What is Orca? | Autonomous DeFi on Solana

For anyone who is not familiar, what is Orca? 

Orca is a DeFi protocol on the Solana blockchain that allows users to trade tokens and provide liquidity on an autonomous basis with ease and efficiency. 

Diving a little deeper, Orca offers a concentrated liquidity AMM (Automated Market-Maker), Whirlpools, with an open-source, double-audited smart contract. Built from the ground up with a focus on intuitive, human-centric design, Orca enables any protocol in Solana to easily bootstrap their own token economy, including custom liquidity pools and liquidity mining. 

What does the ORCA token do? 

ORCA is the governance token for the Orca protocol. ORCA tokenholders control Orca by proposing and voting on matters in Orca Governance v0! 🪙

Can you tell us about Whirlpools? Both the risks and opportunities! 

Whirlpools are concentrated liquidity pools on Orca. 

On most AMMs in DeFi, liquidity providers (LPs) facilitate trades at any price. For example, LPs for a SOL/USDC pool would facilitate trading for SOL from $0 to infinity.

While this model is simple, it is not capital-efficient. Thinner liquidity spread across the price curve translates to higher slippage for traders and lower yields for liquidity providers.

Whirlpools solve this problem by empowering LPs to choose what price ranges they will facilitate with their capital. LPs concentrate their liquidity in the ranges they expect the price of the token pair to move within, enabling better prices for those token pairs. 

However, providing liquidity in Whirlpools is a competitive, skills-based exercise. Savvy LPs who choose more accurate price ranges (which we affectionately call “sharks” 🦈) will earn a higher share of fees and rewards. However, the potential for higher earnings comes at the risk of increased divergence loss, encouraging capital-efficient provision of liquidity.

The ORCA token is used as a reward in pools, but how sustainable is this long term? 

Thanks to the capital-efficiency of Whirlpools, sharks with strong LP strategies can earn high yields from trading fees alone. This has reduced the need for additional token rewards to incentivize liquidity provision, enabling ORCA rewards to be steadily reduced over time. In fact, several Whirlpools on Orca feature no ORCA rewards at all!

How prepared is Orca to survive the bear market? 

In the wild, orcas are apex predators that live in a wide range of environments. The Orca protocol, too, is well-poised to use this bear market to its advantage.

The original contributing team raised over $18 million in a private fundraise in September 2021 to continue developing Orca, placing them in a better position than competitors that may be forced to raise in a bear market. Development of Orca has continued en force over the past few months and shows no signs of stopping. New releases are on the horizon, including Community Listings, which will enable anyone in the Solana ecosystem to launch custom Whirlpools via a convenient UI.

Who are the founders and why did they decide to build Orca? 

Orca was founded by Grace “Ori” Kwan (@oritheorca), who has a background in computer science and human-computer interaction from Stanford, and Yutaro Mori (@rawfalafel), a former contributor to Ethereum 2.0 with experience building across the entire crypto stack. They saw an opportunity to leverage the Solana blockchain’s superior performance to create a core “DeFi lego”: A user-friendly toolkit that enables anyone to quickly and easily bootstrap their own token economy.

Another of the founders’ goals in creating Orca was to lead the charge among web3 protocols with respect to broader positive impact. A portion of all trading fees on Orca go to charities working on climate change and sustainability, and the majority of mint revenue from the Orcanauts NFT launch went to non-profit Aflatoun International to create a crypto education program for youth.

For more info on Orca’s origins, check out this interview with Ori in Yahoo! Finance and their conversation with Solana founder Anatoly on the Solana Podcast.

What comes next for Orca?

Orca will soon be launching Community Listings, allowing users to list their own Whirlpools for tokens they love in the Solana ecosystem!

Further, Orca’s journey towards full decentralization continues. The ORCA community has always been vital to the protocol’s success, and active community governance proposals are shaping the future of the protocol as we speak.

Want to be a part of Orca’s journey? Join the Orca Discord and become a podmate! 🐳