Introducing leveraged mSOL staking with Super Stake SOL
Building and growing with the Solana DeFi community has been the focal point of 2023 at Marinade. The Open Doors Program launched in February with the goal of incentivizing teams across Solana to build on top of mSOL.
With only 2% of staked SOL being liquid right now, its growth can be a key driver in enabling more censorship resistance and liquidity across Solana DeFi.
There have been numerous new concepts added so far and Marinade has seen its stake pool grow significantly to over 6.25 million SOL. Protocols and validators via Directed Stake continue building on mSOL.
Following the successful integration of mSOL trading on Drift in May, Marinade is pleased to share the latest mSOL integration with the Drift team, which is something the community has been calling for a long time:
Leveraged Staking vault with Super Stake SOL
Built by the Drift team using its lend-borrow platform and the mSOL SDK, Super Stake SOL automates the process of “restaking” or “leverage staking” your SOL stake. This has been a popular strategy for any liquid staking tokens, but has been typically done so manually by users on various lend-borrow protocols across DeFi. Check it out at SuperStakeSOL.com.
What is Super Stake SOL?
The mSOL Super Stake vault is a leveraged staking vault that performs recursive borrow/lending of mSOL and SOL via Drift to amplify mSOL staking rewards.
Users can deposit mSOL to receive up to 15% staking rewards yield compared to the base staking APY of ~6.5%.
When a user deposits mSOL into the Super Vault:
- The vault deposits mSOL into Drift protocol’s borrow-lend program
- The program will automatically use the deposited mSOL to borrow SOl against mSOl up to the users’ intended leverage ratio on Drift.
- The program then takes the borrowed SOL, converts it to mSOL, and resupplies it into Drift.
Users can then withdraw their mSOL from the Super Stake vault at any time with no extra fees.
MNDE promotional period with Super Stake SOL
As a brand new use case for mSOL, Marinade is co-sponsoring with Drift an initiative to award up to 100,000 MNDE to initial depositors to Super Stake SOL over a two-week period. 75,000 MNDE has been made available to those wallets who deposit in Super Stake, and if over 100,000 mSOL is deposited during these two weeks, a bonus of 25,000 MNDE will be supplied and distributed.
Risks of using Super Stake SOL
There is no such thing as “risk-free leverage” strategies so here are some risks to think about before you deploy any mSOL into Super Stake SOL, or execute your own leveraged staking strategy on any other lend-borrow platforms:
A central risk aside from the Drift and Marinade smart contracts, respectively, is depegging risk via oracle price fees. For example, if mSOL price were to fall by 20% vs. SOL, or if SOL trades at a premium of 18.5%, liquidators can begin to take over your mSOL position and partially close out the SOL borrow positions.
Given mSOL’s leading market liquidity among Solana liquid staking tokens, this would be a rare event. Keep in mind that during the FTX crash in November, market price of mSOL dropped to about .91 SOL at its low based on historical swap data from Flipside. Chain congestion or stoppages can also affect oracle price accuracy.
Liquidation Risk: Leveraged staking in Super Stake SOL involves a risk of liquidation when a user’s margin ratio becomes a stability risk to the platform. If the value of the staked mSOL falls below the user’s maintenance margin fraction, it can lead to a liquidation event where a portion or all of the user’s collateral may be sold off.
The liquidation ratio (price of mSOL/SOL) is outlined in the Super Stake SOL UI.
Curious how leveraged staking yields work? CryptoNotte of Vyper protocol shared a spreadsheet that lets anyone run some numbers:
You can also see a thread and discussion of the risks of leveraged staking mSOL on Twitter:
You can of course use mSOL in DeFi in a variety of ways (or simply not at all and hodl mSOL for simple staking yield). Check out The DeFi Cookbook or visit the #mSOL-Strategies channel in Marinade’s Discord. For further questions about Super Stake SOL, you can touch base with the Drift team or view the documentation.
