In the rapidly evolving landscape of decentralised finance (DeFi), staking has emerged as a popular mechanism for securing blockchain networks and earning rewards. Marinade Finance, a staking protocol built on Solana, offers a unique and innovative approach to staking that aims to empower users while ensuring the decentralisation and security of the Solana network. In this article, we will explore the various aspects of Marinade, including its funding, governance, liquid staking mechanism, native staking solution, benefits of directed stake, and its commitment to open-source and transparent governance.
Marinade Finance was funded through a fair launch, ensuring a level playing field for all participants. Unlike many projects that rely on venture capital or private funding, Marinade's funding approach aligns with its commitment to decentralisation and community-driven governance. By avoiding a token sale or pre-mine, Marinade has laid the foundation for a truly community-owned and governed protocol.
The protocol's governance is driven by the Marinade DAO (Decentralised Autonomous Organisation), which allows token holders to participate in decision-making processes, such as proposing and voting on protocol upgrades, fee structures, and other key parameters. This ensures that the protocol's long-term mission is shaped by the collective wisdom of its community.
One of the key innovations introduced by Marinade is the concept of liquid staking. Traditionally, staking involves locking up tokens, which are then used to secure the network and validate transactions. However, this can limit the liquidity of the staked tokens, making them inaccessible for other purposes.
With Marinade's liquid staking mechanism, users can stake their SOL tokens and receive an equivalent value of "marinated SOL" tokens (mSOL). These mSOL tokens can be used in various DeFi applications while still earning staking rewards. The price of mSOL gradually increases relative to SOL, thanks to Solana's inflation rewards. This unique approach allows users to enjoy the benefits of staking while maintaining the flexibility to participate in other DeFi opportunities.
In addition to liquid staking, Marinade also offers a native staking solution. Unlike liquid staking, which involves tokenising staked SOL, native staking allows users to stake their SOL tokens directly without any smart contract interaction. This approach offers several advantages, including full control over the tokens and associated accounts, as well as no smart contract risk.
Marinade's native staking solution is fully non-custodial, meaning users retain ownership of their SOL tokens at all times. The staking position is automatically managed and rebalanced without any fees, ensuring a hassle-free staking experience. With a transparent and permission-less delegation formula, Marinade's native staking solution provides users with a secure and efficient way to participate in staking on Solana.
Marinade's stake delegation strategy sets it apart from other staking protocols. While traditional staking involves delegating tokens to a single validator, which may pose risks such as downtime or security vulnerabilities, Marinade's approach ensures that staked SOL is spread among more than 450 validators (excluding the top 32 validators known as the "security group"). This distribution minimises the risks associated with relying on a single validator and enhances the security and decentralisation of the Solana network.
By using a transparent and permission-less delegation formula, Marinade allows users to instantly re-delegate their SOL stakes to the pool of validators. This dynamic delegation strategy optimises staking rewards while maintaining the integrity of the network.
Marinade's commitment to open-source and transparent governance is a core principle of the protocol. The codebase is publicly accessible, allowing anyone to review and contribute to the development of the protocol. This approach ensures that the protocol's operations are transparent and verifiable, fostering trust and credibility within the community.
The Marinade DAO plays a crucial role in the governance of the protocol. Through the DAO, token holders can actively participate in shaping the future of Marinade. Whether it's proposing and voting on protocol upgrades, fee structures, or other key parameters, the community has a voice in the decision-making processes. This democratic approach to governance ensures that the protocol evolves in a way that aligns with the interests of its users.