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.
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
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.
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.
Here’s what we think the MNDE token represent:
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.
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.
Access: MNDE holders can verify their ownership on Discord and get a Marinator role, granting access to the engaged community part of the Discord.
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.
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.
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.
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:
- 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.
- For some pairs, liquidity mining could switch to MNDE options, allowing a permissionless purchase of MNDE from a treasury.
- 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.
- Ownership and Access is … already here and ongoing
- Q1 2022 - Exclusivity: NFTs with MNDE locking and removing some liquidity from the market
- Q1-Q2 2022: Governance on chain
- Q2 2022: Profit sharing vote
- Q2 2022: Liquidity mining redesign