[Proposal] Launch 160M MNDE “Open Doors” TVL Program

What do you propose?

  • Distribute up to 160M MNDE (16% total supply) to those contributing to NEW 40M net SOL staked into Marinade (1,000 SOL deposit assigns up to 4,000 MNDE).
  • MNDE distribution will be split into six bi-monthly settlements until the end of the program, eg. 1,000 SOL brought on day 1 of the grant program would generate 666 MNDE by the end of the first two months.

What is the rationale behind the proposal?

  • As a public goods infrastructure project for Solana with no initial VC funding, Marinade ultimately aims to be owned and governed by the ecosystem. As such, we should ensure the MNDE emission strategy goes along with the end goal: enabling validators and other infrastructure builders, DeFi protocols, wallets, exchanges, DAOs, NFT communities, Labs, and other key builders in the space to co-own Marinade and participate in the governance.
  • Large validators can now utilize Marinade liquid staking through the new Liquid self-stake product.
  • The MNDE liquidity mining program launched in the fall of 2021 helped mSOL TVL grow with retail in the initial months but has not brought a significant TVL increase so far in 2022.
  • MNDE market liquidity so far has been limited, making it difficult to enter into the Marinade DAO at scale, which is why Marinade introduced the Token Exchange Program in Spring, 2022.
  • The Marinade DAO recently updated its referral program, which provides the needed tracking infrastructure and allows anybody to participate in this program.
  • This program aims to open the Marinade DAO to the Solana ecosystem and create a coordination platform rather than a competing environment driven by race-to-the-bottom incentives (like eroding fees or excessive liquidity emissions for APY).
  • If 40M more SOL are staked with Marinade, the expected increase in decentralization as measured by the Nakamoto Coefficient, if this SOL stake were to come from the Superminority and move into Marinade, could grow from 31 to as high as 44.
  • The Marinade team feels strongly about aligning incentives and empowering those that will take Marinade to the next step on its journey to make Solana robust, censorship-resistant, capital efficient, and eventually ready to onboard the next billion people to crypto.

What is the expected positive impact of this change?

  • Best-case scenario, this accelerates the TVL growth and increases 7x the current TVL over the program onboarding phase while increasing 2x the current MNDE supply over the next 12 months of the program running (excluding liquidity and team allocation, to be addressed separately).
  • If TVL grows by 40M SOL staked, the new 16% MNDE ends up in the hands of builders and long-term believers in SOL, who directly contributed to this growth, effectively increasing their relative governance power in the DAO against the operating team or liquidity mining participants.
  • More transparency into Marinade’s cap table, it should be easier to illustrate Marinade’s decentralization and bring more clarity into the DAO’s ownership.

Any other considerations?

  • Worst-case scenario: this program fails to attract significant stake. How to discern whether it’s Marinade flaws or market state.
  • How to balance the system to be easy to run and prevent misuse?
  • How to make the system as open and permissionless as possible to participate? E.g. how can smaller validators participate?
  • Should we split the compensation between the SOL liquidity provider and the entity referring this person, in case these are separate? Or does the current liquidity mining cover the liquidity provider, and the referral partner can decide what part to share with their users?
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Hey to clarify:

Who are the “those contributing to NEW 40M net SOL” here referring to? Is it the wallets that is bringing the stake accounts or the protocols using their referral program?

Also, is it specifically for stake accounts or net SOL staked as well?

Solend currently has 3M mSOL deposited, with 3.1M mSOL being the deposit limit. Solend would struggle to take in significant amounts of mSOL at this juncture (until liquidity improves) but would like to be part of the program. We will look into this more and get back to mDAO regarding our involvement.

very very interesting

Would the 16% increase be for the referral program or is this a separate program all together?

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Feels like this could go towards mSOL staking instead.

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My initial idea was this new program is aimed at projects, including self-stake validators, integrated into the referral program. Those projects can then decide what to share with their users. Anyway, there are some edge cases to solve, such as if Solend onboards a self-stake validator into the program, how to split the MNDE distribution?

At the same time, I think the liquidity mining program, maybe after some adjustments, can go on with its MNDE emission rate still being adjustable by the DAO.

The program should fuel the next wave of TVL growth, turning either SOL or stake accounts into mSOL, so in my eyes, it should not be limited only to stake accounts.

I understand that Solend is currently the #1 use-case for mSOL in the Solana DeFi ecosystem, pushing it to its limits by being overexposed, effectively limiting Solend’s participation in this program. After reviewing it with the team, I would be happy to hear your thoughts on this.

What do we mean by net SOL staked? Is this net SOL for the wallet/submitter, or net SOL for Marinade?

Seems like this conflates a few separate things:

  • On the referral program, the referrer can choose the commission to add, and it’s not related to MNDE nor holding periods;
  • This is distinct from the current liquidity mining program, or whatever new version we end up settling on;
  • There isn’t a 16% increase over any current value - as described, it would assign 16% of the token supply for this kind of rewards (I expect coming out of the 35% assigned for DAO Distribution, although that isn’t stated).

Does that clear things up?

It seems that the “Open Doors” TVL program is biased slightly towards single-deposits of mSOL, such as on Friktion or Solend. These should be your main drivers under this program, as depositing mSOL/SOL liquidity or mSOL/USDC liquidity under these calculations will leave you at 50% efficiency (only referring for half of what your users deposited) and also increasing inefficiency as these mSOL liquidity mainly needs downward liquidity, not upwards.

As you pointed out, Solend’s mSOL deposits are at 3.1M, 45% of Marinade TVL and is slightly overstretched. It’s pretty difficult for Solend to take in more mSOL, but if it’s possible for Solend to take in more, it is easy to drive growth.

Conclusion:

I think we should think about downwards liquidity, mSOL → SOL / USDC liquidity a bit more before embarking on this program. That seems to be the limiting factor for mSOL’s TVL growth, since protocols like Solend relies on this as a bottleneck.

A personal idea I have is we can change “liquidity gauges” to focus more on driving actual liquidity and having the Open Doors program come in later to drive TVL growth. Offense and defense. Since Open Doors program looks like a revamped liquidity program anyways.

This negatively impacts Solend (as Solend gets MNDE from liquidity gauges) but overall should be better to drive growth for both Solend/Marinade.

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How to incentivize deeper mSOL/SOL liquidity?

Note: CLAMM makes so far fewer incentives are needed to ensure any given liquidity depth, especially for a stable pair like mSOL/SOL where people can concentrate extremely tight ranges.
Incentivizing Vault providers managing this range for them may be a good solution for many mSOL holders.

Hello folks,

We’d like to revive this conversation and move the topic forward. We have been discussing internally how to best go about tracking value locked, and are currently leaning towards there not being a “one size fits all” towards tracking.

I currently see four major areas:

  1. Keep at protocol vault;
  2. Hold on your own wallet;
  3. Validators using liquid self-stake;
  4. Referrals from projects without vaults.

Case 1 is easy enough to track: we can check how much TVL is there on a vault during a month, and reward the protocol based on that. It would be up to the protocol to decide if to keep or distribute to its users (the latter would effectively act as extra liquidity incentive rewards).

Case 2 & 3 require more active tracking, and they are something that we likely won’t have ready on day 1 without delaying the launch.

We are unsure how to handle or track case 4, as it seems to be a more fragmented version of 2. This one will likely require more design, or simply the project using a referral code and then requesting a grant from the DAO.

The initial proposal suggests providing rewards for the next 12 months of the program running. A current approach to launch this and then adapt the program as we go would be to modify the terms so that:

  • We have a rolling launch across 3 months, likely launching with only one tracking mechanism and others coming in those months;
  • Stakers will get rewarded for the TVL provided during the 12 months from the launch of the program covering their case;
  • Marinade may decide to implement some other tracking approaches during this rolling launch, as there may be other cases we haven’t considered, and we’d like to avoid having to design this in the abstract;
  • The team may also find that it cannot implement the tracking necessary for one of these in the time required, so one of these cases maybe out - I’m listing them only as some of the possible paths to pursue.

This should provide us with the flexibility necessary to adapt as we launch the program to ensure we bring in a diverse group of ecosystem participants.

Thoughts?

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Folks, if there aren’t any new comments, we’ll likely send this onchain over the weekend. Thanks!

The proposal is now active: Tribeca - Solana Governance By DAOs, For DAOs

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