Macauley Peterson

<div id="highlights-block_623b301d7086e" class="highlights">
 <ul>
 <li>Whirlpools promises higher returns for liquidity providers while benefiting traders with lower slippage across a selection of trading pools</li>
 <li>Today Uniswap has roughly $7.5 billion in total value locked, compared to Orca’s $350 million, according to DeFi Llama</li>
 </ul>
 
</div>



The Orca AMM DEX is launching a concentrated liquidity feature for the Solana ecosystem, dubbed Whirlpools, which debuts today, kicking off a two-week beta phase.



The basic idea of concentrated liquidity is that by allocating capital within a custom price range rather than a uniform distribution from zero to infinity, an AMM (automated market maker) can provide increased depth to handle larger volumes with far less total capital.&nbsp;



Whirlpools is designed to bring higher returns via capital efficiency for market makers while providing traders with low-slippage trades.



“It’s still anyone’s game for bringing concentrated liquidity into Solana,” Orca Co-founder Grace Kwan told Blockworks in an interview. She and her co-founder, Yutaro Mori, Orca’s head of engineering, were attracted to Solana in 2020 when FTX CEO Sam Bankman-Fried began ramping up his support for the Solana ecosystem.



“Yutaro’s superpower is always being able to find an area where we have an edge,” Kwan said. “Being able to build one of the key primitives on Solana is a great opportunity.”



In DeFi, Ethereum remains the dominant blockchain platform, with a higher TVL (total value locked) than all other blockchains combined. The DEX (decentralized exchange) world is no different, with Curve and Uniswap accounting for about $28 billion of the $122 billion in TVL.



Uniswap, which allows creation of liquidity pools for any two assets, debuted the feature of concentrated liquidity in its <a href="https://uniswap.org/blog/uniswap-v3" target="_blank" rel="noreferrer noopener">version 3</a> AMM exactly one year ago, which dramatically increased capital efficiency for liquidity providers.



With concentrated liquidity, trades involving similar assets, such as between stablecoins, can have a tiny price range. Initially, however, Orca Whirlpools will be deployed across a selection of three more volatile assets, all trading against the USDC stablecoin: MSOL-USDC, SOL-USDC and ORCA-USDC.



MSOL is a flavor of liquid staked SOL, a derivative from <a href="https://marinade.finance/" target="_blank" rel="noreferrer noopener">Marinade Finance</a>, which currently has a market cap of about $600 million <a href="https://www.coingecko.com/en/coins/marinade-staked-sol" target="_blank" rel="noreferrer noopener">according to CoinGecko</a>. ORCA is the DEX’s governance token, which was launched in August 2021 and is managed by a decentralized autonomous organization (DAO), the site’s <a href="https://learn.orca.so/token" target="_blank" rel="noreferrer noopener">token page</a> states. But more pools will be opened up following the beta phase.



One of the project’s anticipated innovations is what the team calls “community listings” — essentially the ability for anyone to create new asset liquidity pools independently — or “<a href="https://cms.blockworks.co/events/permissionless/" target="_blank" rel="noreferrer noopener">permissionless</a> pools” in crypto jargon. Orca will provide a “very simple guided experience for creating community listing pools,” Kwan said, which will be possible at far lower cost than Uniswap pools and with a much simpler process compared to current options on Solana, involving the Raydium AMM and Serum DEX.



That feature should debut in a few weeks, following the completion and publication of two security audits from Kudelski Security and Neodyme. The team developing Orca also intends to open-source the platforms’ smart contracts at that time, a step commonly seen as necessary to establish the credibility of new DeFi (decentralized finance) products.



Orca’s developers are focused on improving the user experience of an AMM, Kwan noted, referring to her previous role as an interaction designer at <a href="https://www.ideo.com/" target="_blank" rel="noreferrer noopener">IDEO</a> in Tokyo.



“I’m pretty shocked by the types of UX you see on most DeFi applications,” she said.



For instance, Whirlpools will offer “first class support for liquidity mining,” meaning that, unlike Uniswap, options to incentivize liquidity providers beyond trading fees are built into the smart contracts. Users won’t have to deposit a liquidity provider token elsewhere to receive additional rewards.



Kwan thinks the crypto-native nature of an AMM still has plenty of room for innovation. “One of the reasons why we love the AMM model is it’s so radically simple” compared to a centralized order book design, Kwan said.



“The potential has really been shown by Uniswap V3’s adoption, but we’re really just at the tip of the iceberg.”



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Orca Whirlpools Brings Concentrated Liquidity to Solana

Sam Reynolds

<div id="highlights-block_614a5ea5e016d" class="highlights">
 <ul>
 <li>Orca is one of the many DEXs that has emerged on the Solana protocol </li>
 <li>Kwan says that Ethereum’s high gas fees exclude all but the largest whales, creating a market for Solana-powered Orca</li>
 </ul>
 
</div>



Orca, a DEX powered by the Solana protocol, announced today that it had closed an $18 million Series A led by Polychain, Placeholder and Three Arrows Capital with participation by other notable names like Sino Global, Collab+Currency, Coinbase Ventures and Solana Capital.



Launched in February, Orca has consisted of a two-member team with eight contributors that come from many blue-chip and TradFi companies like Google, Amazon and McKinsey. Since Orca launched in February, it’s one of the only exchanges that has committed to launching a public governance token. Since then, the protocol has reached $750 million in lifetime trade volume, $250 million in total value locked and over 18,000 monthly unique wallets, Orca said in a release.&nbsp;



Speaking with Blockworks, Orca co-founder Grace Kwan said that Orca, one of the first DEXs to be built on Solana, will use the proceeds of the round to build a capital-efficient and user-friendly automated market maker (AMM) for the DEX. AMM’s are DeFi’s alternative to traditional order books on centralized exchanges, where liquidity is provided by users holding a liquidity provider (LP) token and pricing as well as matching done by automated algorithms.&nbsp;



Orca didn’t raise a traditional seed round prior to the series A, but rather received a development grant from the Solana Foundation to bootstrap the operation.&nbsp;



“During our user research, one of the biggest things we heard was that Ethereum’s high fees crowd out beginner users,” Kwan said. “The high fees mean that it&#8217;s only worth it to move thousands of dollars of assets at a time. This blocks out DeFi for anyone but whales.”



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="400" height="400" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/GraceKwan-Headshot.jpg" alt="" class="wp-image-8391" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/09/GraceKwan-Headshot.jpg?w=400 400w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/GraceKwan-Headshot.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/GraceKwan-Headshot.jpg?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/GraceKwan-Headshot.jpg?w=257 257w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/GraceKwan-Headshot.jpg?w=261 261w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/GraceKwan-Headshot.jpg?w=219 219w, https://blockworks-co.imgix.net/wp-content/uploads/2021/09/GraceKwan-Headshot.jpg?w=80 80w" sizes="auto, (max-width: 400px) 100vw, 400px" /><figcaption>Grace Kwan, co-founder, Orca</figcaption></figure></div>



Kwan said that developing on Solana isn’t without its challenges. Initially, there was a lack of developer documentation and tooling but these are things that she and her team are seeing rapidly change. Now, working with Solana is “not much harder than developing on Ethereum if you are experienced in the core concepts of blockchain,” Kwan said.&nbsp;



Nimble DEXs such as Orca have been a subject of investor interest after Uniswap, the first and best known, <a href="https://cms.blockworks.co/are-nimble-dexs-a-threat-to-coinbase/" target="_blank" rel="noreferrer noopener">started nipping at the heels</a> of established giants like Coinbase. In March, Delta, an India-foused DEX<a href="https://cms.blockworks.co/indias-delta-closes-5m-round-token-sale/" target="_blank" rel="noreferrer noopener"> raised $5 million </a>with a small, lightweight team, and 0x <a href="https://cms.blockworks.co/pantera-capital-leads-15m-fundraise-in-dex-protocol-0x/" target="_blank" rel="noreferrer noopener">closed a $15 million round</a> in February led by Pantera Capital.



Although Coinbase’s volumes aren’t in the sights of the likes of Uniswap or Orca, for investors, the thought of a small team creating a product that can pump through billions of dollars of volume is an interesting proposition. According to CoinGecko, DEXs, as a category, average <a href="https://www.coingecko.com/en/dex" target="_blank" rel="noreferrer noopener"> $7.4 billion</a> in volume per day. After all, Orca — with its two full-time staff and eight contributors — have brought in $18 million allowing it to double or triple the size of its team and have years of runway.



Orca’s token is currently trading at $6.70, up 6.6% on-day, according to CoinGecko.



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