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Today we have a new Ethena competitor, SOL issuance, and Mert trolling:

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Solana-based answer to Ethena wins ‘Radar’ hackathon

1,359 projects were submitted to Colosseum’s Radar hackathon, a contest for Solana-based programs to win some prize money — and possibly a seed check from Colosseum’s startup accelerator wing. The judges’ decisions were announced this morning.

You can view Colosseum’s hackathons, which are backed by the Solana Foundation and a slew of big names in the blockchain’s ecosystem, as a proxy for what would-be Solana founders are most interested in at the moment. The last Colosseum hackathon was won by ORE, a proof-of-work-like currency on Solana.

This particular hackathon turned up a lot of DeFi builders, one of the hackathon’s organizers said. The grand champion was Reflect, a delta-neutral currency protocol that lets tokens accrue yield without touching the banking system. 

Reflect is similar to Ethena, a “synthetic dollar” protocol that raced to billions-worth in market capitalization after launching earlier this year. Underpinning Ethena and Reflect is a version of a cash-and-carry trade which involves buying a spot asset and its corresponding derivative to hedge exposure. The projects are “delta-neutral” because the two positions are offset, and price movements won’t affect assets’ value.

In the crypto version, the derivative is a perpetual futures contract which allows Ethena and Reflect to generate yield from the funding rate, or a fee paid between long and short sellers in a crypto perps market. 

Reflect also generates yield by having users deposit liquid staking tokens (LSTs) to mint RDC, which can be thought of as a yield-bearing stablecoin. Solana LSTs generate rewards that are passed on by validators. JitoSOL, the largest Solana LST, currently generates 8.06% in APY.

Staking yield is the whole ballgame for Reflect. Delta-neutral protocols need to find sources of yield, especially when open interest rates decline, and staking rewards could fill that potential gap. The staking yield rate varies with factors including the total number of stakers and the SOL inflation rate being paid to validators.

Ethena, which is built on Ethereum, recently deployed its tokens on Solana as well. However, Reflect sees itself as a more decentralized version of Ethena. The project’s team decided to create Reflect around six months ago after seeing Ethena hit the peak of a deposit frenzy, Reflect’s anonymous co-founder, Nico, told me. 

Ethena holds deposits with large custodians such as Copper and Fireblocks, and it makes trades on centralized exchanges like ByBit. Reflect plans to operate fully onchain by trading perpetuals on the Solana DeFi platform Drift, Nico said. 

Nico added that the more-centralized way Ethena is run can lead to decisions with big security implications, citing the project’s onboarding of bitcoin collateral as a decision that could leave Ethena “more exposed to changes in funding rate.”

Reflect also plans to integrate with Solana restaking platforms Jito and Solayer for a restaked insurance fund that could offload some protocol risk in exchange for some of the protocol’s revenue. 

Reflect wasn’t the only innovative Radar DeFi submission. Colosseum co-founder Matty Taylor told me DeFi was the most competitive track, and the team believes a few of the startups to come from Radar will be “major catalysts” in expanding stablecoin and blockchain usage.

— Jack Kubinec

Here’s an interesting chart that was posted in the Lightspeed Telegram group today:

On Solana, around 97% of SOL issuance is being passed on to stakers, while 3% goes to validators, Blockworks Research analyst Dan Smith said.

This means that when SOL’s price goes up, like it has this week, a lot of that upside is passed onto SOL stakers.

— Jack Kubinec

Ethereum researcher Justin Drake recently pulled back the curtain on his latest project, the “Beam Chain” — a proposed redesign of Ethereum’s consensus layer, unveiled at Devcon. Drake’s new approach promises four-second block times, SNARKs for added privacy and quantum resistance, all while cutting out Ethereum’s accumulated tech debt. According to Drake, it’s Ethereum’s shot at building a more efficient chain from the ground up, keeping apps compatible while aiming for a 2029-2030 launch.

Soon thereafter, Helius Labs CEO Mert Mumtaz took to X to troll this new vision with his own “announcement.” He claimed that Solana has been testing a new system capable of scaling transactions per second (TPS) by 1,000x without core-breaking changes. Mert included a link to a brand new, allegedly groundbreaking Solana roadmap…which turned out to be an otherwise blank webpage with the plain text, “INCREASE BANDWIDTH / REDUCE LATENCY.”

In a follow-up tweet, Mert shared a wild story about allegedly being “swatted” for his audacious bandwidth-boosting plans. In his fictional retelling, the “Ethereum deep state” arrived fully armed, only to be thwarted by the intimidating sight of his 32GB RAM computer.

Crypto Twitter, naturally, had a field day. @edgarpavlovsky admitted, “Dammit, this got me,” while @defido joked, “This level of trolling should be illegal.” @dashabtc went on a rollercoaster of disbelief: “At first, I thought it was a joke about that Ethereum guy, then I believed it, then I thought it was a joke again…can we make joke announcements a regular thing?” Meanwhile, @leftcurveit simply declared, “I got Mert rolled.”

If adopted, the Beam Chain may eventually be a leap into the future for the Ethereum blockchain. For now, however, Solana’s true believers seem happy to remind Ethereum devs that as far as speed, bandwidth and scalability are concerned, they’re still playing catch-up.

— Jeffrey Albus

A message from Matty Taylor, co-founder of Colosseum: