DAO proposal - Unlock a 25M MNDE budget for Marinade Earn - Season 2

Hello Chefs,

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!

14 Likes

So much has changed on Solana since Marinade Earn Season 1 was planned. Airdrop season went buckwild in the time this was announced to completion. There are so many newcomers to Solana many didn’t realize MNDE has been out awhile and already did its initial aidrop. The discord general channel got really degenerate tbh.

Just want to share a few observations and recs here about it from my POV.

Protocols launched or introduced v2 that got a lot of traction and Marinade was not able to get Snapshots done for them in time (snapshots can be cumbersome to make).

I don’t think people should have to go to Realms to claim the MNDE. Even though we stated that would be the case, Realms is difficult to understand for new users. Some thought Marinade was hacked because the MNDE went somewhere else.

Some late-comers to the program didn’t earn enough MNDE to claim (less than 1). If we could let them roll over their balance that would be a nice gesture.

The referral program was confusing because it was only for Native stake. Many thought it was for both. (Which was not the case due to compatibility reasons). The most effective referral programs are those that reward both the referrer and staker with more rewards. Once we design a good program there maybe it could be evergreen and not dependent on any season.

Providing liquidity for mSOL should be valued more than lending (which can introduce leverage). There were also some suggestions to incentivize Marinade’s liquidity pool, but IMO we should direct it to other protocols instead.

It’d be good to reserve some funds for projects who maybe held their assets somewhere that was not tracked that we were not aware of and at least meet them halfway if they can prove they grew mSOL TVL but were not tracked.

While Marinade has always strived to be as transparent as possible, these programs are maybe not the most effective placing all the cards on the table and a little mystery might go a long way and enable more creativity and account for some edge cases and BD.

11 Likes

I was curious of the economics on this from an MNDE holder’s perspective, so I ran the numbers:

I assume a SOL price of $100 and an MNDE price of $0.25. Obviously, these have fluctuated quite a bit, but their ratio usually floats around 0.0025 SOL / MNDE, and it’s the ratio that’s important for the calculations.

Season one gave 1 MNDE for every SOL that was staked over 3 months. So if you assume that every person staking is staking only because of this incentive and that all SOL will leave immediately after this program (bad assumptions that I’ll address in a sec), Marinade has paid $0.25 for $0.11 in fees ($25 * 7% APR * 6% fee).

Of course, this isn’t good analysis because it fails to account for two factors: stickiness of stake and whether the incentives were responsible for the additional stake.

So let’s first address stickiness of stake. I don’t know how sticky Marinade’s stake is (to figure this out, you’d need to stop rewards for a while and see how users react) but I suspect that it’s fairly sticky. Marinade is built for and used by normies (at least crypto normies :smiley: ), who tend to be less mercenary. So I’ve come up with three estimates of how sticky the stake is:

  • Base case: SOL stake stays on average for an additional 9 months if LM ends
  • Bear case: SOL stake stays on average for an additional 3 months if LM ends
  • Bull case: SOL stake stays on average for an additional 18 months if LM ends

Now let’s address the question of whether the incentives were responsible for the stake. Again, Marinade targets normies who are somewhat less price sensitive, which means that a portion of the additional stake would likely have come no matter what. I’ve come up with 3 estimates again here:

  • Base case: LM is responsible for 60% of additional stake
  • Bear case: LM is responsible for 30% of additional stake
  • Bull case: LM is responsible for 90% of additional stake

Now we can compute how much bang-for-buck Marinade is getting across the 3 cases. Here’s the output of that:

  • Base case: Marinade is paying $0.25 for $0.252 in marginal revenue
  • Bear case: Marinade is paying $0.25 for $0.126 in marginal revenue
  • Bull case: Marinade is paying $0.25 for $0.661 in marginal revenue

If you want to test your own assumptions, I’m sure you can figure out the equation :slight_smile:

So basically, it looks like the LM is reasonable. I’d also attach significant value to maintaining market leadership position given that many of the end-users who we all hope & think will eventually show up to Solana (:crossed_fingers:) will likely just deposit with whoever is the market leader. So maintaining a market leadership position could be worth billions of dollars.

11 Likes

Would like to once again bring up the idea I mentioned for season 1 (but wasn’t implemented), where users would get to choose to lock their MNDE rewards or not, and receive more MNDE if they lock. See here for more details and discussion: [mDAO proposal] Launch 160M MNDE incentive campaign for mSOL/Marinade Native - #2 by Durden

5 Likes

I went with Native, 1) because I like the no smart contract risk associated with liquid staking. 2) It makes it tougher to do dumb stuff with my core Sol holdings. 3) Because it automatically spreads my stake with multiple validators.

I don’t agree with the 2 sol to 1 mnde incentive, I think it should stay 1-1 and feel like the referral program should also stay. I definitely think that would incentivize new market entrants to use Marinade.

My stake is likely not going to another platform for the next 12-18 months however there is the feeling of missing out on potential income because of the rewards being offered from other staking providers, even though those are through liquid staking.

I agree with metaprph3t that maintaining market leadership is very important. And should lead to a repricing of the mnde token imo, which if held by participants to the end of the “cycle” could lead to a really nice bonus. Oh and yeah I’m pretty much a crypto normie lol.

Responding to btuck, I don’t see a problem with the Realms claim process, but I do feel that there was a real lack of guidance on how the claim process works.

On a side note, the claim process for unstaking Native stake is tedious, is it possible to implement a “claim all” feature?

Thank you!

4 Likes

still feel msol should get a more favorable rate as native is still not fee paying.

7 Likes

Hello everyone, the proposal has been put on-chain here: Realms

The only modification to the original proposal is about how the budget should be unlocked. Marinade Season 1 did not require the 80M budget unlock from the treasury, as much of the ODP budget was left unused. For this reason, it was passed as a memo vote, requesting no MNDE from the treasury.

In October, most of the unused Open Door Program budget was sent back to the treasury so that the Council would only conserve what would be needed for Marinade Earn Season 1 and the last periods of Open Door Program.

For this reason, the proposal includes the proposal of 25M MNDE from the Treasury to the Council Vault in order to finance Marinade Earn Season 2. All unused MNDE would still be sent back to the treasury.

Thanks for your input on the proposal, we’ll try to take them into consideration as the additional bonuses of Season 2 are being designed.

7 Likes

I think this is a great initiative and fully support the 25M MNDE for Season 2

As the main tool of attracting stake AND distributing governance power, I think it is imperative to keep these kind of programs running. If not for these programs, what else would people expect the MNDE to be used for?

Some comments based on what has been discussed so far

  • If a defi protocol wont work with Marinade to make the MNDE incentive visible to its users, they should not receive the incentive

  • Referral programs are easy to game and I think its a good idea to remove it from season 2.

  • Keeping msol and native with the same incentive is generous. As someone who primarily uses native stake, I am very happy with the matched incentive and would also understand if it were lower for native stakers. For season 2, keeping it the same makes sense and we could revisit making them different in season 3

Some ideas to explore and get feedback on

  • A surprise incentive for people that havent unstaked, have claimed their MNDE, and have voted on this active proposal. This would add mystery and communicate that being fully active is aligned with the project and make stakers even stickier. The current number of stakers that meet this criteria is very low.

  • A lottery/raffle MNDE allocation. For every MNDE allocated under season 2, the recipient also gets a raffle entry into a large MNDE allocation (this allocation would be connected to SOL TVL milestones. This activates the gambler incentive. The marketing of “Stake 1 sol and you could win 1million MNDE” is very powerful - albeit at the expense of some decentralization. If the raffle idea is considered, id suggest adding a voter criteria to also help increase voter participation

  • First time staker bonus. This kind of incentive could help solidify the market leadership position. The SOL/MNDE ratio could be lower than 2:1 and the reward could be given within 2 weeks of staking. The rationale here is to reward fast if they are going to be unstaking anyway, and once they are in the ecosystem, they will consider staking longer for the better incentive

On a side note, I noticed that many whale voters havent chimed in on the proposal yet. Is that normal or is this seasonal related?

7 Likes

I’d agree with this and add an effective referral program needs to be simple and accessible for all participants, with clearly set out rewards and conditions and prompt payments. This has not happened in the past, indeed payments have still not been made for referral activity since July. It would make far more sense to try and fix what it broken than discard the whole channel.

This referral program also conflicted with Marinade’s other marketing efforts : it was only available for Native stake, but if I referred someone with my ‘Directed Stake’ link so they had the option of mSOL or native, then it simply made a stake account for my validator instead of using Native. This was not only a confusing UX for the staker but meant if I wanted to recommend native stake and a user staked mSOL I would not get either the directed stake benefit or a referral reward.

It also is better if a referral program is long term, as it allows time to plan and build a promotion or even apps and tools around something.

Both time and lack of clarity over the open doors scheme put me off participating in season 1. But I think a long term, well thought out referral program would be very much in Marinade’s interests and shouldn’t be dismissed too quickly. Perhaps it is deserving of its own proposal rather than as part of a time boxed incentive scheme?

8 Likes

appreciate this feedback and an improved and simplified referral program should certainly be looked at, not only for validators but for any project looking to integrate both marinade native or mSOL. With Open Doors winding down there will be less conflict here.

3 Likes

pretty normal unless there is controversy

2 Likes

Here is an idea that could potentially increase the effectiveness of the reward system for Marinade users, particularly aiming to attract and engage new members within the Solana ecosystem. This concept, while currently just a proposal and not yet discussed with Drip House, could offer a unique approach to user rewards.

The Concept:

The essence of this proposed partnership between Marinade and Drip House is to offer a unique feature on the Drip House page, enabling users to directly earn ‘droplets’ in relation to their mSOL/Native Stake balance. This innovative approach allows Marinade users the option to substitute their MNDE Incentives with Drip House’s ‘droplets.’ A key component of this collaboration is the compensation model; Marinade would remunerate Drip House based on the number of users choosing to make this switch. This not only introduces a novel reward mechanism but also fosters a symbiotic relationship between the two platforms, benefiting both users and the platforms themselves.

Benefits of This Partnership:

  • Innovative Reward Switching Option: Allowing users to switch their MNDE rewards for droplets introduces a novel and engaging reward mechanism in the Solana ecosystem.
  • Effective Advertisement for Marinade: Featuring this reward option on Drip House can serve as a direct and appealing advertisement, potentially drawing in a broader audience.
  • Attracting New Solana Users: This feature could act as a gateway for new users, offering them a unique and engaging introduction to Marinade as a staking platform.
  • Customized User Experience: The droplet rewards cater to those who prefer more interactive and tangible benefits, especially appealing to users with smaller SOL balances.
  • Strengthening Trust and Engagement: By partnering with a well-known platform like Drip House, Marinade could build trust among new users and deepen engagement within the Solana community.
  • Mitigating Selling Pressure on MNDE: Additionally, by providing rewards in droplets instead of MNDE, this approach could effectively reduce the immediate selling pressure on the MNDE token. Recipients might be less inclined to liquidate these unique, interactive rewards quickly, which could contribute to the stability and perceived value of MNDE in the market.

Expanding on Custom Rewards:

In addition to this partnership idea, I’m curious if we have explored the concept of creating custom rewards tailored for different NFT communities within Solana. This approach could further personalize the experience for users and foster stronger community connections.

Seeking Community Insights:

  • How do you view the proposal for users to switch MNDE rewards to Drip House droplets, with Marinade compensating Drip House based on user participation?
  • What are your thoughts on developing unique rewards for various NFT communities in Solana? Could this be an effective strategy for user engagement?
5 Likes

This is interesting from a partnerships perspective and less so for Marinade Earn. We do make custom arrangements with other projects and Drip would be a good one to speak with given their mass appeal. Has anyone at Drip expressed interest in this type of campaign? Happy to speak with them.

4 Likes

I have not talked to anyone on the team about this Idea, but I would think that they would be receptive to this sort of idea.

3 Likes

Hello Everyone,

Stoked for Season 2 to be going ahead. I feel though that it is sub optimal for any unused $MNDE to be simply sent back. I would rather use any left over as an opportunity to improve community involvement around the governance aspect. One way to accomplish this, without significant overhead, is probably utilizing Dual Finance Options. Essentially:

  • Holders who keep their $MNDE locked in SPL governance during the term of the Season 2 program get a pro rata allocation of staking options from the DAO utilizing any $MNDE not utilized towards Season 2 Rewards.

  • The options, for instance, expire in 30 days from their issuance to eligible members and allow the purchase of more $MNDE at a discount to the prevailing market price.

  • To encourage participation by smaller accounts, and to prevent Whales taking up a large chunk of such a pool, a floor and cap could be introduced such that there is a fairer distribution amongst all eligible members.

  • One could then add some gamification, such as, wallets that vote on atleast one community proposal and held their $MNDE on SPL governance, qaulify but non voters do not - a way of rewarding activity & measuring liveness.

I believe such a proposal will supercharge active involvement in governance and create awareness around $MNDE as primarily a token with governance power. This plays well into the native staking narrative as well as a means to ease the wider community into the directed stake aspect of the product flow. All of this is made possible by virtue of rewarding, in an inflation resistant manner, actual participation in governance.

Thank you!

4 Likes

Worth noting Dual Finance provided Marinade option rewards in the past (since expired) and supports mSOL options. This proposed usage works well, but happy to spend some time designing an option based incentive program if people are receptive to it.

5 Likes

Locking MNDE has its own incentive, namely directed stake by which you can earn SOL. Don’t think we need to add incentives on top of that. Paying people to hold tokens isn’t a viable long-term strategy, because you can’t keep paying them forever and it just delays selling. Also worth mentioning – just because someone locks their MNDE (to get free options) doesn’t mean they will participate in governance.

2 Likes

Big fan of your work ser. Indeed, more than one way to skin the cat!

3 Likes

Hey

Thank you for chiming in.

It is true that locking your $MNDE has the utility from the perspective of directing a portion of the native stake. However, this fact is something that you, as an active member, may have comprehension on and see value in. Most audiences in this space, sadly, dont go that deep. If native stake is to grow, talking up this utility is important, using the token, as it gamifies the experience and sheds light on native staking as a product. That is the true network effect between the protocol & the token. I believe no amount of content dished out as an alternative will ever achieve the same result - especially in an era of “points” and “guages”, so to speak.

To the point that you cannot make people participate in governance just by simply offering the options, I feel it is even harder to make people participate in governance by writing articles. One has to ease them in and incentivize and rewards are the best way for people to see that. In any case, proposed a minimum number of voting activity for qualification and not simply locking the token.

As for this being a long term strategy, it is not. Primarily propose this as a one time campaign utilizing the left over $MNDE from Season 2 Of the Earn Program.

And yes youre correct, there will be actors who will sell and not buy in to the idea long term. However, if this campaign reinforces the utility to hardcore people like you and helps onboard another 100 people like you, that in my mind is a success.

Energy begets energy. Action begets action. Sending the unutilized token back to the vault does nothing for the protocol or the token.

Cheers!

3 Likes

Sending the unutilized token back to the vault does nothing for the protocol or the token.

It avoids unnecessary dilution and retains assets that can be used for productive purposes in the future, just like all the other tokens in the treasury. Or as Lao Tzu put it, “Doing nothing is better than being busy doing nothing.”

4 Likes