A closer look at the kitchen: Marinade Protocol.

11 min readAug 22, 2023

Marinade was one the first projects to grace the solana blockchain after placing 3rd at the Solana X Serum DeFi track. With just an $80k grant, Marinade has achieved a Total Value Locked of over $100 million, launched their token MNDE, and sponsored numerous hackathon tracks on Solana and much more. In this deep dive we are going to talk about;

How Marinade started
How it’s different
What is liquid staking and it’s benefits
The MNDE token and tokenomics
Marinade Native and Delegation strategy
Last but not least we’ll tie all of these into each other…so let’s dive in.

What is Marinade, who are they even…

Relaxxx…i’ll tell you.

Marinade is the first non-custodial liquid staking protocol built on Solana. You can stake your SOL tokens with Marinade and receive “marinated SOL” tokens (mSOL) that you can use in decentralized finance (DeFi). If all of that sounded like gibberish to you let me break it down.

First non-custodial meaning it’s decentralized and you have full custody(ownership and transparency) of the tokens in your account.
Staking might be the term that raises eyebrows so i’d get right to…Staking native tokens(like ETH, SOL, NEAR) means pledging your tokens to help validate transactions on a blockchain by contributing to the functionality, security or just to provide computational resources on a (Proof of stake) chain in exchange for rewards.
When you do this “STAKiNg” on Marinade you get a value equivalent mSOL that you can trade for other DeFi tokens. This very functionality ties up into some called Liquid Staking but we’ll talk about that later

Why is staking important and most importantly what is liquid staking?

Well to understand we have to go back to the architecture, the ingredients in the soup that is the solana blockchain. Solana is primarily a Proof of stake(PoS) chain complemented with a Proof of History which is used as a time keeping layer. Staking is key element PoS chains, where validators(nodes) pledge tokens in order to validate transactions in the blockchain database.

Usually to verify a transaction you must own a minimum amount of tokens and then you can become a validator. Validators participate in the decentralized process of proving the legitimacy of a transaction before it can be recorded. For doing so they rewarded some crypto, but this is isn’t a risk less endeavor as you can some of your pledged token(slashed) by approving a fake transaction. This economic mechanism deincentivizes validator from approving fake transactions.

The thing is not every body can afford to run a validator on solana and although there isn’t any strict minimum token amount…Asides from hosting costs which can run into thousands of dollars annually…Solana Validators must pay to be eligible to vote and this can cost between 2–3 SOL (~$80 at the time of this writing) for each epoch(2–3 days).

Well good thing is even if you cannot afford to run a validator, you can pledge your tokens to one, this process is called DELEGATION.

Delegation refers to the act of assigning the responsibility of validating transactions and maintaining the network’s consensus to a third party.

Instead of running their own validator node, token holders can delegate their tokens to an existing validator on the network. This allows them to participate in the staking process and earn rewards (currently 14.24% in the case of SOL) without the need for technical expertise or the resources required to run a validator.

Now here’s the catch…when you staking your token you typically have to lock up your tokens for a period called the “unbounding period” so that you have to wait some time before you can control your tokens again. At times, this period is rather long, e.g. 28 days on Polkadot network…the opportunity cost, in the case of staking means giving up the ability to use your tokens to generate rewards.

So Liquid staking…

Imagine you can get around the unbonding period and get access to your bonded tokens the very moment you need it…that’s the beauty of liquid staking.

Liquid staking allows users to stake assets and receive a collateralized token that can be used in a plethora of DeFi protocols.

Basically you receive some tokens whose value is relative to value of the the native tokens you locked up…and these token can be traded with other DeFi tokens on the blockchain.

So how does Marinade work?

Marinade.finance’s objective is to democratize liquid staking within the Solana ecosystem, ensuring that all users and projects can easily partake in activities such as staking, trading, token collateralization, and other versatile token uses.

Imagine you have 50 Solana (SOL) tokens, and you use Marinade to stake them. In return, you receive 50 mSOL tokens. Behind the scenes, Marinade combines everyone’s staked SOL tokens, figures out the best validators for rewards while keeping things decentralized, and at the right moment, it assigns your SOL tokens to the most rewarding opportunity.

Normally, when you stake SOL tokens, you have to wait around 2 days before you start getting rewards. But with Marinade, you get rewards right away because the mSOL tokens you hold start growing in value due to rewards from staking. This means that if you decide to unstake or trade your mSOL tokens for SOL later on, you’ll actually receive more SOL tokens than you initially staked.

The best part is, you can easily switch between SOL and mSOL tokens whenever you want. This gives you complete control over your tokens and the ability to use them freely. No more waiting periods when you want to stake or unstake your tokens.

So how is Marinade different?

Well to start, Marinade runs an open kitchen and is actually a DAO which mean that the decision-making and direction of the project is determined by a group of people who are part of the DAO not the team behind the project.

$MNDE

Marinade being a DAO introduces it’s $MNDE which is the governance token with a cap of 1billion the token split;

35% (350M) — The Marinade community, driving the formation of the Marinade DAO
35% (350M) — DAO treasury to finance the future of liquid staking and beyond
30% (300M) — Chefs (team) allocation, with a 6-month cliff and 2 years linear vesting

The allocation of 350M MNDE for the Marinade DAO is further split into three working budgets:

This a little overview i made about MNDE liquidity mining in bullet points so you can easily digest the tokenomics.

MNDE tokens: Total of 1 billion; 350 million (35%) allocated for liquidity mining.
Weekly Incentives: About 1.7 million MNDE (0.17%) to promote mSOL usage and Marinade DAO participation.
Flexible Allocations: Weekly adjustments to allocations based on market changes; community involvement in decisions.
Initial Week (Oct. 7–13, ‘21): Allocations for different pools and activities:

— mSOL/USDC pools: 50%
— mSOL/SOL pools: 31%
— Other mSOL pairs: 9%
— mSOL deposits to lending: 5%
— mSOL staking: 5%

TVL Milestones: 80 million MNDE for decentralized staking milestones; added to weekly allocations.
Milestones Distribution:

— 3M SOL staked: 3.5 million MNDE bonus
— 5M SOL staked: 7 million MNDE bonus
— 10M SOL staked: 7 million MNDE bonus
— 20M SOL staked: 14 million MNDE bonus
— 50M SOL staked: 17.5 million MNDE bonus
— 100M SOL staked: 31 million MNDE bonus

Retroactive Claim: 15 million MNDE initially, 5 million MNDE added recently before launch.
8. Retroactive Principles:

— Flat MNDE/day distribution rate with bonus since Sep 13.
— Claim amount based on mSOL balance and internal mSOL-SOL pool LP balance.

In Summary MNDE is a Marinade governance token and why it doesn’t necessarily hold any value in itself…it represents a unit of voting power in Marinade’s DAO.

Marinade Native

Marinade has created something called “Marinade Native” which lets you easily stake your SOL coins directly with a long list of trusted validators all at once, without needing to do complicated transactions. This is great because it’s safer and more efficient.

Before this, staking could be a bit complicated and had some risks. People had to handle multiple transactions for every validator you stake and keep an eye on how their staked coins were performing. Some methods had risks related to smart contracts. But with Marinade Native, you won’t need to worry about these things.

This has made staking difficult to many institutional investors who could not tolerate either the smart contract risk of liquid staking or the high concentration risk of relying on the performance of a single validator. Over 97% of all staked SOL (370 million SOL) is staked natively with individual validators, translating to an $8.1 billion opportunity for Marinade Native.

This new approach is especially helpful for bigger investors and companies who want to earn rewards but don’t want to take unnecessary risks. Marinade makes sure your SOL coins are staked in a way that reduces risk, and they also consider things like the performance and fairness of validators.

The cool thing is that when you stake your SOL with Marinade Native, you still keep control of your coins — you don’t have to give them up. So it combines the delegation strategy concept of liquid staking with the non-custodial benefits of native staking. And the rewards you can earn, known as APY, are expected to be around 7% per year, which is pretty good!

Marinade has also developed its in-house system to transparently track validators’ performance over time, which you can track on the Validator Dashboard.

Marinade’s smart delegation strategy, which uses a novel scoring system to select the top 100 validators based not only on yield but performance and decentralization, ensures users’ SOL is spread across a tested pool of validators. This formula determines which validators receive 60% of Marinade’s stake, while MNDE and mSOL token voting account for 20% each.

This move by Marinade is a big step for them, and it’s also good news for people who hold their tokens (mSOL and MNDE) because it means they’ll have more influence and benefits as the platform grows.

So, in simple terms, Marinade has made it easier and safer for people to earn rewards by helping the Solana network, and this is exciting for both individual users and the whole Marinade community.

Staking on Marinade Native

Marinade also employs multiple standard delegation strategies it new Marinade V2 which include;

Performance-based (60%): This part of the strategy uses the algorithmic strategy to select the top 100 validators based on a Marinade score, which considers both how much they yield and how decentralized they are.
veMNDE (20%): If people who hold MNDE tokens lock them in the governance system, they can vote on where the stake should go. Validators chosen by these voters must meet performance standards to ensure that the performance of mSOL (a token on the platform) remains strong.
Directed Stake (20%): Those who have mSOL tokens or are part of protocols involving mSOL can also vote for specific validators. This can be done instead of using the algorithm, as long as the chosen validators meet the required criteria for eligibility.

Marinade’s in-house tracking system monitors validator performance, visible on the Validator Dashboard. This ensures staking with strong validators and quick detection of malicious ones. The new version will activate this system fully and add Solana’s redelegation feature. This allows rebalancing without cooling down stakes, enhancing rewards for all mSOL holders.

The Main Chef revamp it’s kitchen

If you’ve being paying attention to Marinade…you would notice the the Validator Dashboard, delegation strategy, The Decentralizer and many other items have being revamped and repackaged as Staking 360

Basically Marinade V2 came with a myriad of improvements and an updated tokenomics.

Unstake pool redesign: Marinade is introducing a design update to the unstake pool to facilitate better instant unstake operations for mSOL, native staking, and other staked SOL tokens. The unstake system combines Jupiter for swaps and Marinade for stake account management to bring users the SOL unstaking experience they deserve.

Direct staking benefits: With mSOL Directed Stake, you have the power to choose and support a specific validator that you trust and believe in. With direct staking you can also tailor your strategy in way that suits you instead of leaving it to Algorithmic strategy. Marinade’s snapshot system ensures transparency and accountability in the directed stake process. You can keep track of your mSOL holdings and their impact on the validator of your choice.

After successfully moving two multisig and ratifying the code of conduct and constitution, Marinade’s move to Realms(the governance wi standard on solana) from Tribeca came with a few changes to their governance system.

The DAO will control the treasury, main contract and council membership.
MNDE holders will lock their MNDE in the governance to gain veMNDE voting power. Chef NFT holders will be asked to migrate to Realms in order to continue governance.
The Marinade Council is provided a limited scope of control by the DAO, allowing it to operate day-to-day using the budget. It holds admin security backstop authorities, and the DAO can replace the council through votes.

Food also gets spoilt in the kitchen

As a an investor it important to know the risk associated with were you keep your money. Marinade has its limitations and it good for you to be aware…i’ll some of them

Limited Network Exposure: While Marinade simplifies staking, it might limit users’ direct exposure to the broader Solana network and its evolving dynamics.
Dependency on Third-Party: Using a staking platform like Marinade means entrusting your tokens to a third-party service, which carries its own security and operational risks.
Centralized Aspects: Even though Marinade aims for decentralization, features like algorithmic delegation might still introduce centralization in validator choices.
Market Volatility: While rewards can be appealing, the value of rewards in terms of the underlying cryptocurrency can be influenced by market volatility.

and now some desserts…

Decentralizing Marinade has been a process and the project is only starting and it’s being ahead of competitors like Lido Finance, Socean, Jpool and the likes out of nothing but sheer innovation …Marinade has been built from the beginning until now with the vision of ultimately being owned by the whole Solana community. To serve as a public good for all, and to be governed by all. I had fun poking around this product more so for my own benefit…shoutout to superteam for the opportunity🙏🏾