Orca: Everything to Know
By Beluga Research August 15, 2023
- Orca is a decentralized cryptocurrency exchange (DEX) built on the Solana blockchain
- It offers rapid transaction speeds and low fees
- Orca has an intuitive user interface when compared with other DEX offerings in the decentralized finance (DeFi) landscape
- Orca has a significant liquidity pool, meaning there is always a user available to buy or sell tokens
Orca is a decentralized cryptocurrency exchange (DEX) built on the Solana blockchain. Orca offers a user-friendly, low-cost way to exchange cryptocurrency on Solana. It enables users to exchange tokens with minimal transaction fees. The Orca DEX achieves this through diverse automated market makers (AMMs) utilizing liquidity pools funded by liquidity providers (LPs).
An AMM allows the automatic trade of digital assets without permissions. With Orca, users can provide liquidity to a trading pool and earn a share of trading fees. Typically, users can also participate in yield farming and staking opportunities. Orca has its native token, ORCA. It uses this token for governance, incentives, and ecosystem development. ORCA holders can vote on proposals, access exclusive features, and benefit from rewards and discounts. Orca is integrated with other Solana projects and protocols.
A Brief History
Orca was launched in February 2021 by co-founders Grace Kwan and Yutaro Mori. In its first month of operation, Orca recorded transaction volumes exceeding $600 million. During this period, the Solana network saw almost $50 million locked in total value.
After its launch, Orca became one of the most popular Solana DEXs and AMMs. In September 2021, Orca raised $18 million from top venture capital firms, including Polychain Capital and Three Arrows Capital. Orca released its first governance iteration in April 2022. Yet Orca has faced challenges and controversies. In September 2021, Orca suffered a temporary outage due to a bug in the Solana network. The outage affected several DEX platforms. Orca quickly restored its service and assured users that funds were safe.
What is Orca?
Orca is a decentralized exchange built on the Solana blockchain. It is one of the most popular DEXs on Solana, with high trading volume and many users. Orca allows users to swap tokens with minimal transaction fees and lower latency than any DEX on Ethereum. Orca enables users to provide liquidity to various trading pools and earn a share of trading fees and token emissions. Orca aims to be the most user-friendly DEX on Solana because it offers an easy-to-use interface.
Orca employs smart contracts to facilitate peer-to-peer token exchange without intermediaries or custodians. Orca uses various AMMs to provide liquidity and price discovery for token pairs. Orca previously offered two types of liquidity pools, Aquafarms, which were general purpose pools, and Whirlpools, are concentrated liquidity pools. Later Orca deprecated Aquafarms to focus on Whirlpools.
The ORCA token is used to pay trading fees on the exchange. There is a total supply of 100 million ORCA tokens. Orca is integrated with other Solana projects, including Phantom Wallet and Solflare Wallet. Orca uses a novel algorithm to calculate the fair price of any token pair based on the liquidity available across multiple pools and exchanges.
- Create a Solana wallet. Users can use a hardware wallet like the Ledger Nano X or a software wallet like Phantom.
- Fund the wallet with Solana (SOL), the native coin of the Solana network. A user can buy SOL on an exchange like Binance or Coinbase and then transfer it to their wallet.
- Connect the wallet to Orca. Visit the Orca website and click the "Connect Wallet" button. Select a wallet from the list and follow the instructions.
- Add liquidity to a pool. A user will provide two tokens to the pool and earn a share of the trading fees generated by the pool.
- Withdraw tokens. A user who has completed a trading session on Orca can withdraw their tokens and deposit them in their wallet.
- User-friendly interface. Orca has an intuitive interface that allows easy trading, liquidity provision, and yield earning for all users. The platform features a Fair Price Indicator. This shows the best price available for each trade and a Swap History.
- Low fees and high speed. Orca leverages Solana's scalability and efficiency. Orca users benefit from reduced transaction costs and more latency than users of any other Ethereum DEX. Orca is ideal for regular and modest exchanges. Orca also supports cross-chain swaps through Wormhole.
- General-purpose AMM. Orca is one of the first general-purpose AMMs launched on Solana. It can support any type of token pair and liquidity pool. Orca use a hybrid curve that combines constant product and constant sum formulas. It employs a dynamic fee model that adjusts the trading fee based on a pool's utilization rate.
- Easy integration for projects. Orca is a DEX for users and a money lego, a component of a decentralized finance protocol, for projects. Orca may be used as a building component for projects to quickly incorporate exchanging, farming, or on-chain data into a decentralized app (dapp). In addition, Orca provides an open-source Software Development Kit (SDK) and Application Programming Interface (API) that allow developers to access Orca's functionality and liquidity from their applications.
- Yield farming opportunities. Orca rewards its users with its native token, ORCA. Users can earn ORCA by providing liquidity to any pool on Orca. Generally, Orca does not allow staking. Occasionally it offers some limited staking opportunities.
- Concentrated liquidity pools. Orca's concentrated liquidity pools, called Whirlpools, allow liquidity providers to specify a price range for tokens. Users can increase capital efficiency and earn more fees by focusing liquidity on the most active price segments.
- Secure and decentralized. Orca is secure and decentralized. Users have complete control over funds and transactions. Orca does not store or access users' private keys or personal information. Yet the platform requires some Know Your Customer (KYC) or registration to use. The appropriate method depends on the user's jurisdiction and the number of transactions in which they engage.
- User-friendly. Orca is designed to be easy to use and accessible for anyone who wants to buy or sell crypto on Solana. Its simple interface makes it easy for users to connect wallets, swap tokens, create pools, and view analytics.
- Fair price and liquidity. Orca uses an AMM model. The cost of tokens is determined by the ratio of supply and demand in a trading pool. This ensures traders get a fair price for tokens without relying on external oracles, entities that connect blockchains to external systems.
- Network Outages. Solana is known for being fast and efficient with transactions, but it has occasional network outages. These can affect the performance and availability of Orca and other DEX platforms on Solana.
- Impermanent Loss . As liquidity providers on Orca, users can earn fees from the trades in the pool. Yet they may suffer losses.
- Slow order execution. Orca has to wait for the Solana blockchain's confirmation before it can execute an order. This means order execution on Orca can be slower than on centralized exchanges.
- Competition. Orca is not the only DEX on Solana. Many other DEXs offer similar or better features, such as Soldex, Serum and Raydium. Orca may need to do more to retain users and liquidity providers.
- Not as many features as other DEX offerings. Orca has fewer features than some other DEX platforms. Generally, Orca does not support staking.