Welcome to the fascinating world of Decentralized Finance (DeFi)! In this post, we’re on a unique journey down Solana’s DeFi pathway using Orca. What is my goal? To lead you from being a DeFi novice to a seasoned pro.

Understanding DeFi on Solana with Orca

Orca is an exceptional tool for earning through DeFi on the Solana blockchain. It offers a function called Liquidity. In layman’s terms, it means that your tokens can be used by others to obtain assets like SOL and USDC, earning you a fee in the process. From my experience, it’s always advisable to get your hands dirty before diving into theories. So, that’s what we will do today.

Before proceeding, I recommend trying with a smaller amount at the start. Don’t hesitate to take a break and follow each step at your own pace. Let’s get started!

Step 1: Open Phantom Wallet

The first step is to open your Phantom Wallet. One important tip is to have different wallets for different uses — you know, just to keep things neat and organized. Today, I am using my DeFi-Staking wallet. Remember, creating a new wallet on Phantom is as easy as clicking Add/Connect Wallet, where you can name it as per your preference and hit “create”.

Step 2: Connecting to Orca

Once you’re inside your DeFi wallet, it’s time to connect to Orca. Click on “connect”, and another window will open. Click connect there, and voila! You are connected to Orca.

Step 3: Choosing a Pool

When it comes to Orca, you’re spoiled for choices, and there are different ‘pools’ available. While some only offer trading fees, others provide a token reward. For instance, Marinade rewards are linked to MSOL, Orca rewards to Orca tokens, etc. The yield and fee rates vary from one pool to another.

In this example, we’ll be using the SOL and USDC pair. Despite a lower fee rate, it provides a more significant yield and offers weekly Orca tokens.

Step 4: Depositing Funds

Upon selecting your desired pool, click on Deposit, and you’ll notice three categories: Active, Passive, and Custom.

For today, we’ll choose the Active option. But first, let’s have a brief overview of the Passive mode.

In this mode, as long as the price of SOL remains approximately between $13 and $35, your funds can be traded, thereby earning you yield. Passive is linked with lower yields and higher divergence losses.

Divergence loss is the decrease in net value that could potentially occur when a liquidity pool becomes unbalanced and is a risk associated with liquidity provision. Therefore, our aim should be to earn more from trading fees than the divergence loss.

The Active option, on the other hand, earns more through trading fees, though it can sway quickly depending on the market movement. Despite these fluctuations, the Active mode offers a higher daily yield than the Passive option.

For this today, we’ve deposited a smaller amount into the pool by clicking “Max”, followed by “Preview” and “Confirm”, then “Deposit” and “Approve”. And that’s it! You have made a deposit, and you should be seeing an NFT in your wallet now, visually representing your liquidity position in Orca.

Pro Tip: Do NOT Burn Your NFT!

Your NFT is essentially your ticket to redeeming your crypto from Orca, so it’s of utmost importance that you do not burn it. If you do, it’s game over, and your crypto will be lost!

So, you’ve successfully deposited your tokens into DeFi using Orca, opening the doors to potentially yield trading rewards and returns.

Remember, the world of DeFi is about practice. Stay curious, learn from experiences, and keep exploring. In upcoming posts, we’ll delve deeper into DeFi concepts where we’ll explore platforms like DeFiLlama.

Disclaimer: This is a helpful blog. Follow me on my socials but remember this is NOT FINANCIAL ADVICE. I am making this content as a community member because it is great to learn crypto, playing on Solana is fun, and it is easy to onboard friends into the space with a game like this.
My opinions are my own, research more if you wish, and if you decide to degen, that is your decision!

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