Marinade Finance is a liquid staking protocol operating on the Solana blockchain. Users can stake the SOL token to earn compounding interest while helping to maintain decentralization throughout the Solana ecosystem. Also, by staking SOL tokens with Marinade Finance, users receive the liquid “Marinade staked SOL” (mSOL) token. The mSOL token can be used in secondary markets on various decentralized finance (DeFi) protocols to maximize yield. Plus, stakers can bypass the cooldown period and withdraw their funds immediately for a small fee. Furthermore, the native Marinade Finance token (MNDE) token is the governance token of the Marinade Finance ecosystem. Not only does the MNDE token grant governance rights to holders, but it also incentivizes early contributors and collaborators.
In this article, we’re going to dive deep into the Marinade Finance ecosystem. Also, we’ll explore liquid mining, the Marinade FInance token (MNDE), mSOL, and the Solana ecosystem. Plus, we’ll discuss the Marinade Finance decentralized autonomous organization (DAO), the Unstake Liquidity pool, and more!
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What is Marinade Finance?
Marinade Finance is a non-custodial liquid staking protocol that operates on the Solana blockchain. The platform enables users to stake their SOL tokens using predetermined staking strategies. In return, users receive “marinated staked SOL tokens” (mSOL) that can be used for maximizing yield using the Marinade decentralized finance (DeFi) features or in the broader Solana ecosystem.
Alternatively, users can swap staked SOL back for SOL at any time upon unstaking. Also, Marinade Finance boats zero lockup periods. Accordingly, users can access their assets at any time. Plus, the platform benefits from an extensive network of validators to maintain security and decentralization. Not only is this process flexible, but Marinade Finance also makes it as straightforward as possible. As such, the platform automatically monitors account balances and validator performance.
To participate in liquid staking with Marinade Finance, users select the amount of SOL they wish to stake. In return, users receive the liquid mSOL token, which increases in value over time with compounding staking rewards. Also, stakers can use mSOL tokens to participate in yield farming or secondary markets before redeeming their SOL tokens.
The Solana Blockchain
Established in 2017 by Solana Labs and overseen by Solana Foundation, the Solana blockchain is among the fastest in the industry. In recent months, a diverse range of Solana-native decentralized applications (dApps) have emerged, propelling the adoption of Solana by users and developers.
Furthermore, the Solana ecosystem is home to various innovative blockchain gaming platforms, social media applications, and decentralized finance (DeFi) protocols. Solana Foundation aims to create permissionless technologies for “public good”. Plus, the Solana blockchain can process over 60,000 transactions per second (TPS), which can be put to the test on the Solana website under the “Break Solana” page. Here, Solana encourages users to crash the network by processing as many transactions as possible. As yet, nobody has been successful.
As one of the fastest and cheapest blockchain networks in existence, Solana boasts next-generation scalability features. Accordingly, Solana is among the most popular smart contract-enabled blockchains around. This is evident in the price action of the native SOL token in recent months.
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Validator Delegation
Marinade Finance uses the same strategy as the Solana blockchain for ensuring stakers receive the highest performance from validators. To maximize decentralization, censorship resistance, and performance, Marinade Finance users delegate their stakes to nodes that are not in the same security group.
The criteria for validator selection uses a scoring mechanism, taking into account performance, commission, delinquency, and decentralization objectives. Plus, Marinade Finance can penalize the concentration of validators in the same data center to help maintain decentralization.
There is no whitelisting for this process. Furthermore, any validator that fulfills its duties and does not fall into the “halt group” can participate. This process aims to create a fair scoring system that clearly outlines which validators are the most performant and which are the most concentrated. Moreover, Marinade Finance achieves this using the same open-source calculation as the Solana blockchain. At the time of writing, Marinade Finance is staking SOL tokens with over 400 validators.
The Marinade Finance Token (MNDE)
The Marinade Finance token (MNDE) is the governance token of the Marinade Finance ecosystem. Holders of the MNDE token will be able to participate in protocol governance via the Marinade decentralized autonomous organization (DAO). Plus, the MNDE token incentivizes early adopters, contributors, and builders. A significant portion of the total supply of MNDE tokens is set aside for the Marinade treasury reserve to form a powerful community governance model. Furthermore, the MNDE token represents fractional ownership of Marinade DAO, which will update various parameters of the Marinade ecosystem.
Additionally, the Marinade Finance token will play an essential role in liquidity incentivization to accelerate the growth of the platform. Plus, the MNDE token will facilitate a reserve fund for strategic partnerships. Currently, there are many suggestions and proposals under consideration for bringing further utility to the MNDE token. This includes protocol-owned liquidity, treasury buybacks, and auctions for features on the Marinade Finance website. At the time of writing, the MNDE token is trading at around $0.31, with a market cap of $17.5 million, according to CoinGecko.
The Marinade Finance token (MNDE) distribution will see 35% of all tokens set aside for liquidity mining incentives and proposals. An additional 35% will go towards grants programs and strategic partnerships. Furthermore, the Marinade Finance team receives an allocation of 30%, which is subject to a two-year vesting period and a six-month lockup period.
mSOL
When users stake SOL through Marinade Finance, they receive mSOL tokens in return. These mSOL tokens represent a user’s staked SOL tokens and serve as a receipt for staking. As such, stakers can use mSOL tokens in secondary markets to maximize yield. Plus, mSOL is compatible with a range of decentralized finance (DeFi) protocols.
Furthermore, mSOL rewards are calculated automatically, so users don’t need to claim them. Currently, mSOL returns are at around 6.6% APY. This means that the price of mSOL would increase 6.6% against the value of staked SOL.
Marinade DAO
While on-chain governance tools are still under construction on Solana, the Marinade decentralized autonomous organization (DAO) already exists. Currently, the DAO resides off-chain in a community Discord server. However, Marinade DAO will soon be implemented to facilitate on-chain governance for the Marinade ecosystem.
Marinade DAO is open to anyone, although holders of the Marinade Finance token will receive rights to vote on proposals to make changes to the platform. Furthermore, Marinade DAO encourages community participation. Plus, the DAO incentivizes community members to contribute to the project with the opportunity of earning MNDE rewards.
Liquid Staking
Whereas traditional staking generally requires users to wait several days to unlock funds, liquid staking enables users to unlock their funds immediately. Many staking platforms feature a “cool down” period whereby users must wait to gain access to their funds. Naturally, this can prevent stakers from acting quickly when they want to rebalance their portfolios.
Liquid staking with Marinade Finance takes a more flexible approach. Users still retain full custody of their assets and earn compounding staking rewards. However, they are free to stake and unstake at any time. Not only does liquid staking provide additional revenue streams via yield farming, but it also means that stakers can act quickly and decisively when rebalancing a portfolio or reallocating assets into different DeFi protocols.
Furthermore, Marinade Finance enables users to withdraw funds immediately by paying a fee of 0.3% to 3%. Alternatively, users can use the “delayed unstake” feature to avoid paying fees. However, this function requires users to wait for 1-2 epochs before receiving staking rewards. Moreover, participating in Marinade Finance liquid mining helps to secure the Solana blockchain and maintain decentralization.
The aim of liquid staking is to enable investors to earn a passive income while still accessing the liquidity of their assets. Tokenized, on-chain representations of staked assets act as a claim on an underlying staking position. Accordingly, users don’t have to choose between staking or liquidity provision via an automated market maker (AMM), for example.
Additionally, Marinade Finance enables users to diversify across multiple validators to serve as a type of “slashing insurance” to hedge against poor validator performance. This means that users can delegate their stake to multiple validators at the same time.
Unstake Liquidity Pool
The Marinade Finance internal mSOL-SOL Unstake Liquidity pool is an “intentionally unbalanced” liquidity pool that enables users to benefit from zero impermanent loss. The Unstake Liquidity pool works at its best when all of the liquidity is made up of SOL tokens that come from liquidity providers. Furthermore, because liquidity providers can only deposit SOL into the pool, users are guaranteed by code to receive the same or higher SOL token value when unstaking as their initial deposit (minus a small transaction fee of around $0.00001).
The Unstake Liquidity pool incentivizes users to make unstaking frictionless by offering a “no-slippage source for mSOL liquidations”. Also, the pool uses a linear fee structure that gives 75% to liquidity providers, with 25% going to Marinade Finance treasury. Moreover, the swap fee decreases until “the target liquidity is reached to cover for operation costs and incentivize liquidity providers”. Currently, the maximum fee is 3%. The minimum fee is 0.3%, and the liquidity target is 100,000 SOL.
Values
Marinade Finance recognizes the need for “radical transparency” in the blockchain industry. Accordingly, the project aims to provide a “quick feedback loop” whereby developers and users contribute to the broader ecosystem of products and services. Furthermore, Marinade Finance aims to democratize distributed ledger technology (DLT) for social betterment and financial freedom via collaboration and open-source tooling.
Exploring Marinade Finance and the MNDE Token Summary
Marinade Finance makes it simple for SOL token holders to earn a passive income via liquid staking. Users gain access to liquid mSOL tokens, which can be traded openly in decentralized finance (DeFi) protocols. Also, by participating in liquid staking with Marinade Finance, users help maintain the Solana blockchain’s decentralization.
Additionally, users can maximize their earnings by providing liquidity to the internal Unstake Liquidity pool to expedite unstaking. Plus, Marinade Finance token (MNDE) holders can vote on proposals to make changes to the parameters of the platform. Moreover, Marinade Finance offers a flexible staking solution that makes earning a passive income with crypto straightforward.
The Marinade Finance project aims to make liquid staking and decentralized finance (DeFi) accessible to all while helping to promote collaboration and innovation. If you want to learn more about the specifics of DeFi, check out the DeFi 101 course at Moralis Academy. Here, we teach students how to interact with some of the most popular DeFi protocols around. This includes Uniswap, Aave, Synthetix, Compound, Curve, and MakerDAO. Plus, we show students how to install and use the number-one Web3 wallet, MetaMask.
Join our community of over 30,000 students and take your DeFi game to the next level with Moralis Academy! Also, don’t forget to follow us on Twitter @MoralisAcademy! We’d love to hear your thoughts about Marinade Finance and the Marinade Finance token!
