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TL;DR
Drift is an all-in-one DeFi platform that offers various financial products such as trading, lending, borrowing, and prediction markets, allowing for easy asset management and transactions on a single platform.
As soon as deposits are made, APY is automatically accrued, and the funds can also be used as collateral for perpetual futures trading, allowing users to earn income even while maintaining their positions.
With hundreds of perpetual futures exchanges and many competing projects awaiting launch, Drift may find it difficult to survive in this competitive environment.
In a situation where there are already strong competitors in each area of DeFi, Drift needs to offer more compelling value to win over users.
Drift is a decentralized exchange (DEX) developed on the Solana blockchain. Initially launched as a perpetual futures trading platform, it has since evolved into an all-in-one DeFi platform offering various DeFi products such as lending markets and prediction markets. Launched in 2021, Drift is a well-established project in the industry and has become the second-largest DEX on Solana by TVL, following Jupiter. The team's ultimate goal is to inherit the advantages of blockchain technology while providing a user experience and liquidity that surpasses centralized exchanges (CEX) like Binance and Bybit.
Cindy Leow (Co-founder): A veteran in the industry with experience at various investment firms, including SoftBank Ventures and 256 Capital, Cindy graduated from Yale University.
David Lu (Co-founder): An investment expert with diverse investment experience at VC firms and hedge funds before founding Drift Labs.
Chris Heaney - Lead Engineer
It’s worth noting that both Cindy and David come from non-technical backgrounds.
Drift Labs has raised a total of $27.3M through two rounds of funding:
Seed Round (2021): Led by Multicoin Capital, raising $3.8M.
Series A (2023): Led by Polychain Capital, raising $23.5M.
However, information about the valuation or private price for these investment rounds has not been disclosed, and the community has avoided giving clear answers to related questions.
Seed round ($3.8M)
Series A ($23.5M)
Drift's main products are as follows:
Trading: Supports perpetual futures trading, spot trading, and swaps. Major cryptocurrencies like Bitcoin, Ethereum, and Solana offer up to 20x leverage, while other tokens offer 5-10x leverage. Drift addresses issues commonly faced by on-chain exchanges such as slow transaction speeds, high spreads, and low liquidity. The solutions to these issues include: 1) Just-in-Time (JIT) auction liquidity, 2) limit order book liquidity, 3) AMM (automated market maker) liquidity, and 4) leveraging the low costs and fast speeds of the Solana blockchain.
Earn: Enables earning through liquidity provision. Related products include: 1) lending/borrowing, 2) insurance funds, 3) market-making funds, and 4) Supercharged SOL.
BET: The newly launched prediction market platform, BET, has garnered significant industry attention. According to Dune Analytics, it surpassed Polymarket, the world’s largest prediction market platform, with a daily trading volume of $20M on August 29. However, having been live for only about two weeks, trading volume significantly decreased after the 29th, as illustrated in the accompanying graph.
Polymarket Daily Trading Volume (Approximately $15M on August 29)
BET Daily Trading Volume (Approximately $20M on August 29)
1. Market Cap/FDV Ratio: 0.21
This ratio indicates that 79% of the total token supply has not yet been circulated in the market. A low ratio suggests potential selling pressure in the future. Conversely, a higher ratio implies weaker future selling pressure, which is a positive sign for the token price.
2. Market Cap/TVL Ratio: 1.32
This ratio shows that the market currently values the project higher than the assets deposited in the protocol, reflecting high investor confidence and future growth potential. To assess whether this ratio is overvalued or undervalued, it’s useful to compare it with similar projects in the same category.
3. Trading Volume and TVL Status
In the past three months, Drift’s trading volume was approximately $10.8B, accounting for only about 3% of the top 10 protocols. On the other hand, its TVL stands at $370M, which is relatively high. Drift ranks fourth in TVL, following Jupiter ($1,032M), Hyperliquid ($567M), and GMX ($480M).
4. Revenue
7D
3M
The total supply of the governance token $DRIFT is 1 billion, with distribution expected to be completed over a period of 5 years.
Community & Ecosystem (53%): This portion will be used for community development, trading rewards, and liquidity provision rewards. Additionally, 10% has been distributed to early users via an airdrop.
Protocol Development (25%): Allocated to team allocations and the treasury fund. Team allocations will vest over 18 months following an 18-month lock-up period. However, the graph indicates that the treasury fund's allocation will be released simultaneously with the TGE.
Strategic Participants (22%): Allocated to investors, advisors, and key partners.
By depositing tokens into the staking vault, you can receive the following four key benefits:
Enhanced Governance Power: Tokens staked in the vault provide twice the governance voting power compared to tokens held outside the vault.
Earning Revenue: You can earn from borrow fees and liquidation fees related to the DRIFT/USDC spot trading pair on the Drift protocol.
Trading Fee Discounts: Discounts on trading fees are applied based on the amount of DRIFT tokens staked.
FUEL Points (Loyalty Program): You earn FUEL points as part of the loyalty program.
However, it’s important to note that if a bankruptcy occurs in the DRIFT market, there is a risk of liquidation of the staked DRIFT tokens.
Looking at the chart above, since the launch of BET on August 16, there has been a significant surge of over 60%. However, despite multiple attempts, the price has failed to break through the $0.52 resistance level and has been consolidating just below it. Considering the macroeconomic situation and the recent surge, it seems there may be insufficient momentum to break the resistance level and test previous highs, suggesting the possibility of downward pressure.
Advantages:
All-in-One Platform: Drift offers a range of financial products, including trading, lending, prediction markets, and more, all on a single platform. This allows users to manage all their transactions and assets easily through one interface.
Capital Efficiency: Drift maximizes capital efficiency by automatically accruing APY rewards from the moment of deposit. Additionally, the deposited funds can be used as collateral for perpetual futures trading, allowing users to earn interest while maintaining their positions.
Variety of Collateral Types: Drift supports a wide range of cryptocurrencies as collateral options.
Fast Shipping: The team is quick to launch new products.
Partnerships: Drift is expanding its ecosystem through aggressive partnerships with various projects, including Ondo Finance and Fuse Wallet.
Disadvantages:
Intense Competition: There are 266 perpetual futures exchanges listed on Defillama alone, with projects like Exponents and Blackwing also preparing for launch with VC backing and market expectations.
Lack of Market Competitiveness: Drift appears to be broadening its range of products, as it may struggle to differentiate itself in the market with only perpetual futures trading. In the lending market, AAVE is the dominant leader, and within the Solana ecosystem, Kamino Finance remains the top DEX by TVL ($1.257B). Additionally, competing against Polymarket in the prediction market space will be challenging, as Polymarket, founded in 2017, is well-established and battle-tested.
Choosing between using the best platforms in each field or opting for Drift, which emphasizes capital efficiency and offers all services within a single platform, depends on individual preference. However, in a landscape where top platforms already excel in each category, Drift will need to offer more differentiated advantages to attract users.
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Disclaimer:
The information provided in this research report is for informational purposes only and should not be considered financial, investment, or legal advice. The analysis and opinions in this report are based on publicly available data and the author's interpretation, and the author has not received any monetary compensation from the project discussed. While efforts have been made to ensure the accuracy and reliability of the information, completeness and timeliness cannot be guaranteed.
Cryptocurrency investments are inherently speculative and carry a high risk of losing the entire invested amount. Past performance does not guarantee future results. It is recommended to conduct your own research and consult with a professional investment advisor before making any investment decisions.
The author and publisher of this report accept no responsibility for any financial losses or damages resulting from the use of the information in this report. The views expressed in the report are the author's personal opinions and do not reflect the official views of any related organizations.
The report may contain forward-looking statements, which are subject to risks and uncertainties. Actual results may differ significantly from those anticipated. The author may hold positions in the tokens discussed in this report.
Viewing and using this report constitutes acceptance of these disclaimer terms.
TL;DR
Drift is an all-in-one DeFi platform that offers various financial products such as trading, lending, borrowing, and prediction markets, allowing for easy asset management and transactions on a single platform.
As soon as deposits are made, APY is automatically accrued, and the funds can also be used as collateral for perpetual futures trading, allowing users to earn income even while maintaining their positions.
With hundreds of perpetual futures exchanges and many competing projects awaiting launch, Drift may find it difficult to survive in this competitive environment.
In a situation where there are already strong competitors in each area of DeFi, Drift needs to offer more compelling value to win over users.
Drift is a decentralized exchange (DEX) developed on the Solana blockchain. Initially launched as a perpetual futures trading platform, it has since evolved into an all-in-one DeFi platform offering various DeFi products such as lending markets and prediction markets. Launched in 2021, Drift is a well-established project in the industry and has become the second-largest DEX on Solana by TVL, following Jupiter. The team's ultimate goal is to inherit the advantages of blockchain technology while providing a user experience and liquidity that surpasses centralized exchanges (CEX) like Binance and Bybit.
Cindy Leow (Co-founder): A veteran in the industry with experience at various investment firms, including SoftBank Ventures and 256 Capital, Cindy graduated from Yale University.
David Lu (Co-founder): An investment expert with diverse investment experience at VC firms and hedge funds before founding Drift Labs.
Chris Heaney - Lead Engineer
It’s worth noting that both Cindy and David come from non-technical backgrounds.
Drift Labs has raised a total of $27.3M through two rounds of funding:
Seed Round (2021): Led by Multicoin Capital, raising $3.8M.
Series A (2023): Led by Polychain Capital, raising $23.5M.
However, information about the valuation or private price for these investment rounds has not been disclosed, and the community has avoided giving clear answers to related questions.
Seed round ($3.8M)
Series A ($23.5M)
Drift's main products are as follows:
Trading: Supports perpetual futures trading, spot trading, and swaps. Major cryptocurrencies like Bitcoin, Ethereum, and Solana offer up to 20x leverage, while other tokens offer 5-10x leverage. Drift addresses issues commonly faced by on-chain exchanges such as slow transaction speeds, high spreads, and low liquidity. The solutions to these issues include: 1) Just-in-Time (JIT) auction liquidity, 2) limit order book liquidity, 3) AMM (automated market maker) liquidity, and 4) leveraging the low costs and fast speeds of the Solana blockchain.
Earn: Enables earning through liquidity provision. Related products include: 1) lending/borrowing, 2) insurance funds, 3) market-making funds, and 4) Supercharged SOL.
BET: The newly launched prediction market platform, BET, has garnered significant industry attention. According to Dune Analytics, it surpassed Polymarket, the world’s largest prediction market platform, with a daily trading volume of $20M on August 29. However, having been live for only about two weeks, trading volume significantly decreased after the 29th, as illustrated in the accompanying graph.
Polymarket Daily Trading Volume (Approximately $15M on August 29)
BET Daily Trading Volume (Approximately $20M on August 29)
1. Market Cap/FDV Ratio: 0.21
This ratio indicates that 79% of the total token supply has not yet been circulated in the market. A low ratio suggests potential selling pressure in the future. Conversely, a higher ratio implies weaker future selling pressure, which is a positive sign for the token price.
2. Market Cap/TVL Ratio: 1.32
This ratio shows that the market currently values the project higher than the assets deposited in the protocol, reflecting high investor confidence and future growth potential. To assess whether this ratio is overvalued or undervalued, it’s useful to compare it with similar projects in the same category.
3. Trading Volume and TVL Status
In the past three months, Drift’s trading volume was approximately $10.8B, accounting for only about 3% of the top 10 protocols. On the other hand, its TVL stands at $370M, which is relatively high. Drift ranks fourth in TVL, following Jupiter ($1,032M), Hyperliquid ($567M), and GMX ($480M).
4. Revenue
7D
3M
The total supply of the governance token $DRIFT is 1 billion, with distribution expected to be completed over a period of 5 years.
Community & Ecosystem (53%): This portion will be used for community development, trading rewards, and liquidity provision rewards. Additionally, 10% has been distributed to early users via an airdrop.
Protocol Development (25%): Allocated to team allocations and the treasury fund. Team allocations will vest over 18 months following an 18-month lock-up period. However, the graph indicates that the treasury fund's allocation will be released simultaneously with the TGE.
Strategic Participants (22%): Allocated to investors, advisors, and key partners.
By depositing tokens into the staking vault, you can receive the following four key benefits:
Enhanced Governance Power: Tokens staked in the vault provide twice the governance voting power compared to tokens held outside the vault.
Earning Revenue: You can earn from borrow fees and liquidation fees related to the DRIFT/USDC spot trading pair on the Drift protocol.
Trading Fee Discounts: Discounts on trading fees are applied based on the amount of DRIFT tokens staked.
FUEL Points (Loyalty Program): You earn FUEL points as part of the loyalty program.
However, it’s important to note that if a bankruptcy occurs in the DRIFT market, there is a risk of liquidation of the staked DRIFT tokens.
Looking at the chart above, since the launch of BET on August 16, there has been a significant surge of over 60%. However, despite multiple attempts, the price has failed to break through the $0.52 resistance level and has been consolidating just below it. Considering the macroeconomic situation and the recent surge, it seems there may be insufficient momentum to break the resistance level and test previous highs, suggesting the possibility of downward pressure.
Advantages:
All-in-One Platform: Drift offers a range of financial products, including trading, lending, prediction markets, and more, all on a single platform. This allows users to manage all their transactions and assets easily through one interface.
Capital Efficiency: Drift maximizes capital efficiency by automatically accruing APY rewards from the moment of deposit. Additionally, the deposited funds can be used as collateral for perpetual futures trading, allowing users to earn interest while maintaining their positions.
Variety of Collateral Types: Drift supports a wide range of cryptocurrencies as collateral options.
Fast Shipping: The team is quick to launch new products.
Partnerships: Drift is expanding its ecosystem through aggressive partnerships with various projects, including Ondo Finance and Fuse Wallet.
Disadvantages:
Intense Competition: There are 266 perpetual futures exchanges listed on Defillama alone, with projects like Exponents and Blackwing also preparing for launch with VC backing and market expectations.
Lack of Market Competitiveness: Drift appears to be broadening its range of products, as it may struggle to differentiate itself in the market with only perpetual futures trading. In the lending market, AAVE is the dominant leader, and within the Solana ecosystem, Kamino Finance remains the top DEX by TVL ($1.257B). Additionally, competing against Polymarket in the prediction market space will be challenging, as Polymarket, founded in 2017, is well-established and battle-tested.
Choosing between using the best platforms in each field or opting for Drift, which emphasizes capital efficiency and offers all services within a single platform, depends on individual preference. However, in a landscape where top platforms already excel in each category, Drift will need to offer more differentiated advantages to attract users.
Subscribed
Disclaimer:
The information provided in this research report is for informational purposes only and should not be considered financial, investment, or legal advice. The analysis and opinions in this report are based on publicly available data and the author's interpretation, and the author has not received any monetary compensation from the project discussed. While efforts have been made to ensure the accuracy and reliability of the information, completeness and timeliness cannot be guaranteed.
Cryptocurrency investments are inherently speculative and carry a high risk of losing the entire invested amount. Past performance does not guarantee future results. It is recommended to conduct your own research and consult with a professional investment advisor before making any investment decisions.
The author and publisher of this report accept no responsibility for any financial losses or damages resulting from the use of the information in this report. The views expressed in the report are the author's personal opinions and do not reflect the official views of any related organizations.
The report may contain forward-looking statements, which are subject to risks and uncertainties. Actual results may differ significantly from those anticipated. The author may hold positions in the tokens discussed in this report.
Viewing and using this report constitutes acceptance of these disclaimer terms.
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