MARINADE: Meet the Liquid Staking Token(LST)Provider that is leaving the competition in the dust.
Who and what is Marinade?
Marinade provides a unique solution to Liquid Staking Token in the DeFi ecosystem.
It is a Decentralized Autonomous Organization responsible for making Solana’s ecosystem censorship-proof and compatible with the Liquid Staking Token(LST) drive.
It is also one of the top-most Solana protocols that avail the support of direct-to-validator staking of SOL tokens with the use of mSOL, an in-house Liquid Staking Token (LST).
Marinade helps delegate staked SOL through its innovative delegation strategy to several validators to help enhance and support the complete decentralization of the ecosystem.
The community and users can stake SOL known as mSOL to add to the growth of yields and earnings, the user can also swap at any time of convenience back to SOL and any other token with ease and flexibility.
Marinade Finance helps make SOL token holders earn passive income through liquidity staking and also having access to mSOL token which is also tradeable in the DeFi ecosystem.
Marinade Finance also helps participants whose stake build upon the value of maintaining the decentralization of the Solana Blockchain.
The Marinade Finance also has a(MNDE) token, which holders can use the power to vote on ideas and proposals to create, modify, and update any parameter on the platform.
Marinade’s Humble Beginning and How it was funded
Marinade was founded in March 2021, during the Solana x Serum Hackathon where the team was able to come up with a working prototype for a liquid staking solution of SOL tokens. Marinade is bootstrapped, i.e. With little or no capital from an external source, or Venture Capital(V.C) hence its only fruition came from grants from the Solana and Serum Hackathon.
It deployed its Main-net at Marinade. Finance in August 2021 after three successful security audits and by January 2022, achieved the enviable height of being number one for Total Value Locked(TVL) on the Solana Chain of over $1 billion USD.
It became a fully functional onChain DAO in 2022, using its MNDE token for governance and voting rights and privileges.
Governance
At its initial infancy and bootstrapping stage, Marinade was fully community focused and driven, but with enviable growth and strides. The governing control is spread in the hands of MNDE token holders through the voting systems and mSOL of the community
Provision of value and democratizing financial responsibility
Marinde.Finance use of open source technology and tools helps in setting the pace and trend for the openness of their democratic approach to finance and also their ledger involves the use of distributed ledger technology(DLT).
And what makes DLT amazing? It is a blockchain infrastructure technology that aids the simultaneous access and validation of records and updates within a database that is fully networked.
Advantages help users have access to changes and update in real-time giving the system much-needed accountability, trustworthiness, and security compliance.
LIQUID STAKING INNER WORKING.
In liquid staking, token holders stake their tokens and receive a receipt token, called a liquid staking token (LST), to evidence ownership of their staked token. The LSTs can be transferred, stored, traded, and utilized in DeFi.
Liquid staking involves the locking up of a token by a user and in the process the funds are used in the advancement of the security and growth of the governance of the stake blockchain.
In liquid staking, the token purchased is used as a transferable asset which is used to generate Liquid Staking Token(LST) which acts as a receipt, which can be used for governance and voting rights, and rewards can be accrued to the issued token can then be stored, traded and transferred to yield other profitable venture.
Liquid staking provides users and investors earn passive income while also giving access to liquidity. Tokenized assets like mSOL from Marinde.Finance act as a claim to stakes of SOL token.
Diversity and flexibility across validators serve as ‘slashing insurance’ as a hedge against poor acting validator performance, Helping users to delegate stakes to multiple validators at the same time to eliminate drawdowns.
Liquid staking involves the locking up of a token by a user and in the process the funds are used in the advancement of the security and growth of the governance of the stake blockchain.
In liquid staking, the token purchased is used as a transferable asset which is used to generate Liquid Staking Token(LST) which acts as a receipt, which can be used for governance and voting rights, and rewards can be accrued to the issued token can then be stored, traded and transferred to yield other profitable venture.
MEET MARINADE NATIVE (WHAT EXACTLY IS Marinade Native?)
Marinade Native is an innovative service coined to tackle the difficulties of smart contract risk while undergoing the swapping of SOL to mSOL with the added benefit of maintaining the 7% expected yield.
Users retain the holding of their SOL which makes it better than the norm, which was the receiving an amount to the yield’s deposit recorded even, if the stipulated 7% is achieved.
Marinade Native opens the SOL ecosystem to investors and has a dynamic and promising risk management system and strategies leading to about 70 percent of SOL being natively staked.
The smart delegation strategy prevents the users from losing custody of their funds through the system’s design of attaching trusted and worthy validators with the SOL staked.
The APY of Marinade Native is usually benchmarked at a promising 7 percent rate with no real or hidden charges and they also have zero management fee.
The Marinade Native is built as a first-ever native staking service by Marinade. Finance team. Its robust and firm principle on staking SOL directly with a network of validators, which is 130 strong and growing in leaps.
Its efficiency is built on the fact that it has no smart contract risk.
Marinade is delivering a unique proposition to handle the gap noticed in the previous unattractive nature of staking and worries that arose for institutional investors about the risk in the smart contract and the concentration of waiting and relying on one validator before transactions are done.
An important quote from Cerba, a core contributor to Marinade Finance helps highlight the stride achieved by Marinade.
“The launch of Marinade Native marks a key milestone in the Marinade 2.0 rollout, which we are excited to deliver. Marinade remains an advocate of liquid staking, which offers a host of other benefits to users as well as the Solana ecosystem as a whole. However, we recognize that many institutional investors are balancing important risk considerations with returns, and for the first time they can now benefit from a stake delegation strategy with no smart contract exposure”
“Our current community of mSOL and MNDE holders will also benefit. Because 20% of the Marinade stake pool is determined by MNDE token voting, the expansion that Marinade Native will bring will ensure the MNDE token is increasingly appealing to validators. As a bootstrapped, community-first project launched with zero VC funding in 2020, it is important that our community remains involved in all governance and benefits as the protocol grows.”
The combination of the delegation strategy concept of liquid staking with the non-custodial benefits of native staking was a solution that made Marinade’s Native approach unique, as users will never give up custody of their staked SOL. Of note is the APY averaging 7% with no management fee attached.
Moreover, Marinade’s smart delegation strategy, which uses a novel scoring system to select the top 100 validators based not only on yield but performance and decentralization, ensures users’ SOL is spread across a tested pool of validators. This formula determines which validators receive 60% of Marinade’s stake based on performance, while MNDE and mSOL for voting and Direct Stake has 20% each.
WHAT IS MARINADE NATIVE?
Marinade Native is an innovative service solution that tackles the difficulties of smart contract risk while undergoing the swapping of SOL to mSOL with the added benefit of maintaining the APY of 7% expected yield.
Users retain the holding of their SOL making it better than the older solution of receiving whatever is amounted to the yield’s deposit even if the stipulated 7% isn’t achieved.
Marinade Native opens SOL staking to institutional investors with its robust risk management strategies.
Until now, those wishing to stake SOL natively with multiple network validators required multiple transactions, and also constant performance monitoring. Liquid staking enables staking through pools to multiple validators, however, it carries smart contract risk through an on-chain program.
This has made staking unattractive to many institutional investors who could not tolerate either the smart contract risk of liquid staking or the high concentration risk of relying on the performance of one validator.
Marinde.Finance in simple explanation, is a staking protocol that is built as the best system to stake your SOL. They have the MNDE token and the mSOL tokens, Stakers stake their tokens natively or in liquid within a pool of hundreds of validators.
The ability to use a smart contract interaction has been eliminated because of the inherence of smart contract risk involved. Liquid stake gives holders the mSOL(marinated SOL) token while the Marinade native(MNDE) holders are under the innovative delegation strategy by Marinade. Finance.
What makes Marinade Native special?
- As a fully non-custodial solution, you conserve ownership of your SOL tokens at all times.
- With the apparent nature of no smart contract risk, this solution eliminates the use of any smart contract.
- It also automatically manages and also rebalanced staking positions with no accrued management fee.
- It runs on open-source technology and has a permission-less delegation formula for validators.
- It also has the options of stake and delayed unstake with no charge, an improvement from the previous rollout.
- It is essentially a native-based Solana community and focused on governance-based growth.
What are the uses of Marinade?
- You can stake SOL (and unstake at any time) or you can also become a liquidity provider to the SOL-mSOL pool.
- It helps in the exploration of additional DeFi yields in multiple protocols enhancing its staking advantages.
What are the benefits of “Directed Stake”?
What is Directed Stake?
In simple terms, Directed Stake means staking your SOL to a single validator rather than the use of the delegation strategy algorithm, and in turn, you still receive mSOL. You can support a validator without losing your liquidity.
What is the importance of Directed Stake?
The Solana ecosystem is growing but still in need of more liquidity, While approximately 70% of SOL is staked, therein only 2 and 1/2 percent of it, is liquid. The presence of validators being able to create their liquid staking tokens could lead to the brittle nature of the market. The continuous encouragement of growth, adoption, and the presence of more liquidity in the market can never be fully exhausted.
Inner Working of Directed Stake
Directed Stake is where 20 percent of the Marinade stake goes.
Invariably the amount of SOL used to vote would be directly proportional to the amount of SOL directed during its epoch time.
Usually, your SOL remains staked to the validator of your choice, even with the use of other Decentralized Finance(DeFi) protocols, as long as you are using the delegation strategy for your mSOL, the SOL in your custody will usually be directed to the validator and help-tracked, using the enterprising Marinade’s Solana snapshot tool.
It should be noted that only one wallet per validator is supported for Directed Stake. The process of supporting more than one validator would mean the use of more than one wallet.
Explanation of DAO governance on Realms
What is a DAO?
Decentralized Autonomous Organizations (DAO) are communities and organizations that run blockchain protocols. They exhibit shared interest in a project, making transparent and usually decentralized decisions on the path and way forward for the project.
As an autonomous organization, they have a process of making proposals and ideas and democratizing the use of voting rights to shutdown or advance projects, these are all judiciously done for the growth of the community.
DAO was first initiated and proposed by the founders of BitShares, Steemit, and EOS(Block. one). The complete implementation of the governance and its enactment until its theory was refined and mainstreamed by Vitalik Buterin, Ethereum co-founder.
DAOs are Autonomous communities and entities with decentralization at their core, setting agendas, and making proposals and rules for the overall growth and goal of the DAO.
Control of these DAOs is usually by voting rights and holding or buying stakes in the DAO.
They are usually expected to be transparent in their dealings, open and democratic. They are flat in structure i.e. have no hierarchy of leaders and servants or any top-to-bottom approach, what exists is a multitude of considerable distributed control structures.
Meet Marinade DAO
Marinade DAO is an open community of enthusiastic individuals, developers, contributors, and validators, where holders of the Marinde.Finance token holders can vote on proposals and contributory growth and developmental ideas for the enhancement of the platform.
DAO governance through MNDE
Marinade is a DAO with a governance token, MNDE, which can be locked into the Realms governance platform to enable governance access to the token holder. To unlock the tokens, a 30-day unlocking process must be initiated in Realms.
DAO vs. Realm
A first instance the word ‘Realm’ could be understood to be a kingdom or custody, a place or abode of entities.
In context, a Realm here would mean a Territory or structure for governance.
Technically, Realm is a configuration and setup for creating a DAO or responsible for the enablement of a DAO.
Realm is responsible for handling the specificity of what a DAO would need and be using, it acts like a governance system for handling the voting process, governance process, proposals and idea-making, and stages and advancement of concepts in the DAO.
It is a front end for SPL Governance for builders to be able to create their DAOs and facilitate the management of their communities and operational structure.
What are some ways that staking to a single validator may be risky?
The risk associated with staking to a single validator involves
- The over-dependence on the validator may be the source of vote lagging or slow voting.
- They could also be responsible for commission rugging.
- Non-restart of the node approximately every 36 hours, due to the cluster restart that may arise from not having the updated version.
Hence the reason for a cap of 10% of the total votes is to manage any risk attached to a delegation of lots of stakes to a single validator. Also, an overflow of MNDE votes for eligible validators is usually split with other eligible validators which is directly proportional to the votes received by the validator.
What sets Marinade’s stake delegation strategy apart?
Marinde helps to integrate your liquidity staking token in the Solana ecosystem with the ticker mSOL, by helping you earn rewards without your funds being locked.
In the old model of liquid staking, tokens were locked i.e. accessibility to your funds for a certain/specific period, and in the process after the duration of the period your rewards are made available to you.
The innovative scheme by Marinde LSTs is as follows:
- The amount of Sol to Stake or Deposit with the Marinde LST protocol- receive reward through mSOL:
- Receive liquid mSOL in return which automatically increases in value with staking rewards.
- Use your liquid mSOL in DeFi or swap back to SOL at any time.
The strategy uses a scoring method of selecting the 100 topmost validators based on their long-standing performance and decentralization and is not commonly attached to only yields which was the norm for selecting validators.
It seems the Marinade team designed a long studious system for the delegation strategy.
The users and holders of SOL are made to cover only the tested pool of validators with the formula where validators get 60 percent of Marinade’s stake, and the MNDE and mSOL tokens account for 20 percent each.
Marinade’s smart delegation strategy ensures SOL is staked with trusted validators without users losing custody.
Stakers can also utilize Marinade Native, which enables non-custodial staking using Marinade’s delegation strategy
As of May 16th, 2022 updates were made to include partial unstaking, this was an improvement from the unavailability to unstake SOL without the performance of an emergency unstake. Hence improving from overstaking any validator and leading to better handling of stakes.
Did you try the competition and explain the relative pros/cons of this project?
As of this write-up, various protocols are in the LST space, providing different types of solutions to the market.
But from the Tabular diagram above, it is evident that Marinade Finance is making a breakthrough with its innovative solutions.
APY Rewards: Marinade seems to be lacking in this department from the 7.016% compared to Lido’s 7.114% or Socean’s 7.916%, and this is for a reason which would be highlighted in the later categories.
Active Stake: Earlier was highlighted that Marinade was behind in its APY Rewards as compared to its competition, but the Active Stake highlights Marinade’s complete dominance in the field by comparing its Active Stake of over 6.4 million to the next competitor of 2.6 million, it shows that a lead of over 3.8 million Active Stake and this can be attributed to its attractive solution.
Validator Stake: Another category that shows Marinade’s leader is the number of Validators in its domain. The complete dominance of 182 validators to over 20 validators for the next competitor, if Marinade was not doing a tremendous job in its field, it wouldn’t be able to attract that many validators to its staple. Complete domination of over 9x to its next competitor.
Marinade’s commitment to open-source and transparent building and governance.
Marinade’s strides in open source are distinctively unshaken and evidence can be traced to its inherence existence from birth in the Solana x Serum Hackathon March 2021 as a bootstrap project that has grown to be an industrious leading solution in the LST territory.
Also of note is its use of Distributed Ledger Technology(DLT) in the democratization of finance with the use of the technology in its ledger.
Since blockchain involves the use of decentralization of finance, Marinade has embraced the use of openness in its use of these open-source technologies.
SUMMARY
Marinade is a trailblazing LST solution providing protocol and a leading DAO in the Solana Ecosystem and provides a unique delegation strategy solution in the staking market and has control over the innovative approach to the market.
Have you given your SOL an uplift with Marinade’s innovative solution?
REFERENCE:
https://medium.com/marinade-finance/introducing-marinade-native-fdb641d98e64
https://academy.moralis.io/blog/could-crypto-be-an-exit-plan-towards-financial-freedom
https://medium.com/marinade-finance/solana-validator-series-cogent-crypto-2f820b0a0c66
https://crypto.com/university/what-is-a-dao-decentralised-autonomous-organisation
https://nextrope.com/dao-governance-models-and-use-cases/
https://defillama.com/chain/Solana
https://www.coindesk.com/layer2/2022/02/03/the-five-big-risk-vectors-of-defi/
https://www.coindesk.com/tech/2023/07/19/solanas-largest-protocol-marinade-bets-growth-on-native-sol-staking-product/https://docs.realms.today/DAO-Management/What-is-a-DAO
