From Zero to Power User on Solana
By Obi3 (Twitter)
Objective: A guide for users who are new to Solana and crypto on the following:
- Storing Your Funds
- Tokens You Should Know
- DeFi Apps to Know
- High level investing strategy
Overview of Wallet Basics in Crypto
Definition | Description | How to Handle | |
Public Key | “Username” | Represents a single wallet. If someone or an app wants to send you funds. They need your username to send you funds | Can share publicly. |
Private Key | “Password” | A Private Key has full access to a single wallet. If it’s exposed the individual gets full access over your funds and can withdraw it without your permission. | Store in a password manager for each wallet you use. If you want to use a new wallet make sure it’s trustworthy, and enter the Private Key. Try to enter private keys instead of your seed phrase. |
Secret Seed Phrase | “Master Password” or “Social Security Number” | A Seed Phrase can generate multiple wallets (each with both a Public and Private Key). This is the most sensitive information. | Store in a password manager. Try to avoid entering in wallets. |
You’ll notice that Private Keys and Secret Seed Phrases pose a giant security risk for the average person. To avoid that we direct users to Fuse Wallet, which is a smart wallet protocol, there are no Seed Phrases, Private Keys, so it is incredibly secure and we eliminate that attack vector. Fuse Wallet cannot interact with DApps either, therefore you cannot get tricked into signing a malicious transaction. Fuse Wallet’s underlying protocol is so secure it is used to manage billions of dollars in funds across Solana.
Storing Your Funds:
Like a normal bank account, make sure to have a “Checking” and “Savings” account for your crypto.
Tool | Purpose | |
Checking Account | Use this to interact with DeFi. Try not to store too many funds on here. Use only as a medium to interact with Apps, People, and Exchanges (e.g. when you transfer SOL out of Coinbase). | |
Savings Account | Use this to store all your assets. If you want to interact with an app simply send it to your checking account (Backpack), interact with DeFi and send tokens back to Fuse. |
Bonus: If you have $5,000 or more invested I strongly recommend investing in a Ledger hardware wallet to add more security to your Fuse Wallet as a 2FA key. That setup is secure enough to protect millions (even billions) of dollars in assets.
Tokens You Should Know
Description | |
Basic: | |
Solana ($SOL) | The core token powering Solana. Fees and transactions are paid using SOL, so make sure you have ~0.2 SOL to cover transactions. |
USD Coin ($USDC) | Pegged 1:1 to the US Dollar and is backed by a 1:1 US Dollar reserve. When many people talk about “selling” they typically refer to swapping $SOL for $USDC instead of off ramping to your bank account. |
Power Users: | |
Staked SOL ($jitoSOL or $hSOL) Upgraded version of $SOL | Solana is a “proof of stake” protocol. Users who stake their Solana to secure the network and validate transactions get a ~7-10% yield per year as an incentive. To simplify staking on Solana you can simply swap your $SOL to $jitoSOL or $hSOL ($hSOL is one of many liquid staking tokens powered by Sanctum). For example, assuming a 7% APY with $jitoSOL. On day 0, 1 $jitoSOL = 1 $SOL. On day 365 1 $jitoSOL = 1.07 $SOL. Use like a pro: A savvy investor would have just enough SOL to cover transaction fees, and the rest of the SOL would be converted to $jitoSOL or $hSOL to get yield passively. |
Carrot ($CRT) Upgraded version of $USDC | Carrot is a protocol where users deposit $USDC, and Carrot automatically taps into the deep, expansive Solana ecosystem to farm the highest possible yield by lending, providing liquidity, etc. Carrot is 100% backed by USDC. Carrot yield has ranged from 10% to 35% APY, currently averaging at around 20% APY at the time of this writing. For example, assuming a 20% APY with $CRT. On day 0, 1 $CRT = 1 $USDC. On day 365 1 $CRT = 1.20 $USDC. Use like a pro: A savvy investor would just completely replace using $USDC with $CRT to always get a yield passively. |
Coinbase Bitcoin ($cbBTC) | Pegged 1:1 to Bitcoin. Coinbase allows anyone to swap 1 cbBTC for 1 BTC and is backed by a 1:1 Bitcoin reserve. Use like a pro: Since Bitcoin is expensive, slow, and doesn’t support smart contracts users can simply trade, hold, and lend cbBTC on the Solana blockchain. On Solana, like Bitcoin, you have 100% control over your funds. |
Top DeFi Apps to Know:
DeFi App | Description |
A swap aggregator, it checks all liquidity pools to give you the best conversion rate when swapping between two tokens. Jupiter will be your best friend. | |
Sanctum lets independent validators introduce liquid staking tokens (like $hSOL) to give users the ability to easily swap into or out of their validator stake pool to earn yield. | |
Kamino lets users borrow, lend, and has complex vaults that give you the ability to have boosted returns. | |
BirdEye lets you track the prices of tokens in real time (better than CoinMarketCap) | |
An NFT Marketplace. Many communities in Solana are gated by NFTs such as MonkeDAO, Geckos, MadLads, Claynosaurz, Famous Fox Federation, etc. |
Basic Investing Strategy
Buy Signal: Whenever Solana dips by ~5-10%, swap ~5%-10% of your USDC (or CRT) to SOL (or jitoSOL)
Sell Signal: Whenever Coinbase is the #1 ranked App on the App Store in the Finance Cateogry, and in the Top 10 overall apps across all categories sell 5%-10% of your SOL to USDC (or CRT). This twitter bot makes it easy.
Alternatively, look at the Fear & Greed Index. Slowly buy when there is fear. Slowly sell when there is greed.