Marinade + MEV on Solana, part 1: more rewards for your mSOL

When Marinade launched its flagship Solana-native product in August 2021, it brought the first liquid staking protocol to Solana.

It’s been 14 months since the first mSOL was minted, and the Solana ecosystem has seen plenty of projects come and go or pivot into something new. During this time, Marinade was often asked by fellow builders what we might the protocol expand to next.

A DEX? Lending platform? mSOL-backed Stablecoin? Run a validator? etc.

Marinade chose instead to focus on its core protocol while also building tools and partnerships to help decentralize the DAO. After all, Marinade is bootstrapped, with a fair-launch token and no VC backing.

Sure, passing up an opportunity causes lots of FOMO. But it was more important to stay focused on the core mission and be known as a predictable partner to generate value for all the other builders in the ecosystem.

So instead, Marinade built products like the  Instant Unstake  feature that enables any user to unstake from a validator instantly without a cooldown period so they never have to miss a trading opportunity. For validators, Marinade introduced the  Liquid Self-Stake  product, enabling them to utilize mSOL while maintaining the stake on their node.

Both of these products were designed to drive more liquidity for Solana DeFi. After all, only 3% of the SOL stake remains liquid.

The DAO stayed committed to its 2022 objective to “Make Solana performant and decentralized.” Throughout the Marinade's history, we've witnessed the lowest number of validators that would have to collude to censor the network, growing from 11 to 31. There has been great progress on the decentralization part.

At the same time, the network began to get overloaded, thanks partly to NFT-minting frenzies. It suffered from congestion resulting in occasional subpar user experiences for regular users who struggled to send their transactions through at times.

So it was during the Marinade  2022 midyear update  the decision was made to revisit the overall strategy to ensure Marinade continues making Solana decentralized and performant.

Sharing MEV rewards with mSOL holders

Maximal extractable value (MEV) refers to the maximum value extracted from block production over the standard block reward and gas fees by including, excluding, and changing the order of transactions in a block.

Because of Solana’s low gas fees, it is for bots or protocols to spam the blockchain with thousands of transactions to get access to coveted whitelist spots, arbitrage, or other trading opportunities. Solana has been rolling out updates leading to the prioritization fees that will make the network more robust and reliable and add additional incentives to validators.

The Marinade stake pool’s algorithmic SOL delegation strategy values a combination of factors: rebalancing the staked SOL to more than 400 high-ROI validators with existing track records spread across different geo-locations. But most importantly, it favors the highest staking rewards while adjusting for risk.

Once there is an established infrastructure for validators to start sharing their additional MEV rewards with their SOL stake liquidity providers, Marinade is ready to:

The Marinade community is aware of and in touch with the teams building the MEV infrastructure on Solana, including Solana Labs, Jito, Firedancer, Marinade (but more about that later), and specific validators planning to share their additional revenue from MEV with their stakers.Marinade plans to maintain full transparency of the permissionless delegation strategy, validators scoring formula, and rewards distribution.

Marinade Docs Delegation Strategy | Marinade Stake Pool Scoring Reports

Coming soon: Validator dashboard to track performance

Key criteria of how validators are awarded SOL stake at Marinade. Scoring reports that track validator performance in the Marinade stake pool can already be found on  GitHub. However, building a more user-friendly dashboard where validators and stakers can easily view and search for validator performances is currently being built at Marinade. This dashboard will feature categories of each validator like “Marinade Rank”, Marinade Score, as well as commission and uptime.

Marinade and MEV, what’s next?

In Part II, Marinade examines Solana's performance in 2022 and explain the recently introduced core network updates in more detail. Read it here

Marinade will be presenting in the MEV Camp in Lisbon on November 3rd prior to Breakpoint. For more information and to sign up, visit this registration link.