Is Solana’s Potential Limited by Native Platforms?

Solana’s popularity has skyrocketed in recent months, primarily due to the launch of several meme projects on this blockchain. However, as with many cryptocurrencies, interacting with different chains can be complex and Solana is no exception. For the Solana ecosystem to continue to expand, the process of trading tokens for other chains on the network must be simplified.

Although solutions like cross-chain swaps and bridged assets have been implemented, the risks associated with trading via bridges – such as hacking – and the fragmentation of pools remain major obstacles. Cloned assets provide a disruptive solution that simplifies trading non-native assets and makes it cheap and easy to create liquid markets for these tokens on Solana. Let’s explore how cloned assets are streamlining the process of bringing over non-native token liquidity to the Solana ecosystem..

Scalability of Solana over the years

It’s no secret that the Solana ecosystem faced tough times post-FTX saga, but now it seems like the good times are back. With a market cap of $49.6 billion and a TVL of $1.98 billion, the metrics and the activities on the network are pointing towards a comeback of its early days. For one, Solana has a solid foundation and a strong team of developers. 

Despite the challenges, it always maintained key strengths. With fast transaction speeds averaging 65,000 TPSsecond (TPS), the Solana blockchain offers improved speed and scalability. This feature positions the blockchain as a cost-effective platform, making it a decent choice for those looking to avoid huge fees on other platforms.

While it’s interesting to see Solana’s comeback and its newfound status as the go-to place for meme hub among degens from other chains, the big question is: how long will they stick to memes? As more money is being pumped into the network, it’s just a question of time before people start to seek alternative investment options beyond memes.

Defillama’s chain index shows that Solana has only about 128 native protocols, while Ethereum has nearly a thousand (8x more). This means there are fewer different tokens available for Trading on Solana. To make a mark in the blockchain world, Solana needs to fix this by making it easier to trade different tokens. And that’s where liquidity comes in. More liquidity means smoother Trading, lending, and borrowing in the DeFi ecosystem.

Trading Non-Native Tokens on the Solana Blockchain

Moving assets not made on the Solana blockchain between two different chains can be tricky. It often involves a third party or validator understanding transaction data from both chains. Right now, there are few options for trading these kinds of assets on Solana. Perpetual contracts, cross-chain swaps, and Bridged Assets are the most popular ways. 

Typically, crypto bridges allow you to move non-native tokens from other blockchains to Solana. Still, they come with big problems like liquidity and security risks. Liquidity—the availability of assets to buy or sell—is split among different places on Solana, which makes it risky for liquidity providers to pick a bridge and a decentralized exchange (DEX) thus making it challenging to  find enough liquidity.

Plus, bridges can have security issues. Chainalysis says 69% of all stolen funds in 2022 came from attacks on bridges. So, while bridging is a temporary fix for using Solana, better solutions are needed for it to really work well.

Another choice is perpetual contracts, which provide a method for trading assets not native to the platform with huge leverage. However, they are contracts, not tokens, meaning they lack utility within the wider Solana decentralized finance (DeFi) ecosystem. Needless to say, they are  complex financial tools suitable for short-term, high-leverage tactics.

Cloned Assets

Similar to bridged assets, clAssets are essentially ‘cloned’ versions of existing native assets on the Clone protocol. They’re designed to offer a more scalable solution, addressing the liquidity fragmentation often seen with bridged assets. clAssets aim to streamline the trading experience by offering a unified and efficient platform for trading non-native assets on Solana.

Clone protocol offers two primary features: clone liquidity for liquidity providers and clone markets for traders. Clone is also designed to provide small capital requirements for non-native assets.

The Comet Liquidity System (CAMM) enables Clone to introduce markets for new clAssets, expanding the range of trading opportunities available to Solana users.  clAssets are real, tradable tokens stored in your wallet, used in borrowing, market making, serving as collateral, and more within the Solana DeFi ecosystem. This versatility offers a better approach compared to the narrow focus of perpetual contracts.

Final remarks

A common adage says that a rising tide lifts all boats; this is a no-brainer, really, because the more attention Solana garners, the more projects flock in and, at some point, will need to bridge over. While the current solutions present security risks and liquidity fragmentation risks, Clone protocol stands in the gap, offering two options to its sophisticated and efficient solution, i.e.: the comet liquidity system for yield seekers and a capital-efficient, steep trading platform to exchange non-native assets for cloned ones.