MNDE Utility and a roadmap

Tokenomics
#1

MENU - Cooking MNDE utility

This text outlines the chef team’s thoughts on the utility of the Marinade token. Chefs warmly invite you to disagree, refute, counter, extrapolate, and propose changes within the boundaries of a respectful, constructive discussion. Marinade cherishes the open process in service of arriving at the best possible result, together. Cheers for being on board with that; let’s dig in.

Starter: Problems and Opportunities

  1. Holding MNDE is not exciting

    • There is no current utility in holding MNDE besides providing liquidity or selling it straight away. Getting MNDE (through retroactive rewards or liquidity mining) is exciting nonetheless - as it is something that can be sold or speculated on.
    • There has been a lack of clarity in the token roadmap and Marinde DAO timeline

  2. Liquidity Mining is expensive

    • While mSOL needs liquidity and liquidity mining could be the easiest way to bootstrap it, we believe that in the long-term, Marinade is overpaying for temporary liquidity.
    • As above: liquidity mining is exciting.

  3. Contributors could end up with too little power over protocol

    • While the major source of MNDE distribution is liquidity mining, it caters towards wealthy SOL owners over Marinade DAO contributors working daily on the protocol.

Main Course: Solutions and roadmap

Here’s what we think the MNDE token represent:

  1. Ownership: You own a portion of one of the most important projects on Solana, which secures and decentralizes the network and powers DeFI by unlocking the stake’s value.

  2. Governance: Not only do you own a piece, but you get an active vote on Marinade’s future.

    • We expect that the main program and its parameters will remain mostly static and won’t need much governance.
    • The exciting part of Marinade governance will be using your MNDE votes to nurture and allocate Marinade’s treasury: to balance the value growth for holders and support the Solana ecosystem at large.

  3. Access: MNDE holders can verify their ownership on Discord and get a Marinator role, granting access to the engaged community part of the Discord.

  4. Sharing profit: Currently, all staking fees are going to the treasury. Using governance, MNDE will be able to activate MNDE treasury profit sharing and discuss its terms.

  5. Exclusivity: MNDE will be the only way to get a limited Marinade Chefs NFT. Chefs aim at the Marinade users to stake and lock their MNDE in exchange for a unique piece of art to show belonging to the Marinade tribe.
    Underlying MNDE will be locked and unlockable only by burning the NFT, making the Chefs a deflationary collection. This MNDE should still be usable in the governance.

Combining these five options in our Marinade (token) will make it exciting to hold MNDE and ensure that everyone is motivated to make Marinade the tastiest project on Solana and beyond, together.
This could start with rethinking liquidity mining and contribution. To get us there, let’s look closer at the Marinade treasury.

Treasury

Marinade treasury collects the continuous staking fees and one-time unstaking fees. Both of those are denominated in mSOL and earning staking fees. A part of those total fees will be shared with partners that integrate staking on their platforms using a referral program.
Beyond that, our treasury holds the 35% of MNDE total supply dedicated for Marinade DAO to use as it sees fit. We also started using the 35% MNDE total supply dedicated to community by distributing it to ecosystem partners and to anyone via liquidity mining.
And lastly, to pay contributors, the treasury sometimes holds a small amount of USDC (exchanged for mSOL) and a small amount of mSOL-MNDE LP tokens which it collected to experiment with protocol-owned liquidity.

It was this experiment that led Chefs to put more thoughts into making of the Marinade treasury an active participant in the ecosystem. Marinade is considering offering discounted and staked+locked MNDE in exchange for liquidity in several forms (mSOL, mSOL-SOL, and mSOL-MNDE LP, USDC).
LP fees will be added to the profit sharing and the diversified treasury provides liquidity and security for the holders to always have a buyer to their selling.

Liquidity mining

If the offer is successful and the treasury gets enough liquidity to become a liquidity provider itself, it should allow Marinade to rethink the liquidity mining program.

The Marinade mission remains: (decentralize the network and improve its security by) staking all the SOL and replace it by mSOL everywhere.

Currently, MNDE emissions distribute the Marinade’s ownership with a promise in covering the philosophical debt of MNDE’s utility further down the road.

MNDE profit-sharing, improved by the discounted offer should allow Marinade to change this formula: by reducing MNDE emissions as incentives for using mSOL, and putting more focus on MNDE as a revenue-sharing token.
This should protect the clear incentive to get more SOL staked at Marinade while providing clear benefits in terms of fees going to MNDE holders.

It’s too soon for specifics, but the liquidity mining program can split into three distinct branches:

  1. For critical liquidity pairs like mSOL-USDC, -SOL, maybe -ETH, -BTC, Marinade token will be distributed as MNDE token. We hope that some more pairs will become critical as Solana grows.
  2. For some pairs, liquidity mining could switch to MNDE options, allowing a permissionless purchase of MNDE from a treasury.
  3. Lastly, the emission cut can be re-directed at Marinade DAO contributors and ecosystem partners to continue establishing Marinade at the front of Solana ecosystem and sharing the success of doing so.

Dessert: Proposed Utility Roadmap

  1. Ownership and Access is … already here and ongoing
  2. Q1 2022 - Exclusivity: NFTs with MNDE locking and removing some liquidity from the market
  3. Q1-Q2 2022: Governance on chain
  4. Q2 2022: Profit sharing vote
  5. Q2 2022: Liquidity mining redesign
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Grow the Pie: 18 ways to increase liquid staking adoption from 2.5% to 5% through Product Led Growth and Acquisition Strategies
#2

If MNDE LM rewards are done away with, what’s the plan for getting other protocols to adopt mSOL and also getting people to provide liquidity? Has any analysis been done on the stickiness (or lack thereof) of liquidity provided when there’s a transition from there being MNDE rewards to them being removed?

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#3

Based on my observations, the mSOL liquidity is only sticky IF mSOL itself has a significant utility in the protocol (Lending, Perps) or brings interesting APY. Or put it another way, mSOL holders are among the more active users in the ecosystem, quickly exploring new opportunities.

The degree and the plan of removing LM incentives is to be discussed and constructed here. MNDE options as a replacement look like a promising way to explore (it offers something to farm but does not spend the token itself).
Beyond that, protocols should be incentivised indirectly as they are: mSOL brings liquidity and volume, is great collateral, and sits in the middle of the most effective swap routes. Direct incetivization by giving MNDE grants to protocols for mSOL implementation could be another possibility.

4 Likes
#4

I didn’t communicate my concern clearly.

I’m wondering how you will get protocols and projects to pair tokens with mSOL rather than other stake pool tokens or SOL. SOL in particular is the default right now, and protocols generally give more rewards to SOL pools rather than mSOL (or other stake pool token) pools, or SOL pools are the first ones they spin up, rather than mSOL. The mSOL liquidity that’s been built up until now is mostly due to MNDE rewards or other protocols offering rewards. These are all temporary measures. I’m curious what the long-term gameplan is for making mSOL the default unit in DeFi (i.e. in the absence of such rewards). In my mind, this has to involve other protocols making a conscious decision to favor Marinade over other stake pools. What’s the plan to convince them to go all in?

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#5

Good question, and curious too.

Just one thing to add, it’s understandable if mSOL pool rewards are lower, since it’s gaining 7% APY against SOL by default.

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#6

There’s no grand plan how to get to such state. The bigger Marinade gets, the easier this should be, provided it can keep true to its values of openness and inclusiveness and continues to deliver on promises. And here are few specific options available:

  • generally become a recognised good actor in the ecosystem over long term
  • incentivizing the protocols facing such choice by a one time MNDE donation to go with mSOL and get them a seat at Marinade’s table
  • leading by the example and providing grant funding to new protocols under Marinade with similar condition in place
  • convincing the general Solana DeFi users about mSOL, who in turn should voice such preference towards new protocols
  • getting big enough where mSOL becomes a de-facto lifeblood of Solana DeFi
  • pushing to implement account abstraction on Solana, where the choice between SOL and mSOL would lose the meaning

What do you think?

4 Likes
#7

I’m somewhat confused by the specifics of locking our MNDE in exchange for an NFT. What is the benefit of doing so? In my opinion the goal should be to generate value within MNDE, not make it “exciting.”

While I agree that Marinade is probably over-paying for liquidity mining on mSOL right now, that is also quite obviously the reason why mSOL adoption has rapidly outpaced that of other liquid staking competitors on Solana. I think that any change to this policy needs to be approached very carefully. If liquidity mining rewards are going away, they need to be replaced by something with equal incentive. Financial incentive.

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#8

This sounds interesting but I don’t know what it means. Can you expound?

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#10

NFT
From one angle, locking MNDE narrows down the deal between MNDE holders and the protocol: revenue share will go to those staking/locking MNDE. So as an MNDE holder, you will have a choice to keep your position liquid or to “pay an opportunity cost” and participate in a revenue share.
NFT is to soften the latter choice by rewarding the locked-MNDE receipt with some cool visual form.

From another angle, I am playing with an idea of how to make the NFT reflect the social status of the MNDE stakers. From the protocol’s perspective and strategy alignment, it’s cool to be in Marinade for the long term.

Incentives
What are your thoughts on the options (as a financial instrument to purchase MNDE at some price) there? If it was not clear in the text: we might work with PsyOptions to distribute in liquidity mining MNDE options to purchase MNDE from the treasury instead of giving away actual MNDE token.

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#11

I think all of this comes down to the APY on the revenue sharing.

I’ll be the first to admit that I’m only here because of the LM partnership that you have with Solend. I was looking to stake my SOL on a validator and saw that I could earn more with mSOL + lending, so that’s the route I went. Everything pertaining to social status, etc… absolutely zero interest. All I care about is how mSOL can make SOL staking more profitable.

As it stands, staking directly with a validator will become more profitable if MNDE rewards go away or the MNDE token continues to freefall in value. I think avoiding that outcome should be priority #1. We need to keep mSOL more attractive than staking directly. “Social” rewards might be enough for some folks in Discord, but the majority will bounce right off of that. At the end of the day we’re all here to make money.

Options are interesting. I know Solend is also flirting with that idea with their SLND rewards. It has potential, but I am skeptical. Depending on where you set the strike/expiry, you run the risk of distributing rewards that end up expiring worthless. That only needs to happen to someone once before they re-allocate their capital to a surer bet.

Right now, MNDE is massively failing in the opportunity cost department. It’s a non-productive asset that continues to decrease in value. I think the first thing that needs to happen it somehow get the token listed on lending platforms like Solend or Fancium so holders can at least earn some yield on it. I don’t know what the economics of that looks like from Marinade’s perspective, but it’s at least something that can help alleviate some of the sell pressure. We need a way for the token to be productive as absolutely soon as possible.

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#12

Has the team considered boosting voting power according to how long MNDE is locked up, similar to Curve on Ethereum? I think this would probably be a more powerful incentive than getting an NFT (although I like that too) and it properly weights voting power toward those with a longer-term outlook.

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#13

You’ve several options:

  1. You either hold SOL and earn no staking rewards
  2. You stake the SOL via “traditional” methods, and earn staking rewards but your capital is locked.
  3. You convert to mSOL and then you earn staking rewards AND you’ve your capital to get additional DEFI Yield

Because Marinade is already “seasoned” ;), managing 7m SOL, contract risk is very, very low.
So choosing option 3) is a no-brainer
I don’t think that at this point we need a lot of incentives to for people to use mSOL.

  1. => no yield
  2. => 7% APY
  3. => 20% APY (Marinade+DEFI)

And since 3) is a no-brainer, if you’re a new protocol, it’s a rational choice for you to implement mSOL form the start, basically because you’ve 7 mil mSOL looking for yield, and you’re translating the same options to your users:

  1. use SOL => get our yield
  2. use mSOL => get our yield AND 6.7% ON TOP, and secure the network

So your users might ask you: why do you require me to deposit SOL? you’re forcing me to lose staking rewards and making the network less secure?. Please support mSOL!

3 Likes
#14

I had your same idea but in general I do not belive is the right way to incentivize MNDE ownership.
From one side this strategy will decrease the selling pressure but on the other hand we will see the birth of protocols like Convex, which are not bad at all but I don’t think is the optimum to have massive amounts of MNDE owned by a single protocol (centralization) since, from my point of view, MNDE should be seen mainly as a DAO token.
[if you want you can check this article where is explained what is happening on Convex with the Frax Finance’s tokens and the loose of governance power for those who decide to block their FXS on convex December Update: Protocol Expansion, CVX/ETH Incentive Migration | by Convex Finance | Dec, 2021 | Medium]

I perfectly get the point of “molnizzle” and what I deduce from his/her argument is a dichotomy: speculation and governance power.
I don’t think (maybe wrongly) that we can keep people involved just with the price correlated at MNDE, otherwise the connection is Governance = Money.
I think we should more focus on what money is used for. In life we use money mainly for two scopes: buy stuff and access to services. We can act on the second point.
Let’s imagine that owning or blocking our MNDEs we could get access not only to vote power but also to web 3.0 services. There are protocols, such as Unstoppable Domains, that will become essential and in the near future for sure we will have decentr. streaming platforms, etc.
Services for which people would pay.
What if people could get premiums to this sevices just owning their MNDE?
This would create a virtuous circle → Hodling MNDE = voting power + benefits → people get involved and are encouraged to don’t convert their MNDE in stable → MNDE increases its value.

For sure we are at an early phase on services but this would lead also to integration between multiple protocols even if they are different between them.

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#15

I think the argument is flawed. It’s akin to saying we don’t want Marinade because it manages a lot of SOL, and we don’t want centralization. Of course, this argument fails because Marinade delegates the SOL to many validators. Convex is governed by people who hold veCVX or whatever, so in the end the voting power of the CRV it holds is distributed, and I wouldn’t call that centralization.

But even putting that aside, you can just design it in such a way that a Convex wouldn’t work. For example, you could employ a very simple design where you have to lock MNDE to receive a portion of mSOL fees, and locking for 4 years gives you more than 1 year would. There is no room for a Convex style protocol in this design.

The use case you lay out would be nice, but it would essentially be other protocols giving free value to MNDE holders, and I don’t know why they would do that.

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#16

Firstly I’d like to say this thread is riveting and its nice to be at the cutting edge of the Sol ecosystem right now. I really like the quality of posts and ideas presented.Thanks also to Gekonn and team for laying out this roadmap for MNDE utility. I will post separately on MNDE utility later.

In particular I like the post from luciotato. I firmly believe once you use mSOL once you will never go back as per reasons outlined.

So can our No1 Target be to introduce new mSOL users? I brought a guy with circa 5000 Sol tokens to the site but he didn’t bite. He was uncertain about the liquidity of mSOl, he couldn’t understand it fully and didn’t get the point in using it if there was a 0.3% - 3% fee for immediate unstake. Why lock it up he said for an epoch and pay fee for unstake. He left without any mSOL. This guy works in corporate finance IRL.

So if we accept the premise that most users of mSOL won’t go back to SOL then growing initial users should be main goal. However new users should also ideally get their mSOL from staking SOL for new mSOL. if someone wants mSOL and they go to Saber, Jup or Raydium and swap SOL to get it we are not increasing staked SOL. I think that is why we hit a stop once we got to 6 or 7 mil staked.

So I feel we REALLY need to drive newbies to marinade.finance website (improve landing page to clearly explain benefits so corporate finance above engages) and get them to actually stake SOL for mSOL rather than aquire it via a swap. That means EXTRA bonus for doing this and it will drive up staked SOL but also create more mSOL in circulation. Maybe you get a one off qty 1 token (like a badge or key you can use) which represents ‘New mSOL Created’ token and this is required in some way for MNDE utility rewards. It would be good if we could push this with referral partners but it’s kind of against their interest as they make fees from swaps.

Q1- Why would anyone use immediate unstake when they can simply use a swap back to SOL ?

Q2- Who currently stakes on the site and why? (Ie Not just swap)

Q3- Who unstakes and is this still needed as surely we have enough mSOL liquidity out in ecosystem already. I get we needed it initially? OK, maybe it is needed just in case but can we hide it away somewhere on the site.

4 Likes
#17

MNDE Utility

  • Agree with post by Gekonn by in large. Some nice out of the box thinking.

  • MNDE locking - It will strengthen price as less circulating. I like NFT idea also and deflation mechanism via burn. I think we may need maybe 5 NFT types based on scale/qty of MNDE locked. (And new ‘mSOL created’ minters badge from above). How to stop multiple NFTs? Maybe use grape verify marinators only so 1 NFT per user name on Marinade discord as opposed to people gaming and using several wallets. These are just details to be ironed out but I love the principle of it and would do it with my MNDE if it was available. Of course still retaining right to vote and also still getting profit sharing / rewards is a must.

  • DAO providing liquidity - This idea I like the most. LM rewards using MNDE as pointed out is both expensive and non sticky. Again if we implement MNDE utility and incentives there is a reason to want to aquire more MNDE. Offering options or discounted price on MNDE tokens would certainly attract people in terms of providing liquidity to the DAO itself.

Advantages:

× Unlike most other tokens mSOL is already going up ~ 7% APY so people will lock it up like a high yield bank account

× This should make the liquidity sticky especially if we offer vested time variable tiered reward MNDE locks (bonfida has a great vested unlock program)

× With DAO providing liquidity then we can hook up with JUP (or others) to provide swaps and put majority of swap fees back into MNDE treasury to reward LP providers & NFT holders etc. This shud drive further growth of MNDE price especially as Marinade is making more money from swap fees as opposed to paying outside LP providers via MNDE emissions & loosing out on the fees

× Regardless I’m almost certain we would still have healthy 3rd party defi partners offering lending, borrowing, of mSOL etc as it is in such wide circulation. We could launch our own LP side by side and balance between the existing. Basic rules of supply and demand will govern outcomes. A lot of big pools on raydium at the moment have no added farming rewards. They just offer providers a share of fees.BTW the incentives we are providing for MNDE will increase demand to borrow it also so lending fees will rise for that as well

I think if we make MNDE stronger the price will rise. Then automatically this makes mSOL stronger. Which in turn makes SOL stronger.

3 Likes
#18

I feel that pushing for newbies to stake on Marinade’s site is a disingenuous goal. If users can get a better price elsewhere, let’s not try to hide that fact from them for our own benefit. Present it as an option, sure, but let them see the full picture.

What would be cool, though, was if Marinade linked their staking into aggregators, so that if it gives the best price, you automatically stake through Marinade rather than swap elsewhere. (Maybe this is already the case and I just don’t know it.)

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#19

Options would also seem to appeal to a different type of user - you have to be closer to a sophisticated trader, willing to make calculations in advance that an average SOL staker doesn’t necessarily make.

fwiw, you only earn yield if someone else is willing to borrow the token from you. The only reason they would do that is because of the token’s value proposition, so that needs to come before any expectations of lending yield and platforms.

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#20

We seem to have come up with a bunch of ideas on mechanics of what to do with MNDE, like lending, locking, or NFT generation.

However, a governance token has financial value if the thing being governed has or accrues value.

With that in mind, is there an approach to growing Marinade’s treasury? That would appear to be the simplest path to growing MNDE’s worth.

@Gekonn’s comments on his original post (below) make it seem like this is a possibility, but I’m not clear on that is the plan.

[…]

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#21

It’s a little bit of risk, but does leveraging the integration already established with being able to Bond Invictus using mSOL make any sense for expanding the treasury to add distribution to MNDE?

Edit: When we flirt with distributions (From a U.S. Law holder) does that get too close to Dividends and Securities or on a global scale does that not matter

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