Lifinity is decentralizing Marinade governance if MNDE indeed belongs to LFNTY owners. When LFNITY is freely tradeable, it’s comparable to delegation.
Lifinity does not directly drive more mSOL liquidity (pool TVL, stake), but does (should?) contribute towards driving it indirectly by ensuring tighter spreads: making mSOL look more attractive due to easy exit at (certain limited position size) at will.
Is this well priced in gauges? Likely not due to the small number of participants and Lifinity being a skilled player.
I agree that Orca Whirpools are not incentivized according to the effect they provide when compared to Lifinity. One side is that Lifinity as a competitor is ahead of the game and voting for themselves. One side is Marinade and the shared Marinade/Orca community has failed to drag Orca into the voting conversation. I would like to find a way how to improve this.
I think gauges or similar exposed incentives surface to drive the skin-in-game discussion is valuable. As this discussion shows.
I think gauges could be improved to rein in the self-reinforcing loop possibility for any participant. This should not break the terms of Lifinity grant as it would apply to everyone.
There are several solutions to be explored in here: caps per relative TVL/volume/time, quadratic voting or something else.
I simply think that Orca whirlpools does a better job, but Lifinity’s gauge goes against Marinade’s liqudity gauges goal, and vampires away incentives that can be best used on Whirlpools etc.
This begs the question of why Marinade is using gauges at all, since some of us think that we can select a better use for MNDE than what the free market dictates. Quoting myself from a chat in Marinade’s Discord:
I’ve always felt a bit weird about how LM gauges have been discussed here before, how X is getting too much or Y should be receiving more. Such comments imply that the team or the community or whoever knows what’s best for the protocol. But if that’s true then gauges shouldn’t have been created to begin with, instead just let the “experts” (whoever they are) decide what the right allocations are. Gauges are essentially the opposite – let the market decide who should receive how much. If a protocol wants more, they simply need to acquire more MNDE. So it seems like there are conflicting perspectives trying to operate simultaneously.
To be clear, not trying to say anything is right or wrong here, just pointing out that we should clarify our overall approach and who we think should be the final arbiter of how to use MNDE emissions.
I was in Marinade long before lifinity. I am a TRUE Solana believer in every sense of the word so censorship resistance is critical and the work that Marinade does is crucial.
I put a lot of effort in to modernise Marinades approach to start a partnership with lifinity and get exposure to Oracle driven AMMs. I think the fact that Jane Street, Genesis, Jump et al are heavily pushing this approach justifies this partnership.
In relation to my bags I hold both MNDE, mSOL and LFNTY. But i’ve only put circa 2% of my Tradfi net worth into Crypto so im not driven or motivated by my ‘bags’ and Folks at Marinade know that by now.
I dont see why other protocols dont load up on MNDE and compete on the guages. I dont see why an agreement that was signed and agreed in last several weeks should be amended. BTW Lifinity bended at every turn to make this partnership work. Id go as far to say that they would likely imho do so again here if it was justified and something Marinade wanted.
2M Marinade costs aro 90k right now. Its not a very big number for protocols to consider loading up imho. Just saying.
As stated earlier I believe that their are many ways in which other protocols could offer to participate in the Marinade DAO (drafting proposals/token swapping/governance suggestions) in order to help them secure a larger / more stable supply of MNDE that would allow them to then further influence the liquidity gauges, as Lifinity has done already. What is stopping the other platforms from petitioning the Marinade DAO in order to help them further incentivize behavior that would be beneficial to Marinade, MNDE, and mSOL?
Up until now it seems as if these protocols have taken MNDE rewards for granted and have not worked to build inroads with the Marinade DAO or community outside of offering the MNDE tokens to their LPs (to subsequently do with as they see fit).
In most cases, these MNDE rewards are often dumped onto the market, causing further price decline for MNDE. At least with Lifinity, you have an interested community of thousands of veLFNTY token holders who are determined to increase their stake in the Marinade protocol because they see the value that the protocol and the MNDE token itself hold.
Blaming Lifinity, and then trying to punish them, (virtually rendering the entire utility of MNDE worthless) for being the first protocol to put in the work to interact with the Marinade DAO seems very wrong to me.
There has clearly been a lack of outreach by other interested parties. Lifinity and its community (myself included) worked hard to engage with Marinade DAO in order to push forward a proposal which has large indirect benefits for mSOL as well as the obvious increase to TVL represented by the pools holdings.
These “large indirect benefits” should not be overlooked either, as Lifinity often provides the deepest liquidity for mSOL/USDC on the entire chain. If traders are going to make the transition to trading mostly with SOL staking derivatives like mSOL they are going to need deep, constant, sustainable liquidity like that which Lifinity offers.
I think we’re really playing with fire here, and it’s concerning to me to see some of the attacks against Lifinity being made so broadly. MNDE token holders should be encouraging more protocols to acquire MNDE, not trying to incentivize less people to use it.
Jumping in here to clarify: leaving aside the question of if it is obviously bad or not, I did raise it when @therealerranmoradasked about risks. I referred to it as a potential governance imbalance.
People may have missed it before the vote, though. @c2yptic has raised that it can be hard to page through weeks of discussion, which is why we are now also trying Twitter spaces to discuss the proposals.
The gauges exist precisely under the hypothesis that the community can help direct liquidity. What you refer to as “the market deciding” is protocols becoming part of the community by acquiring MNDE and participating.
If this was purely a market decision, then we could have a simpler approach like auctioning gauge output.
There will be community members who think that the vote is going wrong yet don’t have financial power equivalent to a protocol, so can’t affect change with their votes. It is perfectly reasonable for them to argue their case, and try to help direct liquidity by convincing other participants.
Discussions may lead nowhere, and proposals may fail. But the community discussing if X is getting too much or Y should be receiving more is a perfectly reasonable approach to governance when you aren’t swinging a huge MNDE club.
There is a lot of noise here, which is clouding the original points raised.
The focus of this proposal seems to be about whether the closed nature of Lifinity, & the lack of community MNDE distribution, is going against what the liquidity gauges were designed for. To me it seems clear that there is an issue here, and the scope of the Lifinity arrangement is not matching with the designed scope of the liquidity gauges. This should be addressed sooner rather than later.
I can also see why there is alot of friction here, as it looks like every other LM gauge has been formed from a protocol who has participated in the token exchange program and purchased MNDE to kick off involvement and support Marinade. Feels to me like a miss from Marinade that they allowed this ad hoc grant model to come in, mostly after the token exchange program was completed, giving away way more MNDE than most protocols purchased, to a protocol that does not add outsized value vs others in the program.
My suggestion is that Lifinity got their grant fair and square, and should keep it (whether or not the realized value is as much as proposed) to do whatever they want with it, but should not be listed in the LM gauges, as there is no match with what they do vs the design of the LM gauge model.
Thanks @sol-defi. I think there are some distracting points here.
Let’s focus on the main points:
Point #1: Should Marinade allow for liquidity gauges, where TVL is capped/fixed, preventing users from depositing funds.
Point #2: Should Marinade continue the Lifinity gauge, due to the feedback loop + centralization of Marinade ownership.
As @sol-defi mentioned, this isn’t targetted at Lifinity. I simply aim to help shed light on Marinade’s core goals of Liquidity Gauges. I personally believe there is a better way to reward/track Lifinity’s mSOL/USDC properly, and call upon @Durden to push another proposal or post regarding volumetric goals and receive MNDE that way. This way we solve the issue at hand (Liquidity gauges missing it’s original goal) while also incentivize Lifinity to do what they are doing.
I will begin drafting the proposal for vote. We have spent a lot of time having a good productive discussion, but it will soon be time to let MNDE do the talking.
I’m disappointed this discussion failed to capture your interest, but basically I would like to restore liquidity gauges to its original purpose, and let Lifinity find another (and better) way to track their value to mDAO.
Understand if you vote to block it but wish you can see the contrasting points.
It’s a very short sighted view that will hinder the long term progress and growth of Marinade. I’m not here to convince you of that as I have better things to do.
You mean for outdated LP pools which dump MNDE on the market, hence dump MNDE price
Lets target Lifinity as they do things differently and change the status quo. Lifinity owners get punished for lifinity holding and stacking their MNDE for them.
You couldnt make this up
I’ll be astonished if MNDE holders vote for this. But lets see. Im sure there are better ways to address this than outright exclusion of a Marinade partner with a large community who voted to hold their MNDE long term as opposed to selling it.
What we originally proposed for volume-based compensation was an amount of MNDE equivalent to 0.05% of the volume generated with a cap of $100M per month. I think the main issue from Marinade’s side was that this would have to come from somewhere other than the LM gauge allocation. It could come from the treasury, but this would be an addition to what’s already doled out through the LM gauges, increasing net emissions. Taking it out of the LM gauge allocation so there’s no net increase of emissions would make more sense, but maybe that’s complicated to implement. I haven’t thought too deeply about this; I think the Marinade team would have better perspective on what is and isn’t feasible.
Team member here. Marinade doesn’t get to “allow” or “reject” a model beyond the governance vote itself - there is no veto or overrule. The most team members can do is vote against a proposal, if they don’t believe it is good for the protocol.
I do think the potential for this “loop” is something that we could have tried to surface more, as it is clear from this discussion that some parties involved in this discussion missed it when I pointed it out. There is a fine line between surfacing a potential issue and coming out against a proposal, though, and I personally tend to err on the side of presenting things neutrally when discussing governance.
A few things to keep in mind here:
Said protocols who had purchased MNDE could have voted against the proposal at the time;
It can be hard for voters to know what value a partnership will add until it starts executing - they vote based on expectations.
LM gauges had a specific defined working model and purpose, which is to increase mSOL in DeFi via LM, and to distribute MNDE to the community to support decentralization of Marinade. Other protocols distributing their MNDE to LPs doesn’t mean it is dumped on the market, that’s literally what the definition of liquidity mining is.
I don’t see this as the case. Many here incl me hold Flares and LFNTY. Yes Lifinity does things differently, and that’s fine. But then it doesn’t make sense to add protocols to a liquidity mining program, who do things vastly different to what the scope of liquidity mining is.
The main discourse from consensus I see, seems to be 2 people in the Lifinity team and a couple like you who are active Lifinity community members. But perhaps this forum is not a good representation of MNDE holders. Better to let governance do its work.
Under the current model, even if Lifinity’s mSOL-USDC does 0 volume, Lifinity is still rewarded with an increase of MNDE. There needs to be a new model, where mDAO can be presented results or numbers from the mSOL/USDC pool, and receive MNDE in line with the contribution.
I have seen Durden and Lifinity lovers say “mSOL/USDC on Lifinity is good!” but have yet numbers that justify or quantify how it is actually good.
The goal of this proposal isnt to target Lifinity. It is to restore the original goals of Liquidity Gauges, and encouraging Lifinity to explore another way of being rewarded for it’s work.
It’s great to see two top projects working constructively to figure things out through decentralized governance, which is in its infancy. Amending terms of a passed proposal isn’t ideal, but reasonable since some key implications were unclear to many. Both Lifinity and Marinade are reputable projects who will undoubtedly cross paths again, so it’s better to find a resolution both accept than have one feel they got the short end of the stick.
The main problems I see are:
mDAO is overpaying for liquidity compared to other options
The amount paid is ever-increasing with no corresponding improvement in service
I want to highlight another issue that was only touched briefly:
Lifinity liquidity is pulled when markets are volatile, which is an unfortunate coincidence since that’s exactly when liquidity is most-needed to avoid bad liquidations on lending protocols. mSOL holders who borrow have a higher risk of wrongful liquidation than when liquidity is on a classic AMM.
Lifinity was granted 2M MNDE and will receive another 6M MNDE in gauge rewards after a year (using the current gauge of 17K * 365, and not factoring compounding). Would mDAO pay Alameda almost $400K to LP $900K for a year? This reality wasn’t quantified in the original proposal, so it’s understandable to be surprised by this revelation.
Other AMMs don’t have a pricing problem since both the supply of MNDE rewards and the demand for LPing are dynamic. The result is that liquidity is always rented at a market price. In contrast, on Lifinity the supply of MNDE rewards is dynamic but the demand for LPing is rigid. Liquidity gauges aren’t a good fit for closed pools.
I’m in support of turning off the gauge and finding another method of incentivizing Lifinity to provide liquidity.
Lifinity liquidity is pulled when markets are volatile, which is an unfortunate coincidence since that’s exactly when liquidity is most-needed to avoid bad liquidations on lending protocols. mSOL holders who borrow have a higher risk of wrongful liquidation than when liquidity is on a classic AMM.
This is inaccurate. Lifinity never “pulls liquidity”; it adjusts prices more quickly and intelligently than other DEXs. Quoting myself from a post on Marinade’s Discord (since the same point was being raised):
I understand that Solend cares most about liquidity during liquidations, which tend to occur when price is volatile, but that’s also when Lifinity tends to be ahead of the curve in terms of correctly pricing assets. Other DEXs will tend to offer “better” prices for liquidations (but not for the other way – Lifinity will likely have the best price for the other direction), but that’s because they have no efficient way of pricing their assets and mitigating IL. So Lifinity may not offer good liquidity for liquidations, but that is merely a single use case for trading. For example, some people want to buy the dip or take profit rather than trade with the momentum (as liquidators do), and Lifinity will often offer them the best price.
