Introducing Katana — Revolutionizing Yield Generation on Solana

Published on: 16.11.2021

Katana is building the yield generation primitive for Solana.

Katana is honored to have won the Grand Prize at the Solana Ignition hackathon!

At its core, Katana simplifies yield generation on Solana by identifying, composing, and packaging the best strategies in DeFi into accessible yield products.

The protocol offers a comprehensive suite of these products across the risk spectrum, enabling users to mix and match strategies to easily produce their desired exposure.

Katana’s ultimate form is to become an evolving and permissionless protocol, allowing anyone to access, contribute to, and build upon the best yield products in the Solana ecosystem.

📌 The Status Quo

Today, yield generation is largely private and non-collaborative. Closed markets have evolved around the process, resulting in yield-searchers paying yield-generators for access to their private strategies.

In this model, strategy access is restricted and value accrues solely to the party running the strategies. Even worse, developers are unable to contribute to or build products on top of the base yield strategies.

They believe this model is suboptimal and ripe for disruption.

📌 A New Paradigm

Katana turns the old model on its head, embracing the unique benefits of Web3 and DeFi to transform the yield generation business for the better.

By building a truly decentralized and permissionless protocol for yield generation, Katana is able to:

Democratize access to the best yield strategies
Enable anyone to contribute strategies and products to the protocol
Allow developers to permissionlessly build products and protocols that source yield from the base layer
Transfer ownership from private firms to the community
Distribute upside to all stakeholders of the protocol

📌 Yield Generation in DeFi

Decentralized yield generation protocols have exploded in popularity, fueled by an insatiable demand for passive investment opportunities in DeFi.

However, yield generation on Solana remains largely fragmented and manual. This presents a unique opportunity to establish a new yield generation primitive, leveraging the innate benefits of Solana’s base layer from the start.

Being based on Solana affords Katana several advantages in yield generation:

A lower-cost basis. Solana’s low transaction fees enable a wider design space of strategies, more frequent compounding, and higher-touch yield products. Also, less gas = more profits.
Improved user experience. Users can freely zap in and out of products while spending a negligible amount on fees.

📌 The Product Suite

Katana leans into these advantages and seeks to innovate on entirely new yield products and strategies, serving as the base layer for yield generation on Solana.

Their product suite is thus designed to offer the most performant yield products — from a variety of different sources and assets — while simultaneously optimizing for risk-reward and security.

Given the fast-paced nature of DeFi, Katana’s product suite will constantly adapt and evolve to capture the best yields available in the Solana ecosystem.

Katana’s first product to arrive on mainnet will be structured products — consisting of covered calls and put selling strategies — followed by automated vault strategies.

We will be doing a separate blog post to analyze each product in-depth, so we only provide a high-level overview here.

Structured Products

Covered calls and put selling strategies for popular assets
Sustainable yield, generated by expressing a market view
Abstracts away the complexity of the underlying derivative strategies
Fully automated for the user, automatically rolling over positions at the end of each period

Automated Vault Strategies

Passive method to earn a yield on a chosen base asset
Span a wider array of yield farming opportunities
Strategies will be changed as new opportunities arise, enabling depositors to consistently earn the best yields available
Fully automated execution for the user

The Vision

Katana’s vision is to become the yield generation layer for Solana. By positioning itself as a permissionless primitive, it enables virtually anyone to tap into the protocol for their desired use case.

Users of the protocol can include retail users, DeFi degens, DAOs + treasuries, institutions, other protocols, wallets, and even FinTech apps — the possibilities are endless.

To get there, they are looking to build a community of contributors, builders, and doers.