What is Orca?
Orca is a DeFi protocol that quickly made its way to become one of the most popular Dapps on Solana. What sets Orca apart is its origin story – it was started by just two builders working at a desk in Tokyo, with no venture funding, famous backers, or prior experience running a start-up. Despite these humble beginnings, the team behind Orca has developed a sophisticated protocol that offers users a seamless trading experience without sacrificing the security and transparency that decentralized systems are known for.
Transparency and decentralization are powerful tools to enable a thriving DeFi ecosystem. With the traditional limitations out of the way, an important question arises: “How does Orca become self-sustaining?”
Orca mainly derives its value as Solana's cornerstone liquidity layer. In exchange for the service provided, Orca receives a small fee that goes into maintaining the protocol. Upon consulting with the community, core developers are usually in charge of implementing the protocol upgrades. This ensures Orca stays safe from hacks and the protocol adapts to the market conditions.
As the number of transactions increase, the fees quickly add up. A portion of these fees goes into the protocol treasury, which pays for the developers, audits, and future products.
Because Solana offers incredible fast trades at minimal fees, the two founders focused more on the user experience. Providing liquidity with Orca is as simple as sending a Venmo payment, only you get to have full custody over your crypto funds, and no KYC is required. This is why the protocol TVL skyrocketed to $1B within 8 months since launch.
The Orca treasury is secured by a multisig that is being held by the core team. The development team made no plans to transition to on-chain governance. If/when it happens, the Orca DAO will gain complete control of protocol parameters. So far, Orca protocol has never been hacked.
Orca also has its own token called ORCA. It is a governance token that grants holders the right to vote on adjusting the protocol parameters. The governance body of Orca is on Discord, but it appears to be closed. Despite the lack of updates from the team, the protocol is functioning and has a TVL of $48M as of 2023. Moreover, the founders are quite active on Twitter where they release constant updates about the protocol.
How does Orca work?
Orca protocol made its mark on the Solana ecosystem via its concentrated liquidity services. In a traditional automated market maker model used by many DEXs, liquidity is spread out evenly across all price points, meaning that a certain amount of liquidity is reserved for every possible price of a token. However, in a concentrated liquidity model, liquidity providers can choose to focus their funds on specific price ranges, allowing them to provide more liquidity at specific price points.
The benefit of concentrated liquidity is that it can improve the efficiency of trading on DEXs. In traditional AMM models, a large number of trades may be executed at suboptimal prices due to the lack of liquidity at specific price points. However, concentrated liquidity allows LPs to provide more liquidity at specific price points where they believe there is demand, resulting in a deeper pool of liquidity at those points. This can lead to a more efficient price discovery mechanism and reduce the risk of impermanent loss for LPs.
Concentrated liquidity is just one of Orca's features. The team had developed a "fair price indicator." It is a sweet addition that helps traders know whether their trade is executed at the correct market price. Orca will warn traders if the token price deviates 1% from the rate quoted by CoinGecko, or if the price impact caused by this trade more than 1%. The UI then alerts the trader if it's a "Great Price!" or "Rate Warning!" or "Price Impact Warning."
How to make money on Orca?
The main method of making money on Orca are to deposit liquidity. In order to get started, all you need is a Solana wallet and some crypto tokens to deposit.
Here's how you add liquidity to Orca:
Open the Orca app
Select "Liquidity" at the top of the main screen
Find the desired pool and click "Deposit"
Select either a preset price range or create a custom range
Enter the number of tokens to depositEnter the number of tokens to deposit
Approve the transaction
Profit
By targeting specific price ranges, LPs can potentially earn higher fees and rewards than they would with a traditional AMM model. This can also allow LPs to better manage their exposure to specific assets or risks, resulting in a more tailored and optimized liquidity provision strategy.
Price Prediction for Orca — Can it hit $1000?
Buying and hodling ORCA — the native token of the Orca protocol — is one way of potentially making money on Orca.
By looking at its current price, it’s natural to think about the chance of ORCA hitting $1000 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.
Let’s examine the potential growth of the ORCA token by analyzing its tokenomics. ORCA’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} ORCA tokens being in circulation today, that means a price of {PRICE} per ORCA.
How did we come to that calculation? It’s quite easy, the price of a ORCA token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each ORCA coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of ORCA at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for ORCA to hit that price.
At a price of $1000 per token, that means the current market cap of ORCA would equal ${{CIRCULATING_SUPPLY} * 1000}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1000.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. ORCA’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} ORCA which means that no more coins above that number will ever be created.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of ORCA? Taking into account the current price of a ORCA token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. ORCA coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of a ORCA token. Doing the same calculation but with a price of $1000 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1000} for the ORCA protocol fully diluted market cap.
These are all crucial details to know when calculating if ORCA can reach the price of $1000 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of ORCA depends solely on its growth as a network used by tens and hundreds of millions of users.
If you’re looking to add some ORCA to your portfolio, the most trusted places to get some are Binance and Coinbase.