[Proposal] Integrate Protected Staking Rewards (PSR), SLA system

What do you propose?

Marinade will start protecting their stakers for 100% expected yield by commiting to deliver at least stake-weighted cluster average credits in any epoch. For validators to be eligible for the delegation from Marinade, they must have a Protected Staking Rewards (PSR) validator bond initiated and adequately funded. The suggested initial required PSR bond funding ratio is 1 SOL for each 10,000 SOL delegated by Marinade. Funding of the PSR bond will be permissionless, withdrawing only allowed for validator. The Marinade DAO will commit 4 SOL for each 10,000 SOL delegated by Marinade, to fund any potential SLA breaches beyond the initial 1 SOL coverage coming from the node operator. This protects staker even against edge cases like one of delegated node’s suffering 100% downtime or sudden commission changes in that epoch.

What is the rationale behind the proposal?

Any time a delegated node goes offline, it means 0% APY for that period, leaving users without rewards. The Marinade DAO wants to protect their users and hold delegated validators highly accountable to keep on delivering the safest SOL staking experience. It will also allow Marinade to grow the delegation set beyond the current ~130 validators.

What is the expected positive impact of this change?

Marinade users are insured to get staking rewards they expect. Validators showing their skin in the game with PSR bond become more aligned with stakers to guarantee their performance. Increased safety and trust in Marinade’s delegation will increase adoption and bring more TVL to Marinade, thus progressing decentralization of Solana network.

Any other considerations?

  • The PSR validator bonds contract is being audited by Neodyme.
  • There will be a dry-run phase with transparent data to show potentially protected events to refund stakers, before the system is put in practise.