HOME>Blog>What is Orca (DEX) & ORCA The Token?

What is Orca (DEX) & ORCA The Token?

Educational
Orca (ORCA)
Savl
Blogpost logo

Introduction

Orca is both a decentralized exchange (DEX) and a cryptocurrency governance token (ORCA). Orca the platform is marketed as the easiest place to trade cryptocurrency on the Solana blockchain seeking to enable low-fees and near-instant token swaps using an automated market maker (AMM) model (more on this later). Whereas, ORCA the cryptocurrency is a Solana-based token that governs the Orca decentralized exchange.

On Orca, you can trade tokens cheaply, quickly, and confidently (thanks to our Fair Price Indicator). Additionally, you can provide liquidity to one of our liquidity pools, including our concentrated liquidity pools (Whirlpools) to earn trading fees and token emissions.

Orca & ORCA history

According to the whitepaper, Yutaro Mori and Grace Kwan co-founded the Orca platform in 2021. Yutaro is a software developer with experience in the sector, with a strong interest in cryptography and economics. Kwan, on the other hand, has expertise in engineering, design, and writing. She specializes in simplifying complex technical systems into user-friendly products. The total supply of Orca tokens is one hundred million ORCA.

What’s an AAM?

There are two main types of decentralized exchanges (DEXs): traditional order books and automated market makers (AMMs). In traditional order books, users who want to buy are matched with users who want to sell similar amounts of tokens. On the other hand, AMMs enable users to trade with a pool of tokens instead of directly with other users. For blockchain applications, AMMs are likely the better option because they are simpler and more flexible.

Orca is an Automated Market Maker (AMM) based DEX built on top of the Solana blockchain. Here’s why it stands-out:

  • Orca offers a highly intuitive and user-friendly user experience and interface (UX/UI), a Solana-based exchange automated market maker (AMM), and a cryptocurrency price aggregator.
  • Orca has unique features like the Fair Price Indicator, which checks prices within 1% of CoinGecko's rates. It also includes a 'Your Tokens' panel to display user balances and a Magic Bar to help identify trading pairs.
  • Solana's increasing popularity, combined with the user-friendly nature of Orca, can potentially drive more people to participate on the protocol in the near future.

Taking full advantage of Solana’s quick transactions and low fees, Orca was among the first AMMs launched on the Proof of Stake (PoS) platform.

ORCA the token

ORCA is the native utility and governance token of the platform and is linked to the trading activity of the DEX itself. Its primary goal is to gradually decentralize the protocol by distributing ORCA to liquidity providers through yield farming. Yield farming is an investing method in the DeFi space. It involves lending or staking cryptocurrencies or tokens in exchange for transaction fees or interest.

The Orca Treasury is a decentralized autonomous organization (DAO) that safeguards the value of the ORCA token on the platform. A DAO is an organization established by developers to automate decision-making and facilitate cryptocurrency transactions.

Orca: The DEX & Ecosystem

Orca, as outlined in its whitepaper, prioritizes human-centered design over program-centric approaches, aiming to streamline and enhance trading experiences on the Solana network. In the decentralized finance (DeFi) landscape, users often grapple with determining fair prices across various liquidity pools.

At its core, Orca facilitates token exchanges and empowers participants to earn a share of trading fees through its innovative trading pools, known as aquafarms. While Orca shares similarities with other exchanges on Solana, it distinguishes itself through unique features that set it apart from traditional automated market makers (AMMs).

One standout feature is Orca's Fair Price Indicator, which eliminates the need for time-consuming comparisons by ensuring that trades occur within a user-defined tolerance and closely align with market rates. Unlike many Ethereum AMMs that rely on browser extensions for balance verification, Orca provides a Tokens panel for seamless balance checks and real-time trade updates.

πŸ’‘ Orca revolutionizes decentralized trading, farming, and development on the Solana blockchain by offering unparalleled efficiency. With transaction costs as low as <$0.01 and lightning-fast speeds, users can trade nearly any fungible token on Solana with ease.

Whirlpools

The introduction of Whirlpools marks a significant leap forward, offering next-generation automated market-maker (AAM) functionality. By leveraging concentrated liquidity, Whirlpools enhance yields for liquidity providers (LPs) while optimizing capital utilization across the ecosystem. LPs can strategically concentrate liquidity within specific price ranges, earning higher rewards and reducing slippage costs for traders.

Furthermore, Orca incentivizes efficient capital deployment through double-dip pools, which offer multiple token types as incentives. This approach promotes liquidity, rewards LPs for their contributions, and enhances the overall trading experience for users.

It is worth mentioning that in Whirlpools, liquidity providers will compete for trading fees and token emissions, which will be distributed among them based on the parameters of their deposits. With Concentrated Liquidity and Leverage, users who set a narrower price range around the current token price will receive a larger portion of fees and incentives. However, they are also more exposed to Divergence Loss (also known as Impermanent Loss or IL).

Conclusion

Orca exemplifies user-centric design and technological innovation in the Solana ecosystem. With features like the Fair Price Indicator and Whirlpools, it sets a new standard for DEXs, promoting liquidity and rewarding participants. Orca's commitment to user feedback ensures ongoing improvement, positioning it as a leading DEX and governance token in cryptocurrency. As Solana gains traction, Orca is poised to attract a wider audience, solidifying its status in the market.

Savl has recently integrated the ORCA token into Savl Wallet.

DISCLAIMER: Cryptocurrencies are high-risk investments, and investors should be prepared to lose all funds. The information provided in this blog post is for informational purposes only and does not constitute financial advice. Savl does not provide investment recommendations. Remember, your capital is always at risk when investing in cryptocurrencies.

Recent publications

Feb 13, 2024
Educational
Orca (ORCA)

7 min.
Savl
Feb 2, 2024
Educational
Jito (JTO)

5 min.
Savl