Exchanges

Crypto exchanges serve as the ultimate gateway for individuals and institutions alike to get their first taste of web3. While there has been significant innovation around native web3 wallets, exchanges should offer the most cutting-edge and network pertinent services to decentralized finance.

A prominent example of a useful web3 product that’s attracted impressive demand thus far is staking. It caters to individuals who want to earn rewards in their favorite digital assets and asset managers seeking safe and straightforward passive income strategies.

With such a wide target audience, it’s no wonder that exchanges around the world have already given users easy access to crypto staking, contributing to the total $230 billion being staked globally. This is particularly relevant for SOL, as more than 65% of its supply is currently being staked. However, apprehension surrounding crypto staking persists for both centralized and decentralized services. For centralized services, there’s the issue of counterparty risk – how does the staker know their assets are actually being staked rather than rehypothecated? For decentralized services, there’s smart contract risk – what if there’s a vulnerability in the code? 

Marinade v2 removes both from the equation:

• The staker bypasses counterparty risk, retaining full custody of their staked assets
• Native staking in v2 eliminates smart contract risk altogether 

On top of that, Marinade v2 offers additional sources of staking rewards due to the stake auction marketplace (SAM), where validators can distribute a portion of their SOL rewards to stakers. Rather than solely earning SOL issuance from the network, stakers also accrue additional rewards via transaction fees and MEV, boosting stakers’ total yield. 

Altogether, by integrating Marinade’s staking services, exchanges provide an easily accessible gateway to Marinade native staking on their platform, allowing users to deposit their SOL directly to validators, decentralizing Solana at large. 

Marinade also offers a potentially more regulatory-friendly service for exchanges to provide in jurisdictions such as the US, where interest-bearing digital asset products are under constant scrutiny. By using Marinade, exchanges avoid acting as intermediaries by custodying or staking assets for users. Instead, directly stake assets with Solana validators, and the exchange acts as a “front-end” for staking deposits. This approach eliminates custody risk and smart contract risk. Which could attract less regulatory scrutiny

Additionally, integrating Marinade’s liquid staking product, mSOL, may potentially increase trading activity on the exchange. Users can stake their SOL, receive mSOL, and immediately trade their mSOL, boosting liquidity and opportunities for users.

‍