I. The New Era of Blockchain Disrupting Capital Markets
Current Challenges in Financial Markets: High Costs and Low Efficiency
The current global financial market is plagued by inefficiencies and exorbitant costs. Whether it's cross-border payments, clearing and settlement, or securities trading, traditional financial institutions often require hours or even days for processing.
Moreover, the fees associated with payment systems are also criticized. For instance:
Bank wire transfers can cost an average of $25 for international transfers and take multiple days to settle.
Credit card payments require merchants to bear fees exceeding 2%, increasing transaction costs.
Cross-border remittance services like Western Union may charge fees that amount to 5%-10% of the transaction amount.
These high costs and low efficiencies impose significant economic burdens on ordinary consumers and businesses, while also restricting the potential for global capital flows.
The Rise of Blockchain Technology: Why Solana is in the Spotlight?
The emergence of blockchain has changed this landscape. As a potential replacement for global financial infrastructure, blockchain technology has rapidly risen with its decentralized, transparent, and efficient characteristics.
Among the numerous public blockchains, Solana has become the focus of the industry due to its high efficiency, low costs, and innovative performance.
High Transaction Processing Capacity: Solana processes over 50,000 transactions per second (TPS), far exceeding Bitcoin's 7 TPS and Ethereum's 30 TPS.
Extremely Low Fees: Each transaction costs just 0.001 cents, almost negligible.
Developer Ecosystem: Solana boasts the fastest-growing developer community, attracting numerous emerging projects and enterprises.
The advent of Solana is not just a technological breakthrough but also a transformative business model that redefines the rules of capital markets by lowering the barriers to financial services.
II. Core Competitiveness: A Performance Revolution Beyond Traditional Finance
Low-Cost and High-Efficiency Payment Ecosystem
Solana's payment ecosystem stands out with its low costs and high efficiency, providing users with a new payment method.
Low Costs:
Solana's transaction fee is approximately 0.001 cents per transaction. Even with 50,000 TPS processed throughout the year, its total transaction cost is just $1.5 billion. This is far lower than the fees required by Visa or Mastercard for thousands of transactions per second.
High Efficiency:
Compared to bank wire transfers that take multiple days to settle, payments on Solana can be completed almost instantly, fundamentally improving capital liquidity and efficiency.
As a lead-in tool for blockchain technology, payments can not only rapidly drive user growth but also naturally expand the application scope of blockchain technology to broader financial scenarios.
Conditional Liquidity (CL): The New Standard in DeFi
Conditional Liquidity (CL) is an innovation by Solana that optimizes the efficiency of decentralized trading by providing protective mechanisms for market makers.
Definition and Operation:
The CL mechanism allows liquidity to be available only when specific conditions are met, such as transactions triggered through trusted wallets (like Phantom) or specific DApps (like Drift). This mechanism prevents malicious bots from exploiting network vulnerabilities for arbitrage, thereby protecting the interests of market makers.
Comparison with Traditional Finance:
Platforms like Robinhood in traditional finance also offer better trading prices for ordinary users through similar liquidity segmentation strategies. However, Solana's CL mechanism combines real-time and transparency on-chain, providing traders with a more optimized experience.
Narrowing Bid-Ask Spreads and Attracting Users:
The CL mechanism allows market makers to confidently offer tighter bid-ask spreads, while attracting more users to participate in on-chain trading. This win-win model accelerates the development of the DeFi market.
Through CL and its payment system, Solana is redefining blockchain's role in global capital markets, not only achieving breakthroughs in technical performance but also bringing new value creation opportunities for users and developers.
III. Technological Innovation: The Value of the Multiple Concurrent Leaders (MCL) Model
Centralized Matching Engines in Traditional Finance vs. Solana's MCL Mechanism
The core of traditional financial systems (like the New York Stock Exchange or Nasdaq) relies on centralized matching engines. These engines are typically located in fixed physical locations, providing an advantage to institutional market makers through ultra-low latency but excluding fair competition opportunities for ordinary investors.
Solana's Multiple Concurrent Leaders (MCL) mechanism disrupts this landscape. In the MCL model, instead of having a single leader node, multiple leader nodes operate simultaneously, enabling real-time price discovery on a global scale. This mechanism reduces regional latency through a decentralized architecture, creating a more fair trading environment for global participants.
Optimizing Global Price Discovery Efficiency and Enabling Broader Asset Trading Scenarios
The MCL mechanism allows market participants to push price discovery to the "edge," where trading is closer to the actual location where information occurs. This innovation not only optimizes price discovery efficiency but also significantly reduces the monopoly of high-frequency traders in traditional markets, truly democratizing financial markets.
IV. Expanding Market Boundaries: The Convergence of DeFi and Traditional Finance
Asset Diversity: The On-chain Process from NFTs to Traditional Financial Assets
The development of blockchain is gradually expanding the types of assets it supports, from native on-chain assets (like DeFi tokens, NFTs) to traditional financial assets (like stocks, bonds, real estate). Solana is driving this trend:
By supporting the issuance of assets in standardized token form, Solana makes it possible for all asset types to be traded within a single system.
For example, the gradual realization of on-chain trading of U.S. stocks and treasuries empowers global retail investors to participate more conveniently.
Globalization and Permissionless Characteristics: Expanding Financial Market Participation
Solana's permissionless characteristics and global operational features give it advantages in financial markets that traditional systems cannot match:
Developers can create applications by simply integrating a private key and tokens.
Users can trade anytime, anywhere, without waiting for clearing cycles.
Compared to traditional finance's complex APIs and high fees, Solana lowers the entry barriers for small development teams and ordinary investors.
V. The Commercial Potential of the Ecosystem: From MEV to TAM
Maximum Extractable Value (MEV): How Solana Captures Value Through Its Technology Stack
MEV refers to the potential profits captured by the network through market fluctuations. The growth of the Solana ecosystem provides numerous MEV opportunities:
Solana's DeFi protocols (like Jupiter, Drift) increase MEV revenues within the ecosystem by continuously optimizing functionality.
In the fourth quarter of 2024, Solana's network revenue (excluding SOL inflation) reached $800 million, demonstrating its rapid growth potential.
Compound Growth Model: A Closed Loop from Protocols to Ecosystem
Solana's growth stems from the combined effects of multiple dimensions:
The maturity of DeFi protocols increases market attractiveness.
The richness of on-chain assets attracts more users.
Innovative services (like NFT financialization) bring incremental value.
This compound growth model not only expands Solana's Total Addressable Market (TAM) but also forms a continuously reinforcing ecological closed loop.
VI. The Panoramic Blueprint of the Internet Capital Market
Five Characteristics of the "Internet Capital Market" Built by Solana
Capturing global information advantages to optimize asset prices.
Enabling global transactions with minimal fees and spreads.
Enhancing trust in the financial system through real-time transparency and auditability.
Improving capital efficiency and maximizing cross-protocol liquidity.
Creating a permissionless innovative financial environment, providing users with freer financial choices.
Potential Impact on the Industry and Trends Prediction
As more traditional financial assets are tokenized, Solana's global nature will attract significant capital inflows, forming a financial market with a wide reach and low operational barriers. In the future, blockchain may replace traditional exchanges as the cornerstone of capital markets, with Solana potentially emerging as a leader in this transformation.
VII. How Solana is Driving the Future of Capital Markets
Through its technological innovation, high performance, and scalability, Solana is redefining the rules of global capital markets. It not only reduces the costs of financial services but also improves efficiency, providing a fairer and more transparent trading environment for global users. In the future, with the continuous development of its ecosystem, Solana is poised to become the core driving force behind the "internetization" of global capital markets.
Will the popularization of blockchain technology become the next industrial revolution? Solana is providing the answer through its actions
