I agree with you on this, and this is what this proposal was made for: try to guarantee the survival of the protocol.
PlayerOfBits also explained some reasons behind bundling those changes, and I think you understand why we did it, and I fully understand why you don’t like it. If you aren’t happy with everything that this proposal encompasses, you can invite people to vote “No” and/or make separate proposals. You can even make a proposal contesting one of the points of this proposal after it has passed in order to revisit it, if it passes.
However, currently there is literally zero info on the new scoring aside from “it’s going to be better”. The little I know about it (punishing high credits and using skip rate “for information purposes only”) I had to wrangle from lj1024 in discord.
The proposal actually explains that credits will move to a secondary place in the delegation strategy, and that the new important metrics will be data center location, commission and stability over epochs. While we can’t yet provide the exact parameters of the strategy, I think this is enough to understand the purpose of the change, wouldn’t you say?
As @pumpkinspool stated, the current situation is not “mostly fine” as modded validators are skewing the average and it’s affecting every validator not running those mods. The current delegation strategy does work, but those improvements are needed to make the delegation strategy more transparent, easy to understand and read, and fairer to everyone.
What I can add is that Marinade will probably gather feedback on the new delegation strategy and tweak it before we arrive to a final version. You’ll probably get a way better understanding of the new delegation strategy as it’s finalized and details can be discussed directly on Discord, between validators and the dev team to tweak the last things.
At 2% you need 250k sol stake to break even on voting fees. 50k stake from marinade will certainly help, but it’s not nearly enough. I certainly have admiration for people who were able to somehow bootstrap themselves, but i’ve been around for 18 months and there are very few success stories. The ecosystem is not mature enough to support hundreds of well-run low commission validators. That’s why I suggested lowering commission gradually as TVL grows.
I agree with you on this point. I would love for Marinade to have enough stake to fully bootstrap a large number of validators, but this can only be achieved in combination with our other efforts to bring more TVL. The current situation forces Marinade to redirect stake towards lower-commission validators, that’s unfortunately the only option we have. As TVL grows according to our plan, we can revisit the target commission and adapt the strategy to the amount of stake we have, and to the number of validators that Marinade should reach and support.
Lowering commission gradually as TVL grows would unfortunately not bring enough revenues in the next months to keep building, but it’s something that can be revisited once Marinade has achieved its objective of securing a strong treasury in USDC/mSOL to pay for expenses.
One would have to look at the numbers, but I wonder if this statement is true. So correct me if I’m wrong: low cap would imply it would take longer if there is a lot to rebalance, meaning bigger hit to APR due to increased marinade fee while system reaches target stake distribution. High cap would mean more rebalancing, triggering APR hit due to unstaking/restaking.
What I meant by this is that the stake is already being rebalanced with a max cap of 4% per epoch. This has been the case for the last months, so it’s already reflected in the 30-day APY of mSOL for example.
When applying the new delegation strategy, we’d use the same cap and maybe it’d take 10 or 20 epochs to fully rebalance everything, but the impact on APY would not be very far from the one we currently have when rebalancing. If we do raise this cap, then yes, this could lower a bit the APY for a small period, but since stake would reach lower-commission validators faster, the APY would be compensated in the next months too.
If you’re really interested in this question, maybe you can try to model the impact and check if the APY hit would be bigger than what we expect? I’ll also check with @lj1024 if we have any model already that would simulate the impact on APY.
I think you missed my point. I agree with gauges not being affected by commission cut for now, but they will take a hit either on gauge income or on marinade stake regardless of what they do.
I see what you mean and sorry for missing your point. I don’t really have an answer to bring to you regarding this, unfortunately validators running at 10% will be affected by this proposal. The gauges will allow to “lower” the impact for validators at 10% that have invested in MNDE, but in order to keep the same stake, they’ll probably have to acquire more MNDE indeed. The only thing I can say is that the drop won’t be “brutal” and they will have time to plan around and make a decision based on what is happening and how things are evolving.
This might sound crazy, but I question the notion of necessarily having a positive cash flow right now, while validators are slowly bleeding voting fees and, to a smaller degree, rising hardware costs. It is contrary to the declared mission.
The mission stated in the article you quote is “Now Marinade’s goal is to make Solana performant and decentralized.” By directing more stake towards stable validators over multiple epochs, Marinade is actually pursuing this mission. We also make the case that there is currently not enough SOL staked (overall) to support 7000 or 10000 validators, it’s simply not possible. The goal of those changes are to allow Marinade to gain more money out of its stake, and consolidate the stake to validators being performant and stable, with a bonus if they run at a lower commission. I wouldn’t be surprised if a validator in a low-populated data center being stable over 50 epochs get stake from Marinade, even at 10% commission.
The thing that you mention and that I understand is that some validators rely on Marinade to become profitable. While I’m very happy that it’s the case for some of them, it’s unfortunately not a “guarantee” that Marinade can uphold to, no matter what. The current situation pushes Marinade to a corner, and we first need to build a solid treasury in order to keep pushing the TVL higher. If Marinade itself is not profitable, validators relying on Marinade won’t stay profitable either for long.
Having a cash-flow positive balance is actually extremely important, as a “12-months runway” can quickly become a 3-months runway if TVL were to disappear, or if SOL price was to drop heavily (impacting all future revenues).
removing compensation program should bring about 700 - 900 sol (30–35k) a month according to the OP (although June blog post states 1246 mSOL income in June.
bumping management fees to 4% would double the above
changing fee split in unstake pool would bring additional income, although i’m unsure how much, wish you would provide some numbers
about 800k sitting in the treasury right now , 2/3 of which is not generating yield for some reason. Also June blog post quoted above mentioned 300k in treasure, so situation has somehow improved?
MNDE could be considered to generate income without dumping it on the market through gauges either by delegating it to your own validator or increasing incentives to LPs in pools in which treasury is participating in.
With 2% fees, the estimate is 0.01% of the TVL per month as revenue. For 7M SOL, keeping the fees to 2% would represent 700 SOL per month, or $24k5 per month (with SOL at $35). 4% would be $49k, and 6% will lead to $73k5. With expenses around $110k per month, you can see that 4% would not cut it.
Fees from the unstake pool can be calculated with the stats available here. We’re seeing between 200 and 500 mSOL in the last months depending on the unstake activity, so it can be expected that moving the fees to 50/50 will bring between 400 and 900 mSOL (or between $16k and $36k at current prices). We also need to take into consideration that the bear market has leaded to quite a lot of unstakes, and those profit cannot be considered guaranteed at all.
Regarding using the 800k in the treasury to earn yield, managing a treasury is actually quite a responsibility and requires time and attention. I’m not aware of the plans regarding those funds, but would be uncomfortable having all this money in Solana DeFi. This treasury is actually the “expense” account that received the funds from the TEP, and I imagine that a part of these funds will be moved to the DAO treasury as we steer the ship back to profitability. (300k to 800k is the result of the TEP). They are probably kept here as we might need to use them over the next months to pay for salaries, unless this proposal passes.
Regarding your last point, Marinade does not run any validators, and it would be quite unfair to use the MNDE in treasury, not even distributed yet, to skew the gauges to our advantage. All MNDE holders using them and leveraging them would probably not like this move too.
As you can see, with the changes on the delegation strategy and the unstake pool, Marinade should reach between $90k and $110k monthly revenues. This is just enough to guarantee a 6-8 months runway (with the current treasury from the TEP) while keeping operations going, but not really more than what’s needed.
Definitely agree with your point on fatigue, this proposal shows that the biggest the proposal is, the more complex it is for MNDE holders to find time and energy to participate. I’m definitely taking this lesson with me, but as explained in all the last messages, those changes made sense as a block and had a same reasoning, so I deemed worth to consolidate everything into one big proposal.
Thanks for the detailed answer, I will close this message by saying that you’ll still be free to vote no and invite people to do the same, or to vote yes and bring up a new proposal suggesting some addendum to certain parts of this proposal even if it passes.
