A glimpse towards the end of 2022…
Time flies way too fast in crypto. So making long-term projections or a multi-year roadmap doesn’t work.
But it’s the uncertainty of tomorrow — market conditions, security risks, leadership stability — that leads many to watch things play out rather than jump in for themselves.
Marinade has avoided making firm longer-term commitments in the interests of maintaining a degree of flexibility on the uncertain path forward. But since its inception in 2021, it has been formed around four core principles:
- Decentralization
- Independence
- Interoperability
- Adoption
While these principles still hold true, and Marinade has been playing an integral part in the Solana ecosystem from Day 1, we can all benefit from an action plan on how to tackle these goals.
And that’s why, as we kick off the year, we’d like to predict what Marinade looks like by year’s end.
Ready?
Fast-forward to December 31, 2022. Marinade looks back at the year passed and has made significant progress on its two main goals:
- Decentralize Solana
- Decentralize Marinade
Here is how Marinade plans to define and achieve success in both:
In Decentralization we Trust
Solana underwent key network updates in 2022 that led to the reduction of operating costs to run a Solana validator from 30 SOL to 3 SOL per month. On January 1st 2022, a validator charging a 10% fee needed 50,000 SOL staked in order to break even. But following upgrades in 2022, it will now take just 5,000 SOL staked for a validator to become profitable under a 10% fee structure. This decreased the financial barrier to entry for new validators and helped to facilitate an increasingly geographically dispersed and decentralized validator set.
These new validators will align with Marinade’s delegation strategy that awards stake to the “long tail.” That tail, in fact, has never been longer! This leads to achieving Marinade’s lofty staking goal:
So what does 30M SOL staked in Marinade mean for Solana?
At this level, because of its open and permissionless delegation strategy, Marinade can now support, bootstrap and incentivize the growth of up to 6,000 validators in the Solana network, a 300% increase on the roughly 1,500 validators active at the start of 2022. Such an increase in validators has pushed the Nakamoto coefficient, or the number of top validators controlling a third of all SOL staked, from 19 to 40, meaning it now takes at least 40 validators to be able to collectively halt the network. This is huge progress for decentralization!
Marinade makes Solana secure, robust, and censorship-resistant.
It’s unclear what the market cap of SOL is at year’s end, but these gains — 2.5x the security group and 4x the number of total validators — led to a hugely positive impact on the value of the Solana network throughout 2022.
How will Marinade grow to 30M SOL TVL?
Marinade has grown from 6 million SOL TVL on Jan 1 to 30 million SOL by the end of 2022. How did that happen? Via a multi-faceted approach focused on utility, frictionless entry and community cooperation:
- mSOL utility. mSOL became the norm for staked SOL tokens. Because of mSOL’s power to unlock staked liquidity while simultaneously decentralizing the network, there is now more mSOL deployed across all Solana DeFi protocols than SOL itself. Every major protocol, wallet, exchange, market-maker, VC, has adopted mSOL as the ultimate unit of account in the Solana ecosystem. NFTs are denominated in mSOL, users purchase in Solana through mSOL, projects fundraise in mSOL. Even Solana transaction costs are wrapped to be paid in mSOL. All these use cases are realized leading Solana to become the most capital-efficient, secure, and censorship-resistant network.
- Stake acquisition. Not only you can use your mSOL instead of SOL, but there are also numerous places where you can turn your SOL into mSOL without even visiting Marinade. And we’re not talking about AMM swaps here, since that does the switch, but the SOL ends up unstaked. We’re talking here about scores of protocols following Solflare, Step, or Sonar, to integrate Marinade’s staking right into their UI. Traffic on the Marinade app itself is low because everybody stakes SOL to get mSOL by using the native liquid staking feature while on their favorite protocol.
- Collective ownership. If you care about Solana, you should care about Marinade was the mantra of Marinade in the beginning. After all, the community behind Marinade played a big part in advancing Solana. But by year’s end, that mantra has evolved: If you own Solana, you should own Marinade. The Marinade DAO is now run by all the key Solana ecosystem players such as validators, exchanges, wallets, protocols, communities, traders, investors, Solana Labs, and others. And because Marinade is collectively owned and governed, the interests of Solana and Marinade are aligned. As long as Solana is around, Marinade will be there to back it up.
Let’s return to where we are today.
How does the story sound so far? Are you connecting the dots already?
Now you must be thinking:
Utility? Sure, that brought me to Marinade in the first place.
Acquisition strategy? Yeah, I know you guys started integrating Marinade staking through wallets and so on.
But collective ownership? Tell me more!
As you wish…
Decentralizing Marinade
Fast-forward to December 31, 2022 once again. You’re probably reflecting on the past year and so is Marinade — looking back at all the major events that finally connected the MNDE token with Marinade’s project.
How did it all start?
The start of the DAO
Sometime in the first quarter of 2022 Marinade migrated its operations from the team and ecosystem multisig hosted with the Serum Multisig to its own open and transparent DAO dashboard built on top of Tribeca DAO.
From that moment on, it became super easy to keep track of capital flows coming in and out of the treasury, and for what purposes the expenses were made. The Marinade treasury consists of ongoing protocol fees and MNDE reserve yet to be distributed. The whole DAO setup delivered not only general transparency over the treasury movements but even empowered MNDE holders with control over the funds within.
What does the governance system look like?
When Marinade governance was introduced, it was probably like nothing you’ve ever seen before.
First, you enable governance by locking in MNDE.
In exchange, you receive voting power, ownership over the protocol fees…
…and this exclusive NFT that represents all of that with your locked MNDE position. As you might have noticed on PFPs around Discord and Twitter, it seems like everybody’s now part of Marinade governance.
If you’re familiar with the veCRV model, the MNDE mechanics are similar with a few caveats:
- Your proof is not a fungible token, but rather a unique NFT representing your locked MNDE
- you can hold one or more locked MNDE positions and the total voting power is a sum of all the positions
- the vote power does not fade out in time, the time to withdraw locked MNDE always stays the same
- you unlock and receive your MNDE by burning the NFT and waiting for the cooldown period to pass, or by selling the NFT on secondary markets
- the NFT showcases your values on social platforms.
A diversified treasury
Marinade has always cared about its TVL growth as the North Star metric, but another key ingredient in its success is TVL defensibility. In other words, to make sure the TVL is not only growing, but also very sticky at the same time.
That’s why besides making mSOL the integral part of the ecosystem, Marinade’s treasury has grown to about 1 million mSOL by the end of 2022 — a productive asset benefiting all MNDE holders.
These funds ended up in the treasury as a result of an ongoing diversification strategy by the DAO, and to allow all the key ecosystem players to come in and begin participating in governance. By turning whitelisted assets into locked MNDE, you get partial ownership of the whole Marinade’s treasury and respective voting power.
Now, each MNDE token is backed with a treasury filled with mSOL, SOL and USDC. Most of it used to provide liquidity and earn fees in DeFi.
Because of this, MNDE holders now profit from:
- ongoing staking fees
- unstake fees generated through their own liquidity pool
- partnership fees through funding other protocols building on top of mSOL
- fees generated by liquidity providing using the treasury LP tokens
MNDE utility in a nutshell
MNDE holders have control over four ultimate levers:
- Protocol fees and treasury. Part ownership of Marinade’s SOL monthly protocol fees and the MNDE treasury.
- Delegation strategy. Vote on how to delegate the SOL staked to Marinade.
- Ownership of MNDE liquidity mining allocation.
- Executive team. Elect members and grant a budget to the team you trust to have the best chance to push Marinade forward.
The MNDE treasury is used as the DAO sees fit (eg. grants, ecosystem security fundings, strategic partnerships, or community events). The protocol fees are used for MNDE buybacks and shared with the MNDE holders locked in the governance.
The validator delegation strategy is still mainly run by an open-source, permissionless formula. However, MNDE voting power can also affect delegation by awarding a pre-determined bonus stake to validators playing an active role in the Marinade DAO.
So by the end of 2022, Marinade’s executive team is officially installed as an operational body to the Marinade DAO. While the original team was appointed by the founders of Marinade, it is now elected by the DAO for a period of time. Once elected, the executive team will have the flexibility and ultimate freedom within the granted budget to achieve its goals and objectives. The DAO is represented by the executive team it elects to facilitate the advancement of a secured Solana and a prosperous Marinade.
And now, back to the present…
So that’s the Marinade grand plan in 2022. With the ultimate goal of ensuring the health and decentralization of the wider Solana network, and with an increasingly empowered DAO exhibiting a vigorous governance process, Marinade’s journey is just beginning. It’s not too late to join! Right now, becoming a Marinator only takes 20 MNDE tokens.
So now that the roadmap has been shared for 2022, hopefully the fogginess of the future has cleared up and it’s easy to see that Solana, after all, tastes better with Marinade.
How to buy the MNDE token
MNDE is available for trading on Solana’s Orca and Raydium DEXs. MNDE can also be farmed by providing liquidity of other tokens such as SOL and mSOL. To view a list of farming and LP options, visit the Marinade DeFi page.
About Marinade
Marinade.Finance is the first non-custodial liquid staking protocol built on Solana. Stake your SOL tokens with Marinade and receive mSOL (“marinated SOL”) tokens in return that can be used in decentralized finance (DeFi). mSOL is the most widely integrated collateralized version of SOL. The price of mSOL goes up relative to SOL each epoch, with rewards being accrued into your stake account.
Marinade’s delegation strategy stakes to 400+ validators that are selected automatically by an open-source, fair formula based on performance, commission, and decentralization.
Marinade includes mSOL->SOL swap, so you can “Unstake Now” and receive your SOL immediately for a small fee. You can also directly exchange between mSOL and SOL on secondary markets at the current rate. Finally, you can unstake your SOL with zero fee by waiting 2–3 days for the Solana cool-down period (Delayed Unstake).
