Solana ETFs Are Coming With Carlos Gonzalez Campo
🎯 Summary
Podcast Episode Summary: Solana ETFs Are Coming With Carlos Gonzalez Campo
This episode of Light Speed with host Jack Cubanek and guest Carlos Gonzalez Campo of Blockworks Research focused primarily on two major developments in the Solana ecosystem: the imminent possibility of Solana Exchange-Traded Funds (ETFs) being approved by the SEC, and the growing technical debate surrounding Central Limit Order Books (CLOBs) versus Automated Market Makers (AMMs) for decentralized exchanges.
1. Focus Area
The discussion centered on Crypto/Web3, specifically focusing on the Solana blockchain ecosystem, institutional adoption mechanisms (ETFs), and Decentralized Finance (DeFi) infrastructure (DEXs and order book technology).
2. Key Technical Insights
- CLOB Technical Hurdles on Solana: Implementing efficient on-chain CLOBs on generalized L1s like Solana is technically challenging due to limitations in transaction ordering, specifically the inability to easily prioritize transaction cancels over takes. This disadvantages market makers (MMs) by exposing them to toxic flow, leading to wider spreads.
- Optimization for Financial Applications: The trend in high-frequency trading infrastructure is moving toward building application-specific solutions (rollups or dedicated chains like Hyperliquid’s Onyx L1 or FOG’s chain) that allow for structural advantages like application-specific sequencing and collocated validators, which are necessary to replicate centralized exchange efficiency.
- LST Efficiency for Staking ETFs: If Solana ETFs are approved with staking, utilizing Liquid Staking Tokens (LSTs) like Lido Staked SOL would provide significant operational efficiency. LSTs allow for higher utilization rates of staked assets while maintaining liquidity for redemptions, leading to better APYs for investors compared to staking a portion of assets and leaving the rest idle.
3. Market/Investment Angle
- Solana ETF Potential: The market appears to have been surprised by the SEC requesting amended S-1 forms, suggesting potential approval as early as late June or July. Solana ETFs are expected to attract institutional demand due to their clear “Decentralized NASDAQ” narrative and the potential for a hybrid asset profile (growth stock + predictable yield via staking).
- Impact of ETF Inflows: While Bitcoin ETFs dominate, even inflows comparable to Ethereum ETFs ($10B+ AUM) would be highly impactful for Solana due to its lower market capitalization, translating to significant buying pressure from investors (family offices, hedge funds) unable to access Solana directly on exchanges.
- CLOB vs. AMM Utility: AMMs remain superior for bootstrapping liquidity for long-tail assets and new meme coins (where MMs won’t participate). CLOBs, however, are the most efficient structure for highly liquid, established assets where active market making based on real-time data is crucial.
4. Notable Companies/People
- SEC: Actively engaging with prospective Solana ETF issuers, specifically requesting details on staking implementation in amended S-1 filings.
- 21Shares: Mentioned as a major ETP issuer in Europe, where their Solana ETP is currently the largest product by AUM, signaling strong institutional interest overseas.
- Hyperliquid: Cited as the current leader in on-chain perpetuals trading volume, built on the Onyx L1, demonstrating the viability of CLOBs on specialized infrastructure.
- Lido: Discussed as a potential beneficiary if ETF issuers adopt LSTs for staking implementation, with arguments made that Lido Staked SOL is structurally less like a security due to its autonomous yield distribution mechanism (Tip Router).
- Pump Fun: Contrasted with CLOB platforms; positioned as a consumer-focused product driven by high turnover in newly launched meme coins, utilizing AMMs efficiently for that use case.
5. Regulatory/Policy Discussion
The key regulatory discussion revolved around the SEC’s stance on staking within ETFs. Unlike the initial Ethereum ETFs which stripped out staking, the SEC is now actively soliciting detailed staking plans from Solana ETF issuers, suggesting a potential green light for integrated staking rewards, which is a significant shift.
6. Future Implications
The industry is moving toward infrastructure specialization. Generalized L1s like Solana may struggle to host the most sophisticated financial applications (like high-speed CLOBs), leading to the proliferation of application-specific rollups or dedicated chains optimized purely for trading efficiency. Furthermore, the success of Solana ETFs, especially if they include staking, could unlock a new, massive wave of traditional finance capital into the Solana ecosystem.
7. Target Audience
This episode is most valuable for Crypto/Web3 Professionals, Institutional Investors, DeFi Developers, and Solana Ecosystem Participants who need high-level analysis on regulatory developments, institutional adoption trends, and core infrastructure debates (CLOBs vs. AMMs).
🏢 Companies Mentioned
💬 Key Insights
"I think definitely what we've seen is that centralized issuers are getting an insurmountable lead over decentralized issuers"
"If you look at Solend, about 80% of their volume comes from aggregators, and what that tells you is that they're providing the best price execution..."
"What we're seeing is just this trend of these types of protocols trying to own the end-user. I think Mark from the Blockworks Research team put out a great tweet the other day that says, "Own the user on the float," and that resonates along with me."
"I think that is actually a core focus for Solana developers today: how do we make this a reality that can be achieved on the Solana L1 today? And that's why you're seeing a lot of talk about multiple concurrent leaders, how do we prioritize cancels over takes, how do we enable application-specific sequencing..."
"What you're seeing is this trend of passive liquidity provision being phased out by more active market making, and what you're seeing is attempts to pull that off on-chain."
"For instance, on Solana, you can't really prioritize cancels over takes. So, on Solana, market makers have a structural disadvantage to toxic takers, and what that does is that market makers are not willing to provide as tight spreads as they would otherwise."