TVL surges! Introduction to the Marinade Protocol: Touching the Entire Solana DeFi Ecosystem with SOL
The native token SOL of Solana has recently seen a rapid increase in price, driven by the growing demand for SOL in the DeFi market. The amount of SOL locked on Solana was around $35 million in August, but has now surpassed $75 million, doubling in a short period of time. In addition to the popular Saber and Sunny protocols in August and September, there is another protocol that has seen a faster increase in Total Value Locked (TVL) recently.
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Marinade Finance
Marinade Finance is a liquidity staking platform launched on Solana in August this year. Over the past two months, it has continued to attract users and collaborate with other protocols in the Solana ecosystem. According to data from DeFi Llama, it is currently the third-largest protocol by total value locked on Solana, and is close to surpassing Raydium, the largest AMM on Solana, with a lockup increase of over 70% in the past week.
The platform is quite simple in function and only involves the token SOL. Users can stake their SOL on Marinade and receive mSOL in return. The value of mSOL gradually increases relative to SOL over time. When users unstake their mSOL, they can receive more SOL than they initially staked. The current annualized staking yield is approximately 6.67%.
It is important to note that unstaking can be immediate or delayed. Opting for immediate unstaking incurs an unstaking fee of 0.3% to 3% based on the current protocol's SOL quantity, with lower fees for larger amounts. Choosing delayed unstaking does not require an additional fee, but the SOL will only be available in the wallet after three days.
mSOL Extended Applications
This seemingly simple protocol, despite its seemingly modest annualized yield, has attracted many users to stake their SOL. This is because mSOL can be used in various protocols, significantly increasing users' potential returns and capital utilization. The following are examples of different protocols for illustration.
Lending
A simple application is to lend out mSOL to earn interest income. For example, depositing mSOL into the lending pool of Francium on Solana can yield an annualized return of approximately 2.37%.
Liquidity Pool
Users can pair mSOL with other tokens to create a pool and provide liquidity. For instance, placing mSOL in the mSOL - USDC liquidity pool on Radium not only generates LP tokens but also provides MNDE rewards, with the current annualized return at around 49.6%. MNDE is the platform token issued by Marinade, primarily used for governance.
The mSOL - USDC liquidity pool on Radium can be accessed directly through Marinade's link, and the earned MNDE can be paired with other assets to provide more LP tokens in different liquidity pools.
Vault Yield Aggregator
By adding liquidity to the mSOL - USDC liquidity pool mentioned earlier, users receive mSOL - USDC LP tokens, which can be further placed in yield aggregator protocols to earn additional annualized returns. For example, depositing LP tokens into the mSOL - USDC yield aggregator in TULIP on Solana can yield approximately 72.53% annually.
The DeFi protocols available for mSOL and MNDE are diverse. They not only significantly improve capital efficiency but also integrate with other protocols in the Solana ecosystem, driving the overall market value and total value locked in Solana, which is currently on an upward trend. However, smart contracts carry inherent risks, so please evaluate carefully before use.