As Marinade Earn - Season 1 has ended, Marinade should prepare for the future of its incentives. Given the growth that Marinade has experienced throughout the last 3 months, I strongly believe that it makes sense for Marinade DAO to give a try to a Season 2.
Before diving into the proposal, let’s make a quick summary of the first season and those last 3 months:
- Marinade plans to distribute around 10M MNDE tokens for Season 1, with around 9.4M allocated to mSOL and Marinade Native stakers and approximately 300k MNDE allocated to referrers. This means that out of the initial 80M MNDE budget, approximately 70M MNDE will be sent back to the DAO treasury.
- mSOL’s TVL has grown from 5.55M SOL to 6.92M SOL.
- Marinade Native’s TVL has grown from 2.4M SOL to 4M SOL.
- Total TVL went from 7.96M SOL to 10.95M SOL.
While this growth probably cannot be attributed to Season 1 only, it’s interesting to note that both mSOL and Marinade Native grew significantly, which could be explained by the similar level of incentives on both products.
We can also notice that the referral wasn’t used that much and probably didn’t play a large part in this growth.
What do you propose?
I suggest unlocking a budget of 25M MNDE for the Marinade contributors team to design and release a Season 2 for Marinade Earn. This budget would be taken from the initial 80M budget of Marinade Earn Season 1, so should that proposal pass, Marinade would send back 45M MNDE to the treasury instead of 70M, and keep 25M MNDE earmarked to Marinade Earn - Season 2.
As for Season 1, the MNDE distribution would stay correlated to TVL, and the budget could be used partially, with the excess sent back to the treasury.
Unlike for Season 1, the Marinade contributors team would like to ask for this budget without unveiling all the exact details in order to be able to add some bonuses to the base rewards throughout the season. Nonetheless, some base rules of Season 2 would be:
- Season 2 would last 3 months, between Jan 1st and March 31st.
- Up to 25M MNDE would be distributed to eligible users. MNDE would be available to claim at the end of the 3-month campaign and locked for 30 days. People will have 90 days to claim their MNDE before they are clawed back and sent back to the treasury.
- All mSOL/Marinade native users would accumulate 1 MNDE / 2 SOL over the campaign duration.
- For mSOL, only mSOL detected by Marinade’s monitoring snapshot tool (for directed stake) would be accounted for. Marinade would nonetheless expand the list of protocols supported and do its best to allow new protocols hosting a large mSOL TVL to be added.
- The referral program for Marinade Earn will be removed for Season 2.
- If Marinade TVL grows so much that 25M MNDE needs to be distributed at the end of 3 months, the distribution would be split proportionally among participants based on participation to not go above 25M. Remember that it would also mean that Marinade has experienced significant growth.
What is the rationale behind the proposal?
Marinade Earn Season 1 can be identified as one of the factors for the recent growth that Marinade has been experiencing.
I believe that prolonging it for Season 2 will allow the Marinade DAO to confirm if this incentive model keeps creating growth and additional TVL or if the recent TVL growth should be attributed to the overall regain of activity on Solana in the end and the incentive model needs to be re-explored again.
I also believe that this distribution mechanism allows the Marinade DAO to distribute MNDE into the right hands while creating a strong incentive for new users to choose mSOL or Marinade Native to stake with.
This means that even if Season 2 does not bring significant growth, MNDE would still be distributed to protocol users and allow Marinade to decentralize itself further.
For all those reasons, I believe a Season 2 would be the best path forward regarding incentives around Marinade.
What is the expected positive impact of this change?
This proposal would allow Marinade Native and mSOL to benefit from additional incentives, increasing their attractivity. It also allows people who joined Marinade in the last months to get a chance to accumulate MNDE for a full season.
Moreover, starting with a lower base reward but some room to design additional incentives within that 25M MNDE budget will allow the Marinade contributors team to reward some users even more and create activity and hype around the incentive campaign throughout the season.
Any other considerations?
- One of the main downsides of the model used in Season 1 was that those additional MNDE incentives could be hidden and hard to discover and understand, as most DeFi protocols don’t have a good way to show them. As part of Season 2, Marinade may require DeFi protocols to develop a way for their users to know about the additional MNDE incentives when using mSOL if they want to be supported in the snapshot monitoring.
- Most of the reasoning for this Season 2 is similar to what was detailed in the proposal for Season 1. Since there are good reasons to believe that this campaign helped Marinade’s growth throughout the last 3 months, we should keep it going.
Keen on hearing your thoughts, Chefs. Let’s try to make the discussion progress as efficiently as possible, as the beginning of this season 2 would already be retroactive!