As of today, Solana (SOL-USD) is trading at $123.65, representing a 7% price surge ahead of the non-native token trading launch on March 1, 2024. With a market capitalization of $56 billion and a 24-hour trading volume of $7 billion, it is ranked fifth among over eight thousand cryptocurrencies listed, showing its position in the DeFi market ahead of the non-native asset trading launch
These statistics illustrate Solana’s efforts in scaling the heights of decentralized finance (DeFi), reaching these levels despite it becoming a struggle to trade non-native tokens in the Solana blockchain.
Native tokens are cryptocurrencies that belong to a specific blockchain network, for instance, Bitcoin (BTC-USD) on the Bitcoin blockchain or SOL on the Solana blockchain. Non-native tokens — utility, stablecoins, or non-fungible tokens (NFTs), on the other hand — are digital assets created and operated on a blockchain platform but are not the platform’s native cryptocurrency, often serving specific purposes.
Solana has emerged as a critical network, attracting the attention of developers, investors, and traders alike. Recently, ARK Invest CEO Cathie Wood stated in an interview with CNBC’s Squawk Box that Solana is the fastest and most cost-effective blockchain compared to Bitcoin and Ethereum (ETH-USD). Although the positive sentiments indicate the continuous rise in SOL prices, a significant pain point has been in actualizing seamless and effective trading of non-native assets on the Solana blockchain.
Perpetual contracts, cloned assets, and bridged assets can bring a long-lasting solution to Solana’s overreliance on native tokens, says Evan Deutsch, co-inventor of Clone, a non-native token trading platform in Solana. In an interview, Evan suggests that cloned assets are the most suited tools for bringing liquidity to non-native tokens on Solana. He continues challenging the expensive nature of perpetual contracts, terming them as only ideal for short-term but high-leverage models.
Evan explains that these are contracts, not tokens, and lack utility potential across the wider Solana DeFi environment. Conversely, he points out that bridged tokens are subject to what he terms the “liquidity fragmentation problem.” Despite their ability to bring non-native assets to Solana, bridged assets carry little liquidity for trading these tokens.
Cloned Assets on Solana
Cloned assets (clAssets) are tokens created as replicas of existing cryptocurrencies or assets on different blockchain networks. clAssets are tradable tokens stored in users’ wallets, utilized within the Solana DeFi ecosystem for borrowing, market making, and also sometimes can serve as collateral. They are designed to address the liquidity fragmentation issue and security concerns in a more scalable and safe manner.
״Cloned assets represent a novel DeFi asset class that we created to effectively onboard liquidity for non-native tokens to Solana. They are essentially bridged assets with supercharged liquidity, boasting enhanced capital efficiency and scalability,״ explains Deutsch.
Trading Non-Native Assets on Solana’s Blockchain
Transferring non-native tokens across different chains in the Solana blockchain can be challenging, if not impossible. On its own, Solana does not have the capabilities to facilitate non-native token trading and usually calls for third parties. Perpetual contracts, bridged assets, and cross-chain swaps have become the most famous bridges enabling non-native asset trading. However, these intermediaries’ cost implications and liquidity fragmentation challenges call for a different approach.
With this in mind, Clone has developed a non-native token trading platform in Solana to address the mentioned challenges. Clone’s X post reveals that it will launch its public mainnet protocol on March 1, 2024, for Clone Markets and Clone Liquidity.
This launch by Clone comes at a time when security risks and liquidity problems have significantly affected non-native token trading in Solana. Chainalysis recently reported that 69% of stolen DeFi funds originated from protocol bridges, signaling the imminent danger of using them in the Solana ecosystem.
״Clone protocol consists of two front-end interfaces, Clone markets and the Clone liquidity. Clone Markets is designed specifically for cloned asset trading, while Clone Liquidity supports liquidity provisioning on Clone using comet liquidity positions,״ Clone’s X post stated.
The Clone protocol will provide two interfaces that allow traders to oversee their entire portfolios within a single platform within the Solana ecosystem. Traders will have the ability to transfer non-native assets through “cloned assets” within the Clone protocol.
The protocol’s focus on user experience simplifies engagement with decentralized finance applications on Solana, potentially increasing adoption and participation. Integrated with Solana, the Clone protocol contributes to ecosystem growth by adding value and attracting users and developers to the blockchain.
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