Hi mDAO and community,
After following Marinade since the launch of NFT-governance I have noticed a few failures in the intention of the system that I think can be resolved. I was active in various Convex bribe strategy designs, and noticed that there’s poor maintenance of governance after things are left to the gauges with Marinade so hope my proposals and insights will be valuable.
Issue: Gauge weights are skewed ~50% towards a highly underutilized lending pool (Solend)
Context: Solend is a Compound style lending platform which uses a piecewise interest rate curve.
While skewed weights in isolation with gauges are not a problem,
This is nonproductive for mSOL growth in the ecosystem. This is a simple case of the mDAO being outsmarted and outvoted by Solend who own a good share of MNDE (maybe someone can share a link to the Solend account!).
Current mSOL Utilization on Solend is 0.26%, and has been <1% for a while now . Is that a sign that there’s nowhere to use borrow mSOL to use in Solana DeFi? Clearly not, it’s a classic effect of gauge bribes - a large actor just farms-to-dump MNDE rewards (Solend). In Convex/Curve wars, gauges triggered a highly competitive marketplace for multiple DAOs to increase emissions for their native assets, but in mDAOs case it has just centralized the entire gauges system around Solend…
Where is the current 1.6% interest rate for mSOL lenders on Solend coming from?
- 75% (1.2% APY) is coming from $MNDE liquidity mining
- 24% (0.39% APY) is coming from $SLND liquidity mining
- <1% is coming from actual use of Solend’s product!
Unsustainable yield shouldn’t be overincentivized
- At the current rate, mDAO is emitting 2.5% of TOTAL MNDE supply PER YEAR into an idle pool (that is more than 4x the proposed Marketing budget @btuck made for the next year and the entire TokenExchangeProgram amount; both you would think bring more new users to Marinade than Solend emissions)
- This is $815k USDC/year spent on incentivizing an idle pool, given what I have read about Marinade needing a larger USDC treasury it seems like a drain of capital
- Solend has tactically pitted Marinade vs Lido as the 2 most competitive liquid staking projects in Solana to compete for emissions. Lido has a larger capital base and multi-chain adoption, so mDAO has an uphill climb that shouldn’t be drained with emitting MNDE with unknown impacts
Change next Reward Cycle’s max voting share to 30% to avoid getting governance hacked
Issue a MNDE grant for a Governance Researcher to evaluate and report on the impact of mSOL growth per platform due to Gauges. I think someone from Flipside will be a great candidate, cc: @dobby and team!
- What is the pre- vs post- $MNDE liquidity mining impact on Solend’s mSOL deposits (measuring new users, retention, and # mSOL deposit changes)
- What is the mSOL user acquisition cost per $MNDE paid with Gauges?
- Build a “live mSOL DeFi dashboard” for mSOL users to be able to transparently track present and historical mSOL yields across Solana DeFi (this would be very useful for Marketing as well I expect).
Engage a Risk Management platform such as Gauntlet Research (note they are quite expensive) or a Treasury Management program such as Friktion’s Circuits or Llama to help with liquidity mining management among other needs.
Evaluate quadratic vote weights to limit unsustainable yield distribution
Gauges for reference:
Thanks - I am looking forward to a productive conversation on this matter!