The objective of this article is to determine how frequently SOL stakeholder interactions with DeFi protocols occurred over the past month? With which protocols are they interacting most frequently? In addition, what kind of actions are they taking?
It is possible to stake SOL tokens at any time by anyone holding them. In this article, we’ll talk about how SOL stakeholder have interacted with DeFi protocols in the last month. Let’s start by discussing what staking is about.
A wallet that supports staking is required in order to stake SOL tokens. A stake account must be set up before you can use SOL tokens in your wallet. There’s no limit to the number of stake accounts that can be created, and any amount of SOL can be deposited into each stake account. A single wallet can manage or “authorize” multiple stake accounts, since each new stake account has a unique address.
About : Staking
A stake is the activity of assigning some or all of the tokens held by a holder of SOL tokens (like someone who bought them on an exchange) to one or more validators, helping to increase the voting weight of those validators. Tokens delegated to validators do not mean that they also own or control your tokens. Even if you have delegated tokens that you staked, they are still under your control. Token holders demonstrate their trust in a validator by staking tokens with them. Validators that receive stake delegations from more token holders are therefore viewed as more trustworthy, which is evident by their votes being weighted proportionately to their stake allocations. It is by the Proof of Stake that the network reaches consensus, when it weighs the collective votes of all validators against the stake they have been assigned.
Based on the below graph, we can observe the SOL stakeholders interacting with different Defi Protocols past one month on a daily basis. Here we can see the number of stakers between March 13, 2022 and April 12, 2022, were 983.77K. The maximum number of stakers recorded in March 27th 2022. Stakers exhibit a decreasing trend.
In the below graph, we can see which protocols are these stakeholder groups interacting with the most. With the DEX protocol, we can see that the majority of stakeholders are interacting. The majority of Stakers in the past month have interacted with DEX protocols by providing liquidity and swapping. Next, they will be involved in the mining and selling of NFTs. The Defi protocol has not been used much through staking and farming for the past month.
In this small note, we can see information about different common actions that stakeholder s perform,
Staking: Passive income can be earned through staking in the DeFi world. A token is staked in an intelligent contract and rewards are obtained based on the security of the token.
Farming: Traditional farming relies on providing liquidity into a protocol. As a result of this, a cryptocurrency pair is committed to a liquidity pool in exchange for a yield. By contributing to the pool, liquidity providers can earn a percentage of the reward. Pools must be provided with cryptocurrency pairs in equal value. The liquidity provider, for example, that wishes to participate in the USDT-ETH pair must deposit USDT and ETH both worth US$100 into the pool on behalf of the liquidity provider.
Swapping : The act of swapping is equivalent to exchanging one coin or token for another in the cryptocurrency world. In Solana we have many DEX protocols to perform swapping action with tokens.
Mining : A mining operation is the process of generating new coins and keeping track of all token transactions.
The below graph shows us what kinds of actions these stakeholder were performing over the past month. We can see that more than 80% of stakeholder actions involve swapping and providing liquidity. Out of the 3 activity types, DEX Swapping/Liquidity Providing contributed the most (81.85%) to the total Stakers. Our next observation is that many stakers are minting and selling NFTS after swapping and providing liquidity. Token staking and farming are only doing a very small number of stakers.
From the above analysis,
- If we look at the number of stakers from past one month, the maximum number of stakers recorded in March 27th 2022. Stakers exhibit a decreasing trend.
- The majority of traders this month have interacted with DEX protocols by providing liquidity and swapping. Then, they will engage in the mining and selling of NFTs. Since last month, Defi has not been much used in staking and farming. Consequently, we can see that more stakeholders are taking part in swapping and providing liquidity through DEX protocols.
- During the past month, Solana has not been very active in terms of farming and staking.