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MarginFi — Uniting Defi Protocols

There is certainly no shortage of Defi protocols being developed in Web3. On this Twitter Space, Project Serum talks with the MarginFi team about their plans to unite these protocols, decrease fragmentation, and present Web3 traders with a more seamless and cohesive experience.

For the people that may not yet be familiar with MarginFi, tell us a little bit about what you guys are working on.

The one-liner is: we’re building decentralized portfolio margining on Solana. What that means is MarginFi provides a way to link all of the other Defi protocols on Solana, since we know everyone isn’t trading/investing on one single protocol.

So, instead of opening up several accounts on platforms like Drift, Mango Markets, etc., users can take leverage out at the MarginFi level which is then flowed through all of the other protocols. This allows you to be much more capitally efficient and makes the whole process run much more smoothly.

How does margining work right on Defi and what is MarginFi looking to change and improve about that process?

Whether it’s Defi or TradFi, margining continues to be margining. Put simply, trading on margin is an interaction with leverage that traders use to get more efficiency out of their capital. It’s kind of a form of risk management at the Defi level.

The basic process of margining, in Defi or TradFi, continues to work the same way. I think the big thing that we realized coming into 2021 is that Defi is currently very isolated — at the position level and the protocol level. Effectively, if you’re constraining traders to one particular protocol, you’re kind of limiting the capital efficiency they can realize in the Defi market.

What we’re looking to improve is offering a solution that allows traders to take advantage of margin across platforms and across protocols, and allow them to take advantage of the capital efficiency that comes with it.

How does MarginFi integrate with Serum right now?

The short way to put it is MarginFi wouldn’t exist without Serum. It really could be argued that Serum was at the forefront of this whole composability wave.

The early versions of MarginFi aren’t directly integrating with Serum, but we’re definitely built on top of Serum. Really, MarginFi and Serum are great examples of the full extent of composability. It’s not just the direct integrations that matter. It’s more about an entire financial stack of defi protocols becoming more cohesive and becoming interoperable.

How do you guys feel about partnering with Serum moving toward the DevNet launch?

What’s really highlighted here is how much Serum has inspired, and how much has been built on top of it. If MarginFi wasn’t doing this with the Serum ecosystem, we probably wouldn’t be doing it all.

If we really want to provide a unified trading structure that allows traders to trade across relevant trading protocols, it’s mandatory for us to place a high priority on Serum’s ecosystem. It’s really been a driver of new markets that have never really existed before. And we’re already starting to see some of the more traditional markets take shape. But, we’re really excited to see some of the more imaginative ones that can be created in the future.

You guys had mentioned before that you were interested in improving the developer experience on Solana. I’d love to hear more about what your thoughts are on how to do that.

I mean, what developer experience, right? That’s the shortest way for me to put it. But, this is what happens in a really nascent ecosystem. If you compare building in Web3 to what building in Web2 is like, you see a lot of tooling, testing, infrastructure, observability, etc. It’s still early and there’s a lot to be built.

There’s been massive progress in the Solana ecosystem over the last few years. And, I think Solana is in this position where things are really just about to take off. Anchor, which is kind of like the gold standard for building on Solana, has created a massive revolutionary shift in the developer experience on-chain.

We do see a massive opportunity to push forward on a similar front. Today, we’re thinking a lot about testing. The default way to test program-side code is to just ship it to DevNet, right? There’s really not a robust containerized, reproducible way to test code that you’ve written. Which has become the default in Web2.

There are three pieces here that we really think about when it comes to how much effort to put into this. One is, obviously, we want to solve our own engineering team problems. We want to be able to build robust code and we want to make sure we have the development tools necessary to do so.

The second piece is we want to make sure we stay focused. We don’t want to blindsided by a subtle onset of “shiny object syndrome.” So, we really try to stay on top of, “how much time is really worth putting into this?”

The third piece that we’re really excited about is just being able to contribute to the efforts — on all fronts. We’re big fans of open-source and community efforts, and our hope is to build something valuable for other developers. Something that makes it easier for folks to build, build better, and coordinate across multiple growing software engineering teams.

Bringing Margins to the Masses

That’s a wrap on another week of the Project Serum Twitter Space interviews. What an insightful look into all the amazing things happening on Serum and in the digital economy as a whole. Thanks to brilliant people in the space like the MarginFi team, we’re seeing a new economy spawn right in front of our eyes.

For more on what the MarginFi team is doing with Serum, check out the full YouTube video.

Check out MarginFi here:




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