and Lido. These protocols are competing to offer the best liquid staking solutions, which could drive innovation and improve the overall DeFi experience for Solana users.

The growth of liquid staking on Solana could have far-reaching effects on the blockchain's DeFi ecosystem. By increasing the amount of capital available for use in DeFi applications, liquid staking has the potential to boost overall activity and liquidity in Solana-based protocols.

Challenges and Opportunities for Multi-Chain Deployments

The podcast discussion also touched on the challenges faced by projects attempting to deploy across multiple blockchains. The example of Lido, a prominent liquid staking protocol on Ethereum, was highlighted as a case study in the difficulties of multi-chain expansion.

Lido has faced significant challenges in establishing itself on Solana, despite its success on Ethereum. This struggle underscores the importance of native ecosystems and the difficulties in translating success from one blockchain to another.

The hosts argued that being native to a particular blockchain ecosystem often provides significant advantages. This is particularly true for Solana, where the unique architecture and community dynamics can be challenging for outsiders to navigate effectively.

This situation presents both challenges and opportunities for the Solana ecosystem. While it may be difficult for established projects from other blockchains to gain traction on Solana, it creates space for native Solana projects to thrive and establish themselves as leaders in their respective niches.

The Future of Solana: Beyond Payments and DeFi

While payments and DeFi are currently at the forefront of Solana's development, the blockchain's potential extends far beyond these areas. The podcast touched on several other exciting possibilities for Solana's future:

  1. Decentralized social media: With its high throughput and low fees, Solana could serve as an ideal platform for decentralized social media applications.

  2. Gaming and NFTs: Solana's speed and cost-effectiveness make it well-suited for gaming applications and NFT marketplaces.

  3. Internet of Things (IoT): The blockchain's scalability could make it a strong contender for IoT applications that require processing large volumes of data.

  4. Decentralized identity solutions: Solana's efficiency could enable new forms of decentralized identity verification and management.

These potential use cases highlight the versatility of Solana's technology and suggest a bright future for the blockchain beyond its current focus areas.

The Importance of Messaging and User Adoption

One of the key challenges identified in the podcast for Solana and the broader crypto industry is effective messaging to attract new users. The hosts emphasized the need to communicate the benefits of blockchain technology in simpler, more relatable terms to reach a wider audience.

Mert, one of the podcast hosts, stressed the importance of making blockchain concepts more accessible: "Something that's super important going forward is going to be how to message this simpler without ridiculous jargon and terms to just everyday people and how can help them."

This focus on improved messaging and user experience will be crucial for Solana as it seeks to expand its user base beyond the crypto-native community. By making its technology more accessible and highlighting real-world use cases, Solana can position itself for broader adoption in the coming years.

Conclusion: Solana's Growing Momentum

The recent developments discussed in this roundup podcast paint a picture of growing momentum for Solana. From major partnerships with companies like Visa to the evolution of its DeFi ecosystem, Solana is establishing itself as a formidable player in the blockchain space.

The blockchain's focus on efficiency, scalability, and user experience positions it well for future growth, particularly in the realms of payments and decentralized finance. However, challenges remain, particularly in terms of messaging and attracting mainstream users.

As the crypto industry continues to evolve, Solana's progress will be worth watching closely. With its robust technology and growing ecosystem, Solana appears poised to play a significant role in shaping the future of blockchain and cryptocurrency.

Facts + Figures

  • Visa processed approximately $11 trillion in transactions last year and is now expanding to use USDC settlements on Solana.
  • Solana's average transaction fee is $0.00025, with block times of around 400 milliseconds.
  • Over 1 million verified Coinbase users now hold USDC, according to a recent tweet from Coinbase.
  • Approximately 70% of SOL is staked, but only 3% of that staked SOL is in liquid staking protocols.
  • On Ethereum, 21% of ETH is staked, with 45% of that being in liquid staking protocols.
  • Marinade Finance has a TVL of 102 million, while Lido on Solana has 48 million, and Jito has 32 million in TVL for liquid staking.
  • Jito's liquid staking token grew from 600,000 staked in June to 1.6 million today.
  • Lido is considering sunsetting its Solana protocol due to financial constraints and limited adoption.
  • The podcast mentions that Solana DeFi protocols are now "10 times better" than they were in 2020, according to developer Tristan.
  • Solana's focus on scaling with hardware improvements is highlighted as a key advantage for long-term viability.

Questions Answered

What is Visa doing with Solana?

Visa has announced that it will be using Solana for USDC settlements. This move allows Visa to leverage Solana's fast and low-cost transactions for cross-border payments and potentially improve efficiency in global e-commerce. The integration could lead to significant cost savings for Visa and provide a stamp of approval for Solana in the financial industry.

How does Solana compare to other blockchains for payments?

Solana offers unique advantages for payments compared to other blockchains. It boasts an average transaction fee of just $0.00025 and block times of around 400 milliseconds, making it significantly faster and cheaper than many alternatives. Solana's architecture is also designed to scale with hardware improvements, ensuring long-term viability for payment applications.

What is Solana DeFi 2.0?

Solana DeFi 2.0 refers to the next phase of decentralized finance on the Solana blockchain. It represents a maturation of the ecosystem, with improved infrastructure, more robust protocols, and a focus on sustainable growth. This new era comes after the challenges faced by the crypto industry in late 2022 and aims to provide more resilient and user-friendly DeFi experiences on Solana.

How is liquid staking developing on Solana?

Liquid staking on Solana is still in its early stages but showing promising growth. Currently, only about 3% of staked SOL is in liquid staking protocols, compared to 45% on Ethereum. Several protocols, including Marinade Finance, Jito, and Lido, are working to increase liquid staking adoption on Solana. This presents a significant opportunity for growth in Solana's DeFi ecosystem.

What challenges do multi-chain deployments face?

Multi-chain deployments face significant challenges, as exemplified by Lido's struggles on Solana. Despite success on Ethereum, Lido has found it difficult to gain traction on Solana. This highlights the importance of being native to a blockchain ecosystem and understanding its unique dynamics. Projects attempting to expand across multiple chains often face difficulties in translating their success and adapting to new environments.

How is Shopify integrating with Solana?

Shopify has approved an open app integration that allows merchants to create plugins enabling Solana-based transactions on their online stores. While not a direct partnership, this integration opens up new possibilities for businesses looking to accept cryptocurrency payments through Solana. It potentially lowers the barriers to entry for crypto payments in e-commerce.

What are some potential future use cases for Solana beyond payments and DeFi?

Solana's potential extends beyond payments and DeFi. Some possible future use cases include decentralized social media platforms, gaming and NFT applications, Internet of Things (IoT) solutions, and decentralized identity verification systems. Solana's high throughput and low fees make it well-suited for these and other applications that require processing large volumes of data efficiently.

How is Solana addressing the challenge of user adoption?

Solana and the broader crypto industry are focusing on improving messaging and user experience to attract new users. The podcast hosts emphasized the need to communicate blockchain benefits in simpler, more relatable terms. By making the technology more accessible and highlighting real-world use cases, Solana aims to expand its user base beyond the crypto-native community and drive broader adoption.

Related Content

Solana vs Ethereum Fee Markets | Mert Mumtaz, Dan Smith

Explore how Solana's fee revenue is approaching Ethereum's, the impact of failed transactions, and the evolving L2 landscape post-EIP-4844.

Solana Legend on Next Generation Blockchains

Solana OG shares insights on blockchain evolution, DeFi innovations, and the future of Web3 gaming in this in-depth interview

The Solana End Game | Anatoly Yakovenko & Lucas Bruder

Anatoly Yakovenko and Lucas Bruder discuss Solana's scaling solutions, upcoming features like async execution, and the future of MEV on the network.

How to Instantly Unstake + Withdraw SOL from Solana Staking

Learn how to unstake SOL from Solana staking and withdraw your SOL from Solana staking.

Solana Staking Rewards Calculator

Calculate your potential earnings when staking on the Solana network

Validated | The Toly Episode

Solana co-founder discusses network stability, performance optimizations, and balancing innovation with reliability in this in-depth conversation

Breakpoint 2023: Bonds Can Be Interesting, Too

Introducing stable bonds on the blockchain, fostering growth and stability in the DeFi ecosystem.

Breakpoint 2023: How Helium Migrated to Solana

The migration of the Helium network to Solana blockchain.

Future of Media ft. eDAO

Explore the future of media with eDAO founders as they delve into NFTs, music monetization, and the evolving entertainment industry in the Web3 space.

0xJaypeg's View on a Multichain World

Expert insights on Solana's growing dominance, Ethereum's struggles, and the evolving crypto landscape from software engineer and crypto analyst 0xJaypeg

Breakpoint 2023: Building Blocks of a Regenerative Economy

An insightful discussion on blockchain's role in establishing a regenerative economy.

Breakpoint 2023: DeFi is Broken. How to Fix It on Solana

Eugene Chen of Ellipsis Labs discusses DeFi's drawbacks and proposes solutions on Solana.

Breakpoint 2023: Finding Utility for NFTs

An in-depth look into the expanding utility and application of NFTs in Web3.

Breakpoint 2023: How to Store Solana NFTs On-Chain - A Brief Overview

An insightful exploration into the essentials of storing NFTs on Solana's blockchain.