Marinade Finance: A Comprehensive Guide
Introducing Marinade Finance.
Marinade Finance is like a tool for people who own SOL cryptocurrency. It helps them join in a special type of finance called DeFi. With Marinade, you can easily put your SOL to work and earn rewards. The cool thing is, you can take your money out whenever you want, unlike some other methods where you have to wait. When you use Marinade, you get marinated SOL tokens (mSOL) as a proof of how much SOL you’ve put in. These tokens can be used for more DeFi stuff. So, Marinade makes it simple to earn and use your SOL in the world of decentralized finance!
- Marinade’s ethos:
- Funding: Marinade was founded in the spring of 2021 following a successful Solana x Serum Hackathon event.
The initial funding came from the Solana Foundation and Serum.
The funding was used to develop the Marinade platform and launch its mainnet stake pool in August, 2021.
Marinade did not receive any venture capital backing or conduct an initial DEX offering (IDO).
This allowed Marinade to launch as a truly decentralized project with no single entity having control over its development or future.
- Control: The Marinade Finance protocol is controlled by a community of token holders. The token holders vote on important decisions about the protocol, such as the distribution of fees and the addition of new features.
- Mission: The long-term mission of Marinade Finance is to make Solana staking more accessible and liquid. The protocol aims to do this by providing users with a way to stake their SOL tokens without having to lock them up for a set period of time. This allows users to still use their tokens in DeFi applications while earning yield.
3. What is liquid stacking .
Liquid staking, in simple terms, is a process where individuals who hold a cryptocurrency that can be staked (locked up to support the network’s operations) are able to receive a tradable representation of their staked tokens, known as a “liquid” version. This allows them to retain the benefits of staking (earning rewards and participating in network security) while still having the flexibility to trade or use their tokens without waiting for the staking period to end. It’s like getting a token that represents your staked coins, enabling you to maintain both the rewards and the ability to use your funds as needed in the wider cryptocurrency ecosystem.
4. Liquid Staking with mSOL.
Liquid staking with mSOL is like putting your SOL cryptocurrency to work through Marinade. Instead of just holding SOL, you stake it with Marinade to earn rewards. In return, you get mSOL tokens, which show your stake. You can keep these tokens or trade them for your staked SOL later. The value of mSOL goes up over time because you’re earning rewards. If you hold onto mSOL for a year, its value compared to SOL could increase by 7–8%, making it a good way to make some extra money without doing much.
Benefits of Staking SOL with Marinade
Using Marinade to stake your SOL grants you several advantages:
Full control over your tokens and associated accounts: Marinade is a non-custodial solution that never compromises your control over your assets.
Unlock your stake and receive a tokenized version: By receiving mSOL in exchange for staking SOL, you can use staking positions in DeFi without sacrificing rewards.
Open-source and permissionless delegation formula: Marinade’s protocol is transparent, with over 450 validators participating.
Stake and delayed unstake with no charge: Enjoy the freedom to stake and unstake without fees.
Native Solana community-driven governance: The Marinade ecosystem is strengthened by its community and contributor-centric approach to governance.
4. What is Marinde native.
Marinade Native is an alternative to liquid staking on Solana. It allows users to benefit from an automated delegation strategy without using any smart contract. This means that it is more decentralized and secure than liquid staking.
Marinade Native works by using the Solana program library to automate the delegation of SOL tokens to a group of trusted validators. Users do not need to create a Marinade account or deposit their SOL tokens into a smart contract. Instead, they can simply send their SOL tokens to a Marinade Native address, and the protocol will automatically delegate them to validators.
Marinade Native offers a number of advantages over liquid staking. First, it is more decentralized. This is because the tokens are not locked up in a smart contract, which makes them more difficult to hack. Second, it is more secure. The Solana program library is audited by a third-party security firm, which helps to ensure that the protocol is safe to use. Third, it is more efficient. Marinade Native does not require any gas fees, which can save users money.
How to use Marinade Native?
In order to use Marinade Native, click on “Stake” for your SOL and select the “Automated” and “Native” options, then confirm the transaction.
You can also redelegate existing stake accounts to Marinade Native by just selecting them in Marinade’s dApp, choosing “Native” and confirming the transaction.
In order to use Marinade Native, click on “Stake” for your SOL and select the “Automated” and “Native” options, then confirm the transaction.
You can also redelegate existing stake accounts to Marinade Native by just selecting them in Marinade’s dApp, choosing “Native” and confirming the transaction.
5 . why directed stake is beneficial:
Increased control: Directed stake gives you more control over where your stake is delegated. This means that you can choose to delegate your stake to validators that you believe are most trustworthy and reliable.
Increased rewards: Some validators offer higher commission rates in exchange for directed stake. This means that you can earn more rewards by directing your stake to these validators.
Reduced risk of slashing: Slashing is a penalty that can be imposed on validators who misbehave. By directing your stake to validators with a good track record, you can reduce the risk of your stake being slashed.
Supporting decentralization: Directed stake can help to decentralize the Solana network by allowing users to delegate their stake to a wider range of validators. This is important because a decentralized network is more secure and resistant to attack.
Supporting innovation: Directed stake can help to support innovation in the Solana ecosystem by giving
6. Explanation of DAO governance on Realms
The DAO governance on Realms for Marinade Finance is a way for the community to collectively manage the protocol. The DAO treasury holds all of the protocol’s assets, including SOL, USDC, and MNDE tokens. The community can vote on proposals to spend the treasury funds, such as funding new features, marketing campaigns, or liquidity incentives.
To participate in the DAO governance, you need to stake MNDE tokens. The amount of tokens you stake determines how much voting power you have. You can also delegate your voting power to another community member.
Proposals are submitted to the DAO by anyone in the community. The proposals are then voted on by the community members. The proposal with the most votes wins.
The DAO governance is a way for the community to ensure that Marinade Finance is managed in a fair and transparent way. It also gives the community a say in the future of the protocol.
Here are some of the things that the DAO can vote on:
i) Funding new features
ii) Marketing campaigns
iii) Liquidity incentives
iv) Changes to the protocol’s parameters
v) Hiring new team members
vi) Making donations to charity
The DAO governance is a powerful tool that can be used to make Marinade Finance a better protocol for everyone. If you are interested in participating in the DAO governance, you can learn more about it on the Realms website.
https://app.realms.today/dao/MNDE
7. Here are some ways that staking to a single validator may be risky:
i) The validator may be malicious. If the validator is malicious, they could try to double-sign blocks or engage in other fraudulent activities. This could lead to your stake being slashed, or even the entire network being compromised.
ii) The validator may be offline. If the validator is offline, they will not be able to validate blocks and you will not earn any rewards. In some cases, your stake may also be slashed if the validator is offline for an extended period of time.
iii) The validator may be hacked. If the validator is hacked, your stake could be stolen. This is a more remote risk, but it is still possible.
The validator may go out of business. If the validator goes out of business, you may lose your stake.
iv) The validator may not be honest. Even if the validator is not malicious, they may still make mistakes that could lead to your stake being slashed. For example, they may accidentally sign two blocks at the same time, or they may go offline for an extended period of time.
v) The validator may not be liquid. If the validator does not have enough liquid funds, they may not be able to pay out rewards or cover slashing penalties. This could leave you at risk of losing your stake.
vi) The validator may be subject to regulatory risk. The regulatory environment for staking is still evolving, and there is a risk that validators could be subject to new regulations that could impact their ability to operate. This could also impact your ability to get your stake back.
8. What sets Marinade’s stake delegation strategy apart?
Performance-based delegation: Marinade’s stake delegation strategy is based on a performance score that is calculated for each validator. The score takes into account factors such as uptime, commission rate, and slashing history. This ensures that stake is delegated to validators that are performing well and contributing to the security of the network.
Decentralization: Marinade’s stake delegation strategy is designed to decentralize the Solana network by spreading stake across a wide range of validators. This helps to make the network more secure and resistant to attack.
Transparency: Marinade’s stake delegation strategy is fully transparent. The performance scores for all validators are publicly available, and users can see how their stake is being delegated. This helps to build trust and confidence in the Marinade protocol.
Community control: The Marinade DAO has control over the stake delegation strategy. This means that users can vote on changes to the strategy, ensuring that it remains aligned with the needs of the community.
Liquidity: Marinade Finance allows users to withdraw their staked SOL at any time without any penalties. This makes it a very liquid staking solution.
Security: Marinade Finance is a non-custodial protocol, which means that users retain full control of their SOL tokens. This makes it a very secure staking solution.
9. Marinade’s commitment to open-source and transparent building and governance.
Marinade Finance is committed to open-source and transparent building and governance. This means that the code for the Marinade protocol is open for anyone to inspect and modify, and the decisions about the protocol are made by the community through a DAO (Decentralized Autonomous Organization).
Here are some of the ways that Marinade Finance demonstrates its commitment to open-source and transparent building and governance:
i) The code for the Marinade protocol is open-source and available on GitHub.
ii)The Marinade DAO is governed by a set of community-owned tokens called MNDE.
iii) All decisions about the Marinade protocol are made by the community through voting on the Marinade DAO.
iv)The Marinade team publishes regular reports on the protocol’s performance and finances.
v) The Marinade team is committed to responding to feedback from the community.
vi) Marinade Finance’s commitment to open-source and transparent building and governance is a key part of its mission to be a trustworthy and reliable liquid staking protocol. By making the code and decision-making process transparent, Marinade Finance is building trust with the community and ensuring that the protocol is governed in the best interests of all stakeholders.
10.The liquid staking landscape
Marinade may have been first to market for liquid staking on Solana, and impressed with its governance structure and sizeable average APYs, but there are a few other projects out there aiming to make up ground:
i) Lido: With around $6B in its ETH liquid staking protocol (stETH), Lido is well known in the Ethereum community. Their liquid protocol for Solana trades as stSOL and also claims a steady average return.
ii) Parrot: Parrot is best known for their stablecoin service, PAI, but also provides a liquid staking service for Solana that trades under prtSOL.
iii) Socean: Socean has a suite of services native to Solana, and managed to raise around $5.75M in seed funding with some notable VCs taking interest. Their staking solution, Socean Stake, trades under SOCEAN.
iv) JPool: JPool is one of the newest services to come to market, and secured funding from Alemeda Research and Solar Eco Fund.
