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What is Marinade Finance?

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marinade finance

Marinade Finance is a liquid staking protocol running on the Solana blockchain.

When it comes to storing assets, cryptocurrency staking has already solved key hurdles caused by the tight-grip rules and shady transactions of the traditional banking system. Through blockchain-powered staking, storing assets can now produce more rewards, and every transaction is finally transparent. 

The only hurdle is that while these funds are staked or locked, holders cannot use them on profit-making transactions such as trading and selling. Yes, they are allowed to unlock these assets before the staking period ends, but it comes with specific penalties. To counteract these downsides, “liquid staking” was introduced, allowing holders to access their funds and use them on decentralized finance (DeFi) applications, all while being locked. 

Background

Marinade Finance, which has an interesting “kitchen” concept, aims to bring onboard the brightest minds in the tech industry to “cook” the best and most decentralized financial offering for its community. Along with these goals, it intends to unlock true democratization in liquid staking, offer complete transparency for its users, and bring badly-needed services to the Solana blockchain. 

What is Marinade Finance? 

Marinade Finance is a liquid staking protocol running on the Solana blockchain. Interested participants can start using the platform by staking their SOL tokens using automated staking strategies, which will offer them “marinated” SOL or (mSOL) token, the network’s staking token. 

Users can withdraw/unstake their SOL tokens in two ways: By waiting for the unlocking period to end, which can take one to two epochs, or right away but with a minimal charge. They can also directly exchange between SOL and mSOL on secondary markets. 

When users deposit their tokens, Marinade automatically delegates these assets to its list of top-performing validators. Despite these delegations, participants shouldn’t worry as Marinade Finance still offers holders 100% control over their assets. 

When it comes to rewarding fees, it only charges a 2% fee, which, according to it, is the lowest rate in the market. This 2% fee is Marinade’s charge for letting investors use its advanced and secure staking service. A part of this fee goes to the platform partners who help bring total value locked (TVL) into its “mSOL” token. TVL is a key metric for a DeFi platform’s efficiency. 

Neodyme, Ackee Blockchain, and Kudelski Security, one of the industry’s most trusted security firms

have audited and approved Marinade Finance’s smart contracts. These three audits ensure that Marinade’s codes have passed all the industry standards, making it a safe and secure ecosystem for investors. 

Importance of SOL Staking

Apart from earning passive income, SOL staking offers one more important benefit that users shouldn’t forget: helping the Solana network become more decentralized and secure. Users’ collective effort in staking helps tighten the security of the entire network, which, in the end, benefits all participants. Two things must happen to increase Solana’s decentralization: First, more SOL tokens should be staked, and second, more trustworthy validators to handle them. 

MNDE Token 

MNDE is Marinade’s governance token and serves as fractional ownership of the platform’s decentralized autonomous organization (DAO). Unlike other tokens, it hasn’t gone through the traditional backing of a token sale, venture capitalist funds, and private investors. Another interesting fact here is that the team has allocated a considerable amount of MNDE tokens to the DAO and treasury reserve to provide enough muscle to its governance community. 

mSOL Token 

mSOL is Marinade Finance’s tokenized version of staked SOL tokens. Think of mSOL as “receipts” that let holders exchange them for staked SOL and their accumulated rewards. Holders can use mSOL on DeFi platforms while earning staking rewards, giving them not just one income stream. 

mSOL will remain a valuable tool as long as the Marinade earns staking rewards that would consistently grow users’ investments. With the growing utility of mSOL and its importance to the Marinade ecosystem, it can potentially replace SOL, and while it may not happen right away, it is something that the team is looking forward to. 

Users can acquire mSOL in two ways: Stake them on Marinade’s staking pool or trade mSOL on secondary markets, including FTX and Sayber. Note that with trading, charges are involved in the transactions. For projects using the mSOL tokens, holders should remember that Marinade Finance cannot vouch for their security as the platform’s team doesn’t audit them. Marinade advises users to exercise full vigilance and do-you-own-research (DYOR) before investing in mSOL-powered projects. 

mSOL Utilities 

  • Collateral for borrowing and lending transactions. 
  • Liquidity provider for pools. Holders can use their Marinade SOL on “mSOL/SOL pools” (with protection for impermanent loss). They can also put them on “mSOL/XXX pools” (without protection for an impermanent loss but offers liquidity on a bigger number of pairs)
  • Tradeable on decentralized exchanges (DEXs). mSOL is available on various DEXs, including Orca and Raydium, allowing holders to trade Marinade SOL, including their accumulated rewards, on their preferred crypto tokens. 
  • Single asset staking. It is a feature that allows holders to stake their mSOL to gain MNDE.

Marinade DAO 

Marinade DAO (mDAO) is the governance community of the staking platform, where users can participate in decision-making/voting by acquiring MNDE tokens. 

Its primary responsibilities include:

  • Refining the platform’s roadmap.
  • Selecting the best strategic decisions.
  • Adjusting the program parameters if needed.
  • Propose additional utilities for MNDE to make it more valuable 

Marinade Chefs 

Marinade has rolled out its non-fungible tokens (NFTs) collection called “Marinade Chefs,” an army of octopus-shaped characters equipped with governance features. Users can acquire them by locking their MNDE tokens for 30 days. Each Marinade Chef will have varying levels depending on the amount of MNDE tokens locked by holders. 

Each Chef allows owners to submit votes on DAO and gain a “Marinator” role on the platform’s Discord account. They are also allowed to list their adorable octopus on secondary markets for additional income. One important reminder: Simply holding these NFTs won’t equip Chef owners with governance power and a role in Discord. They are required to lock their Marinade Chefs to leverage these benefits. 

Vote Using NFTs 

Marinade Chef offers holders voting power, and the number of MNDE tokens locked in their NFT will be the exact size of their voting power. (Example: 30,000 MNDE locked in the NFT = 30,000 voting power). Holders can head to this link to review the platform’s latest proposals and vote for the ones they believe in. 

Important reminder: Owners can only vote with a maximum of 15 NFTs in their wallets. If they have more than 15 Marinade Chefs, the team advises them to spread their Chefs in different wallets so holders can use all of them for voting. 

Conclusion

The increasing utility of the mSOL token is one of the key aspects that can turn Marinade Finance into a more competitive liquid staking platform. But one concerning thing here is the future projects that will use mSOL, which have no seal of security from the Marinade team. If major risks arise from one of these projects, they may undermine mSOL’s image and weaken the community trust built upon it. 

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