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Marinade's Ascendancy: Championing Liquid Staking on Solana

By: illustrious
July 16, 2023 4:33 PM EDT
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In recent weeks, the DeFi sector has seen a notable rise in demand for Solana’s liquid staking token (LST), marking an emerging trend in the crypto space that underscores the potential of staking services. Solana, a blockchain platform deploying a Proof of Stake (PoS) consensus mechanism, has become a significant player in liquid staking, offering users the chance to liberate liquidity from traditionally illiquid tokens.

Among the trailblazers in Solana’s liquid staking sphere, Marinade Finance (MNDE) stands out. The protocol has been on an exceptional growth trajectory, with its total value locked (TVL) skyrocketing to an astounding $177 million within a single month, representing an 80% increment. This impressive figure is a majority share of Solana's overall TVL, which currently tallies at $314 million. Jito, the second-largest LST protocol on Solana, is also growing and has seen its TVL doubled in the past month, amounting to approximately $26 million.

The rapid upsurge in liquid staking token demand has had a ripple effect on the price of Solana’s native cryptocurrency, SOL. Data from Coingecko shows a 27% week-on-week climb for SOL, securing it second place among the top 10 cryptocurrencies with the most significant price hike. One key player contributing to this trend is MarginFi, a DeFi rental platform.

In early July, MarginFi launched a loyalty points program, a move that has remarkably boosted user engagement and attracted new participants. This program incentivizes users to spend more time on loans and borrows and encourages referrals, thereby enabling lenders and borrowers to earn points. Users can also earn additional points through a referral system, where they receive 10% of the points earned by referred users. Furthermore, a fraction of that 10% can be obtained from second and third-generation referrals.

MarginFi's loyalty points program has seen an outstanding uptick in active users, tripling the numbers. Additionally, the platform's TVL has almost quadrupled, exceeding $10 million. A noteworthy aspect of this is that more than half of MarginFi's TVL is composed of liquid staking tokens such as "jitoSOL" and "mSOL", providing Solana investors with a tempting annual interest rate of about 7%.

Though the ultimate goal of the loyalty points is yet to be officially unveiled, an official statement indicated the points aim to quantify activity within the “mrgn economy” and incentivize users to actively participate in lending and borrowing activities. Many users are speculating these points may pave the way for governance token airdrops in the future.

Moreover, MarginFi isn't the only project leveraging point systems to encourage ecosystem growth and contribution. Trading protocol Cypher, a partner of MarginFi, is implementing a similar points system. This trend has piqued the interest of industry observers, who see it as a potential catalyst for a "second Solana Summer," hoping for a vibrant and flourishing Solana ecosystem.

The growth of Marinade Finance as the leading liquid staking protocol on Solana, along with the strategies implemented by other projects like MarginFi and Cypher, exemplify the evolving dynamics of DeFi. As liquid staking continues to gain traction, the potential for Solana's ecosystem to become a hotbed for innovative staking solutions seems promising.

Always experimenting.

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