Marinade Finance Unveils Governance Proposal to Combat Malicious MEV

In the wake of growing concerns about MEV centralization on the network, Solana’s oldest staking provider has proposed what may be a timely solution.

Finn Miller

Published: Dec 12, 2024 at 19:51

Marinade Finance, Solana’s staking pioneers, has initiated a new governance proposal aimed at mitigating the impact of malicious validators and democratizing MEV across the network.

The proposal comes at a critical time for Solana’s staking landscape. Concerned with ongoing sandwich attacks and the growing centralization of network stake, Solana researchers and validators have demanded change.

How does Marinade Finance intend to address MEV woes and foster greater balance in Solana staking?

The Pros and Cons of MEV

The crypto community’s perception of MEV is arguably one-sided, with the bulk of the blockchain world associating MEV with malicious sandwich attacks. Marinade Finance has a more nuanced view, arguing that “MEV is both a challenge and an opportunity.”

In the proposal drafted by Marinade Finance, Head Chef Michael Repetny highlights the benefits of MEV, which helps to optimize onchain liquidity flows, capital efficiency, and fairly reward validators for their essential services.

Meanwhile, Repetny acknowledges that MEV can also be abused to exploit end users and undermine the decentralization of the network. According to the recent proposal, MEV concerns have been further exacerbated after Jito Labs suspended its public mempool, leading to a proliferation of shady, private operations.

Marinade Finance has always perpetuated a balanced approach to MEV. The staking provider actively employs strategies to mitigate malicious MEV at both protocol and application layers to optimize the end-user experience. However, Marinade admits MEV is also a necessary evil, and should be distributed fairly through permissionless markets.

By upholding this belief, Marinade has succeeded in offering depositors over 10% native staking APY, the highest native staking rewards across the Solana ecosystem.

How Will Marinade Balance MEV on Solana

Marinade’s governance proposal is centered around three key principles: The formation of a public committee overseeing delegation, the reopening of a public mempool, and the funding of comprehensive and transparent Solana MEV research.

Marinade proposes establishing a public group of reputable community members to review the current validator set. The committee will exercise the right to blacklist malicious actors and slash PSR (Protected Staking Rewards) bonds to recover costs of stake redelegation and discourage future infringements.

Additionally, Marinade will champion the reopening of a public mempool, which would distribute MEV fairly and alleviate concentrations of power across the network.

Finally, Marinade suggests allocating funds from the MNDE DAO treasury to support comprehensive research into Solana MEV. This research would provide valuable insights that could inspire new MEV mitigation strategies and educate validator operators and the wider ecosystem.

What Are the Risks if Malicious Actors are Left Unchecked?

If network participants don’t take timely action, researchers argue that the consequences could be severe for Solana’s staking landscape.

Ben Coverston, a Partner at Temporal, a crypto research and development firm, argues that changes are needed sooner rather than later.

solscan

Highlighting how one of Solana’s most infamous sandwich bots, arsc, has accumulated over 807,000 $SOL in delegated stake, Coverston predicts this malicious actor could become “Solana’s largest staker within 1-2 years.”

Not only would this outcome result in millions of dollars extracted from traders, it would also be a severe blow to network decentralization and security.

Marinade’s new governance proposal is currently open for community debate. Network participants are encouraged to share their opinions and contribute to discussion ahead of the vote.