Lightning-fast liquidations protecting the protocol LPs

Lightning-fast liquidations protecting the protocol LPs

Ethereum is currently the leader in the smart contract space, with over 70,000 nodes compared to just 1,000 for Solana. However, Solana is considered to be an Ethereum killer because of its innovation and how it is tackling some of Ethereum’s weaknesses.

Solana, through its proof-of-history (PoH) protocol, is revolutionizing how blockchains work. By allowing validators to be in charge of their own clock, the transaction verification process is reduced since the nodes don’t have to put in processing power before they can verify various timestamps. Thus, improving the speed at which transactions are processed on the Solana network. The Solana network processes up to 60,000 transactions per second, surpassing that of Bitcoin, Visa, XRP and Ethereum combined.

Solana’s DeFi ecosystem has grown to a certain level after a rapid growth phase, including AMM DEX, CLOB DEX, AMM for stables, Decentralized Stablecoin, Oracle, Lending protocol, derivatives, launchpad, yield farming, and asset management, among other things.

  • Serum, which is positioned at the ecosystem level and is also a CLOB DEX. 
  • Raydium, A DEX that integrates the order book and AMM liquidity. 
  • Bonfida, as Serum front-end, includes modules such as bot trading strategies, APIs, and naming system. 
  • Pyth, the oracle that provides the price of traditional financial assets and the price of crypto assets.

We believe that the future of DeFi will be more professional and capital-efficient, and that Uniswap V3 provides active liquidity management features, and that more Uniswap V3-based solutions will be promoted in this manner. The performance advantage (particularly the predictable scalability) lays a solid platform for DeFi’s further growth and capital efficiency.

Transaction Cost

The high transaction costs of Ethereum have stifled user adoption of DeFi. Users who wish to earn fee income on Uniswap V3 by modifying their range of liquidity provisions must pay gas fees, which might reduce their profit margins, especially during peak network traffic periods reaching $60.

The cost of completing a transaction using Solana, on the other hand, is $0.05. A self-evident advantage due to the significant difference in transaction costs.

The Solana main net’s TPS has now surpassed dozens of times that of Ethereum. Because Solana’s design throughput is 50k/s, it is capable of maintaining cheap transaction costs. 

Solana can handle a massive number of requests at once without raising transaction fees or restricting user requests. At Alf, we feel that for our DeFi solution to gain widespread adoption, we need the cost-effectiveness that Solana provides to our users to expand our protocol successfully.

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