Not financial advice.

Introduction

Decentralized Exchanges/Automated Market Makers are a key piece of any decentralized finance (DeFi) ecosystem; many users rely on DEX/AMMs to trade nowadays and the trend is only increasing as seen below.

Source: https://dune.xyz/hagaetc/dex-metrics

Monthly DEX Volume has been increasing ever since the introduction of AMMs into the markets. In recent times, the ever increasing requirements of KYC by centralized exchanges has also pushed some users to explore other options which leads them to DEXs. As such, we expect volumes at DEXs to continue to grow steadily, and with that the fees accrued by DEXs will also continue to increase.

With that, Sino is delighted to announce our investment in Orca, a decentralized AMM in the Solana ecosystem. Through our investment thesis, we will share our views on the future of DEX/AMMs and how Orca will tackle the numerous competitors and rise to the top as an apex predator.

Why Orca?

Orca is focused on a human-centered approach, making the ever-growing, complex world of DeFi simple enough for any user to approach and interact with. Great user experience makes it easy to onboard new users and bring them back repeatedly. As Einstein puts it, “Everything should be made as simple as possible, but no simpler”. This is the ethos behind Orca, a human-centered DEX; take the base experience of AMMs and make it even simpler & better for every trader. Besides that, Orca also focuses on being composable and capital-efficient; key points for any AMM in the market.

Orca has chosen to build on Solana as, in their view, Solana provides the best user experience via it’s inherently low fees and near instantaneous transactions as well as a very strong team that has the ability to foster a thriving developer ecosystem. The growth of Solana as an ecosystem is evidenced by the recent increasing Total Value Locked (TVL).

Source: https://defillama.com/chain/Solana

Key Differentiators

Within the Solana ecosystem there are many AMMs and the competition is fierce.

Source: https://defillama.com/chain/Solana

Orca competes with other AMMs through their human-centered UX. Below is a screenshot of their swap. Here, you will see a lot of subtle but crucial points of information that will put your mind at ease when trading.

  • Displays the approximate value of the tokens you are trading before and after a swap.
  • Fair Price Indicator shows the difference between the quoted price by Orca vs price trackers such as Coingecko and others in the future. This helps users determine whether the prices fall within their expected range during their trades.
  • Price Impact Indicator which shows the slippage that will occur with the trade.
  • When all of these indicators are acceptable, Orca shows a big green check mark above to let you know that the trade is good to go. Otherwise, a Rate Warning or Slippage Warning is shown to users so that they can make their own judgement whether to proceed. When prices are better, it shows Great Price.
  • All other pertinent information is also displayed transparently here, users are able to see the fees % as well as the total amount of fees that are paid to liquidity providers. This is a stark contrast to some AMMs that do not display such information.

Besides the basic AMM swap, Orca has also introduced StableSwaps with a significantly lower fee for LPs (0.06%) and low slippage — making it competitive with the rest of the AMMs in the space.

A key part of AMMs is liquidity. As an AMM garners strong support from Liquidity Providers, it creates swaps that have better pricing due to lower slippage. With better pricing comes more trades as traders and aggregators seek out the best prices in the ecosystem. As more trades happen, liquidity providers generate more fees thus having a better return which in turn entices more liquidity providers to come in. Thus, a virtuous cycle is born.

That said, every AMM has the same concept to create this virtuous cycle.
Orca stands out here through their superior user experience. It is incredibly easy to be a liquidity provider on Orca; all you need is equal parts of tokens for the desired pool, click deposit and it’s done.

This simplified deposit method takes out several steps from a typical AMM LP process. For reference, other AMM LP requires you to first add your tokens into a LP pool and receive a LP token representing your share and then stake that LP token into a farm in order to generate yield. Orca has done away with one step and allows you to immediately deposit and start generating yield. This handy feature reduces time taken and eases the experience for new users especially.

Another aspect of Orca that is amazing is it’s composability. Orca has released it’s Orca SDK v1.1.5 which makes it easier for projects to use Orca as a building block in DeFi. Composability has always been a key feature of DeFi, allowing projects to be a fundamental layer upon which others can build. As the saying goes, “If you want to go fast, go alone. If you want to go far, go together.” As Orca builds and releases more features to it’s SDK, other projects can utilize Orca to build a next generation of products accruing some value back to Orca and its users, creating a win-win situation.

In the early days, Orca has helped bootstrapped its community through their Collectibles, adorable NFT tokens that are given to the community as commemorative tokens of being early participants in Orca. There are plans to continue rewarding loyalty and engagement community members of Orca through an upcoming NFT project so keep an eye out for it.

Team

Orca is headed by Ori and Yutaro. Ori studied Computer Science at Stanford before working at various startups, followed by a design firm, before Orca. Her numerous skill sets have proved invaluable as she juggles across being an engineer, designer and more importantly cofounder at Orca. Yutaro is a seasoned crypto veteran, already full-time in the crypto space since 2017. From contributing at Eth2.0 to building smart contracts for UMA, he is now a core engineer and co-founder at Orca. Orca has a core team of 10 as of writing, including engineers, biz devs and operations from places such as Google, Amazon, IDEO and McKinsey.

Orca Tokenomics

For the full tokenomics details check it out on Orca here.

There’s a few key points that make Orca stand out from a tokenomics perspective that we believe helps to form a strong narrative around the Orca brand.

The fees from swaps are structured as such:

  • 0.25% — LPs
  • 0.04% — Orca Treasury
  • 0.01% — Orca Impact Fund

It is rare to see a project that dedicates a percentage of its revenue to help make a positive difference in the real-world. The Orca Impact Fund is a dedication of the team’s effort and will be donated on a quarterly basis to help fight climate change. Users can feel better about using Orca knowing a portion of the fees will go towards helping create positive change in the world.

Orca is also one of the very first few protocols to have conducted a fair launch on Solana. Through their intentional roll out, the communities were able to get retroactive rewards and be the very first to access the Orca tokens at fair prices. This is a great nod towards building and retaining a strong community which bodes very well to the future of Orca.

Another aspect of Orca is it’s commitment to distribute its token to the community.

The ORCA governance token is designed to support the long-term health of the Orca protocol. As such, most of the tokens are designed to be distributed to the greater community and supporters of the protocol to help shape and grow Orca into formidable force. Typically projects with a wide distribution of tokens have a better participation in governance programs as users believe that their votes matter and are not solely dependent on votes by whales.

Conclusion

We believe that Orca will be a key AMM and contribute greatly to the growth of the Solana ecosystem, and even the fight against climate change. As Orca continues it’s innovative, human-centered, approach in developing its features, we believe that Orca’s strong user base will continue to grow. Sino looks forward to the development of both and will throw its full support behind Orca.

Disclaimer: This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained here constitutes a solicitation, recommendation. endorsement or offer by Sino or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

A team of former consulting, Wall Street, private equity, government, and corporate veterans accelerating the blockchain revolution