I think Lifinity’s treasury gauge and Lifinity’s 2M MNDE stack is giving it an unfair advantage in liquidity gauges. In regular DeFi protocols, MNDE rewards are distributed to users who are usually MNDE holders.
In lifinity, MNDE rewards does not drive TVL growth. Instead, Lifinity provides $900k TVL without letting external community or user participation and keeps all the MNDE rewards. I think this goes against the spirit of Marinade’s liquidity mining gauges.
According to Marinade:
“MNDE Liquidity mining serves 2 functions in Marinade:
- it incentivizes staking SOL and using it in DeFi integrations, being a means of acquisition and retention
- it spreads the ownership of MNDE around in the ecosystem to its users, decentralizing Marinade”
In essence, the whole point of liquidity mining is to expand and grow the use cases for mSOL, and distribute MNDE to the community. As Lifinity’s deposits are capped, an increase or decrease of MNDE rewards here leads to no change in TVL. Additionally, MNDE ownership does not get decentralized at all, only serving to further enrich Lifinity and provide it more voting power for a subsequent gauge.
What is worth noting, is that Lifinity did propose this arrangement in a previously passed proposal. And while there was some discourse, enough MNDE votes were received for the proposal to pass.
My thought right now is that the Marinade community did not realize the impact of passing such a proposal. I am opening this forum post to create an opportunity for MNDE holders to chime in on Lifinity’s value to Marinade, and whether it is beneficial for Marinade DAO to continue this gauge.
Given status quo, Lifinity is sucking up a significant & growing proportion of MNDE emissions, with no positive impact on mSOL demand, defi use cases for mSOL, or ability for the wider community to participate in MNDE emissions.
mSOL-USDC tvl on Lifinity is currently $922k, with 7 day trading volume of $3.2m. Orca’s trading volume on mSOL pairs is more than $3.2m in only 24 hours. 7 day trading on mSOL via Jupiter is currently $11.5m
Currently Lifinity is receiving 13,168 MNDE/week, 9.22% of total. Next weight it will receive 15,148 MNDE, 10.6% of total. Since Lifinity is compounding the MNDE emissions to add to its own voting power, it won’t take long until it controls 10m MNDE, all kept by the protocol to increase its own voting power.
The Lifinity gauge is operating outside of the guidelines and spirit of the Marinade Liquidity Gauge program. The current setup goes against the ethos of decentralizing MNDE ownership via open community participation, and does not generate additional use cases or demand for mSOL in Solana defi. Other protocols had used their own treasury funds to purchase MNDE in order to participate in this program, so that mSOL adoption in Solana DeFi could increase, and to help support the decentralization of Marinade by distributing MNDE to protocol users.
I would like to open the discussion about what actions could be taken to prevent the further mis-use of the Marinade Liquidity Gauge program.