Abstract:
Marinade Finance proposes to modify the Delayed Unstake feature for mSOL, aligning it with industry best practices and ensuring better protection for Marinade’s treasury. Under the new mechanism, users will receive a staked SOL account instead of a claimable SOL ticket. Additionally, a 10 basis points (bps) fee will be introduced on all delayed unstake transactions, reflecting a standard approach in the wider market.
Background
The Delayed Unstake feature was originally designed to offer users a straightforward way to convert their mSOL back to SOL with minimal friction. Users currently receive a ticket representing claimable SOL, which can be redeemed after a certain waiting period.
While this model has proven popular, recent market conditions have highlighted potential economic risks for the Marinade treasury.
Proposed Changes
- Transition to a staked SOL account
- Instead of receiving a ticket with claimable SOL, users opting for delayed unstake will now be provided with a stake account holding the SOL.
- Users can then withdraw from this stake account once it becomes fully deactivated, aligning Marinade with common industry procedures.
- Minimum delayed unstake threshold
- A minimum threshold of 1 SOL applies to delayed unstake requests.
- For amounts below 1 SOL, users will be directed to perform an instant unstake in the app through the liquidity provided on Jupiter.
- Introduction of a 10 bps Fee
- Each delayed unstake transaction will incur a 10 bps fee, credited to the Marinade treasury.
- The fee is not intended as a profit center for Marinade, but rather serving as an industry-standard safeguard aimed at discouraging exploitative behaviors and protecting the protocol from malicious actors.
- Example attack scenario:
- A malicious third party mints a large amount of an LST (e.g., mSOL) by depositing staked tokens, then instantly swaps it via a high-liquidity pool, draining liquidity and leaving other participants at a disadvantage.
- Introducing a fee discourages rapid cycling in and out of the protocol, reducing the likelihood of similar “toxic flow” events.
Rationale
- Risk mitigation and alignment with industry standards
- The current delayed unstake poses a risk to Marinade’s financial health, particularly in volatile markets where unstaking to a stake account is not dependent on successful contract cranking and as such is a more stable option with no potential downtime.
- Introducing a fee on delayed unstake transactions is a recognized market practice to discourage malicious activity.
- Simplified mechanics and reduced complexity
- Transitioning from a “ticket” system to a direct stake account aligns with how Solana staking naturally operates, reducing internal complexities.
- Users gain a more transparent, standard experience while maintaining the flexibility to redeem their stake at a later time.
- User choice and market efficiency
- The split mechanism (delayed vs. instant unstake) empowers users to choose the unstaking method best suited for their desired liquidity speed and fee tolerance.
Economics of Unstake Options
- Instant unstake
- Required for amounts below 1 SOL (and recommended for larger amounts when market conditions are favorable).
- Subject to liquidity on chain and potential priority fees and slippage.
- Users typically pay a spread based on pool conditions rather than a fixed protocol fee.
- Delayed unstake
- Ideal for larger amounts of SOL.
- Incurs a 10 bps fee upon withdrawal.
- The 10 bps fee is roughly equivalent to about two epochs of staking rewards, depending on validator performance and network conditions.
- If real-time liquidity is abundant and the spread is minimal, users may find it cheaper to unstake instantly; conversely, if the spread is high, delayed unstake could be more cost-effective.
- Example threshold
- Delayed unstake becomes more beneficial for higher amounts (e.g., 100,000 SOL), where the 10 bps fee is relatively small compared to potential slippage on large trades in the open market.
- Users are encouraged to evaluate liquidity conditions and fees before choosing between instant and delayed unstake.
Conclusion
By revising the Delayed Unstake mechanism for mSOL, Marinade Finance seeks to:
- Enhance protocol resilience: Reduce treasury risks and align with industry best practices.
- Streamline user experience: Replace ticket-based claims with stake accounts for clearer, more secure management of delayed unstake requests.
- Offer balanced unstake choices: Provide both a fee-based delayed option and a market-driven instant option to suit varying user needs.
We invite the community to share your feedback on these changes. Your input is invaluable in ensuring that Marinade remains a stable, user-focused platform.