The first Liquid Staking solution on Solana

In March, Marinade.finance participated in the Solana x Serum DeFi hackathon. As a result, we’ve been able to deliver working prototype of a liquid staking solution for Solana (SOL) tokens.

Photo by James Sutton on Unsplash

Now, what is liquid staking good for, you ask?

As you might know, proof-of-stake (PoS) gives you the ability to stake your tokens to make the network more secure or just to provide computational resources in exchange for earning rewards (currently 14.24% in the case of SOL).

Imagine one day you are staking your tokens but decide to unbond them so you can move them as you see fit. With traditional staking that’s not so easy. The reason is that PoS projects often introduce so-called unbonding period, so that you have to wait some time before you can control your tokens again. At times, this period is rather long, e.g. 28 days on Polkadot network.

Next comes what economists call the opportunity cost. Simply put, it’s what you must forgo in order to get something else. In the case of staking, we’re practically giving up the benefit of using the tokens to generate rewards in some other way (like a liquidity provision which is probably about to boom on Raydium).

So there has always been a choice: Are you going to lock your tokens to earn staking rewards, or will you lend your tokens via a liquidity provider platform and earn rewards that way?

How about both combined? And how about you can get around the unbonding period and get access to your bonded tokens the very moment you need it? Sounds Impossible? Not anymore.

How liquid staking works with mSOL at Marinade.Finance

Marinade.finance aims to make liquid staking available to all the users and projects in the Solana ecosystem so that people can both stake and trade, deposit as collateral or do anything else with the tokens.

Let’s say the user stakes 100 Solana (SOL) tokens via Marinade.finance and gets 100 mSOL tokens in return. Under the hood, we manage to magically merge all deposited SOL tokens from multiple users, calculate the most rewarding validators along with decentralization in mind and at the right time delegate SOL tokens give the best result.

Normally, you’d have to wait about 2-days warmup period since hitting the “Stake” button to start generating rewards on Solana (SOL) token. With Marinade.finance you start to benefit from staking right away by holding mSOL tokens since mSOL tokens increase in value due to accrued rewards from staking. This way, should you decide to unstake or rather swap mSOL for SOL after some time, you’ll automatically get more SOL tokens than you originally deposited.

You can easily swap between SOL and mSOL tokens anytime you like, providing you full liquidity and control over your tokens. No more lock-up periods for staking and unstaking your tokens.

What’s more, your mSOL tokens can be traded in our AMM pool or they can serve as a gateway to the rest of Solana ecosystem and its DeFi capabilities.

If you’re curious, check our previous article explaining a bit more about our approach to liquid staking and its benefits.

Why Solana?

The mission of Solana is a Layer 1, proof-of-stake blockchain that is focused on scalability. Easier said than done, right? But the Solana team has introduced numerous unique concepts that drove us to build on top of this interesting technology:

Photo by Joshua Brown on Unsplash

All in all, Solana can handle 50,000 transactions per second with 400 millisecond block times. But don’t take my word for it, try to break Solana yourself.

We’re strong believers of the Solana ecosystem growing at a very rapid pace with services like Serum, Raydium or upcoming Oxygen. And that’s why we’d like to become a go-to-place for staking in this ecosystem so that users can maximize their yield on their tokens.

It’s time to build out the vision! Be sure to check our site, Marinade.Finance and join us on Discord to get the latest updates!

About Marinade Finance

Marinade.Finance is the first non-custodial liquid staking protocol built on Solana. You can stake your SOL tokens with Marinade and receive “marinated SOL” tokens (mSOL) that you can use in decentralized finance (DeFi).

The price of mSOL goes up relative to SOL each epoch, with rewards being accrued into the underlying staked SOL. Marinade stakes in 400+ validators that are selected automatically by an open-source fair formula based on performance, commission, and decentralization.

Marinade includes mSOL->SOL swap, so you can “Unstake Now!” and receive your SOL immediately for a small fee. You can also directly exchange between mSOL and SOL on secondary markets at the current rate. Finally, you can unstake your SOL with zero fees by waiting 2–4 days for the Solana cooldown period (delayed unstake).