MARINADE
Marinade token metrics:
Token name: Marinade
Ticker: MNDE
Blockchain: Solana
Token standard: SPL
Marinade Price: $0.04160797(at the time of this research)
Contract: MNDEFzGvMt87ueuHvVU9VcTqsAP5b3fTGPsHuuPA5ey
Token type: Utility, Government
Token supply: 1,000,000,000MNDE
Circulating supply: 204,216,634 (source: coingecko)
Introduction
Marinade.finance is a staking protocol that is built on the Solana Blockchain. Unlike any other staking platform you know, marinade.finamce uses an automated staking strategy that is designed by the marinade core team. Users can stake natively or liquid stake to the same pool of 100+ high performing Solana validators.
Marinade was founded through Solana ecosystem grants at the solana and serum hackathon in 2021 and launched its liquid staking protocol and mSOL (marinated Solana) Liquid staking token on mainnet, August 2021. Marinade’ s governance token, MNDE, was minted on November 7, 2021 as a fair launch token. No Initial coin offering (ICO) was done, no presale, everything was funded with help from ecosystem grants provided by Solana and serum during the hackathon. A total of $80,000.
Marinade launched an on-chain DAO (Decentralized Autonomous Organization) governance in April, 2022. In July, 2023, the DAO migrated it’s governance to realms. This enabled direct control of the treasury and protocol decision by MNDE holders. More details of this below.
Marinade has an ethos of complete decentralization, transparency and commitment to open source development.
Marinade’s commitment to open source was inspired by the FTX and Alameda collapse as marinade had a relationship with FTX. The collapse of FTX caused FUD in the crypto market causing individuals to sell their SOL, individuals who staked SOL for mSOL swapped mSOL for SOL with very low fees and this affected SOL liquidity.
Marinade gets its revenue in SOL and so the drop in price affected Marinade’s long term vision. The FTX and Alameda saga portrayed the need for a permissionless and transparent system where everything is plain to the public. This is the rationale behind Marinade’s enforcement of an open source development. A system of full decentralization and transparency. This caused marinade to become committed to open source and transparent transactions.
Marinade’s delegation strategy, operations and control are all open source and can be accesses freely. All the computation can be run on any computer and anyone can see it and verify any information. Marinade is also permissionless and non-custodial. This means that the bot can be run by anyone. It is completely decentralized.
Details can be found in GitHub repository: https://github.com/marinade-finance/delegation-strategy-pipeline
Going further, marinade was born out of the merger of two project trying to accomplish a similar goal, that is, to offer a liquid staking solution on Solana that participates to the decentralization of the network and it’s security. After being awarded 3rd place in the Solana and Serum hackathon, the developers of marinade decided to link up with Lucio Tato and Marco Broeken who were working on liquid staking solution and also participated in the hackathon. It was this relationship that birthed Marinade.
Marinade’s visions and long term goals stem from their core values and these visions are :
• Help decentralization: In Solana network, there are about 1900+ validators where the top 32 validators currently have enough staking power to be able to stop the network. That is so much power given to a very minute number of validators. In the building stage of marinade, this power belonged to 11 validators and this posed security problems. Since Marinade is big on decentralization, Marinade decided to solve this issue by delegating stakes to smaller but reliable validators thereby spreading the power to more validators. This increased the number of validators in the Solana network. Marinade had a plan to have more validators securing the network.
• Another vision of marinade is to onboard the next 1 million people into crypto and that is why marinade is building and continuously developing a user experience app that will adapt to the need of more users. Emphasis is put on having a user-friendly interface so that users would find it easy to navigate and can invite friends to join the platform.
• Marinade also wants to create opportunity for it’s users by allowing users to use DeFi while staking and helping the network. For example users can stake SOL to get mSOL. The mSOL can be used in DeFi as liquidity to an AMM or it can be deposited to a lending protocol while receiving rewards at the same time. This is the idea behind liquid staking. More details below👇👇
STAKING WITH MARINADE
Blockchains use consensus mechanism to validate transactions in a secure and decentralized way. In the consensus mechanism known as Proof of stake (POS), Staking your token helps to validate transactions and secure the network. With Marinade, staking your SOL(Solana) to a validator helps secure the Solana network. In return for staking, you receive mSOL(marinated Solana) as rewards. Marinade offers the possibility of staking your SOL in exchange for mSOL. The staked SOL is spread among more than 450 validators. These validators are chosen through transparent and permissionless formular.
LIQUID STAKING
Liquid staking is an alternative to the normal/traditional staking. With traditional staking, your staked token is locked up until a given time. Before that time, you do not have access to it except you decide to unstake. However, Marinade offers the opportunity for users to be liquid while staking. Users are rewarded with mSOL when they stake SOL. The mSOL received is the liquid stake token (LST)–a token which allows you to have access to liquidity. The mSOL can be useful in DeFi where it can be used to add liquidity to a pool. It can also be used to lend and borrow or traded in some centralized exchanges like Coinbase, Raydium and Saber. The idea of liquid staking is that you still have access to liquidity even while you are still staking. The liquid staking token, mSOL, serves this purpose.
The benefits of Liquid staking are:
• Opportunity cost: it’s like killing two birds with one stone. With the liquid staking token, users can freely participate in DeFi and generate another reward on top of staking rewards. You don’t have to choose between staking or providing liquidity to an AMM, you can do both😊
• Unbonding period: liquid staking tokens(mSOL) can be swapped for underlying staked assets. Users don’t have to wait to unstake their tokens.
• Reliance on a single validator: a single validator may not perform optimally. With liquid staking, you can diversify your stake across multiple validators which insures against malperformance of individual validators.
MARINADE NATIVE
Marinade native is an alternative to liquid staking that allows users to benefit from an automated delegation strategy without using smart contracts. This is quite different from liquid staking in the following ways:
• Marinade native does not depend on smart contracts but leverages native Solana functionalities (marinade delegation).
• With Marinade native, you have custody over your SOL and have the right to withdraw it at all times.
• Marinade native does not include any fee for the user. You do not pay any fee to deposit your SOL, no fee to manage it, and no fee to unstake it. Amazing!!!😁 To unstake for free, you wait for the cool down period. However, if you are in a haste and cannot wait for the cool down period, a very small fee applies for instant unstaking (about 0.1–9% fee).
• Unlike liquid staking, you are not receiving mSOL with marinade native; rather you are creating Solana stake accounts in your wallet and delegating the management of those accounts to marinade. You don’t have to watch your stake all the time.
• With marinade native, rewards are sent to each of your stake accounts at the end of every 2-3 days which is referred to an epoch.
How to use Marinade Native
Using the updated marinade dApp which is user-friendly, select Native and then stake. Marinade creates a stake account for you with all the validators in that delegation. To unstake, the liquidity router is used or you can unstake instantly by paying a fee. Marinade native offers about an average of 7% APY with zero management fees.
Three outstanding benefits of marinade native delegation strategy that make it stand out:
• Does not require multiple transactions to stake to multiple network validator.
• It does not require monitoring. Just like passive income and it is automated.
• It does not require smart contracts and so it is free from smart contracts risks.
• It is open source. This is the most unique feature of this strategy.
Marinade delegation strategy uses a novel system to select to select top 100 validators based on performance and decentralization and not just yield. This ensures that user’s asset is spread across a tested and trusted pool of validators.
DIRECTED STAKES
Remember when we talked out liquid staking, we saw that a user can stake SOL to get mSOL in return, and this mSOL can be used in DeFi and may serve as a liquidity provider. Directed stakes is one of the features of marinade that enables holders of mSOL to select a validator they want to support with liquidity from their mSOL while benefitting as a liquidity provider.
A user can direct his stake to a validator of choice. With the help of the Snapshot system developed by marinade, a users mSOL holding and the stakes directed to a validator can be monitored and accounted for. Direct stake can only be done with one validator. Multiple validators require multiple wallets.
If you decide to change your validator, you can stake SOL to mSOL, use directed stakes and select a new validator. Easy peasy.
MNDE Directed stakes
MNDE is the governance token of marinade and this can be used in direct stakes as well. It has a relationship with mSOL directed stakes–you just have to lock your MNDE token in your wallet. The idea behind this is that when you link your wallet to a validator in direct stakes, both your MNDE and mSOL will count as directing stake to the same validator.
Note: that MNDE holders control 20% of marinade delegation strategy. This control is usually divided between the locked MNDE and the one used in directed stakes.
Benefits of Directed stakes
• They give more power and utility to MNDE token and this eventually makes it more valuable 😊
• It allows validators to receive stake in a more planned way allowing room for growth.
• It provides better APY. Since validators receive more than enough stakes to be profitable, they can lower their commission and this can lead to a better APY for users. That is more money when you stake😛
Note: to cancel your directed stakes, stake any amount of SOL to mSOL using the automatic delegation strategy.
Directed stakes only happens with one validator. This can pose some risk to users as some validators can be harming the network and may end up getting blacklisted. Some validators are involved in:
• Vote lagging: also called slow voting. This happens when a validator takes a lot of time to vote and degrades the network.
• Commission rugs: changing commissions before rewards are calculated. Stakes get less than they should.
• Failing to restart a node within the appropriate time.
All these ends with staking to more than one validator.
Marinade has however, developed an in-house system to transparently track validators’ performance. This is done through the validator dashboard. This way, malicious validators can be tracked and identified.
The validator dashboard is also part of Marinade’s commitment to have an open source platform for staking.
GOVERNANCE DAO ON REALMS
Marinade initially launched on Tribeca in early 2022. It was one of solana’s first on-chain DAO. However, community building and development was happening at realms and that made marinade migrate to realms. Realms is a DAO wallet used by marinade.
Migrating to Realms enabled direct link between MNDE holders and the DAO treasury. It brought more familiarity amongst Solana participants. It also brought transparency and the ability to use new tools contributed by communities building on Realms.
To obtain governance power, users have to lock their MNDE to obtain veMNDE which shows their governing power.
Benefits of Moving to Realms
• MNDE holders will have real ownership of the marinade treasury. The responsibility of unlocking budgets used to grow the protocol will be on the holders.
• Marinade will be able to benefit from all the tooling built on top of realms.
• Marinade will be able to distribute funds transparently.
An article written on July 19, 2023 revealed that marinade is responsible for $167 million of crypto assets. That is just about a little bit above half of the total value locked on Solana. However, the liquid staking solution has not gone above 2% of the network’s Solana. Protocol developers at marinade believe that further growth will come by appealing to institutional investors.
Marinade will continue to facilitate it’s growth and that of the ecosystem, in a few years, it will be a fully decentralized entity managed by the ecosystem via the governance token.
References
https://docs.marinade.finance/partnerships/marinade-press-kit
https://docs.marinade.finance/getting-started/faq
https://docs.marinade.finance/marinade-protocol/validators
https://docs.marinade.finance/marinade-products/directed-stake
https://www.asiacryptotoday.com/marinade-finance/?amp
https://medium.com/marinade-finance/introducing-marinade-v2-the-next-chapter-for-solana-staking-and-mnde-d4305d2dfc74
https://coincu.com/78748-what-is-marinade-finance-mnde/?
https://medium.com/marinade-finance/introducing-marinade-native-fdb641d98e64
https://medium.com/marinade-finance/introducing-a-new-and-improved-delegation-formula-for-msol-95c9777bb384
https://www.coindesk.com/tech/2023/07/19/solanas-largest-protocol-marinade-bets-growth-on-native-sol-staking-product/?