What is Marinade Finance and How Does it Maintain 10% Native Staking APY?

Marinade Finance, Solana’s oldest staking operator, has delivered on its ambitious roadmap, offering over 10% APY in native staking rewards.

With Marinade providing the Solana ecosystem’s highest native staking rewards to over 147,000 wallets, there’s never been a better time to brush up on the basics.

What is Marinade’s V2 staking platform and how is it reinventing Solana’s staking landscape?

Solana Staking and Marinade Finance

The Solana network runs a Delegated Proof-of-Stake consensus mechanism. This essentially means that $SOL holders are able to commit their $SOL tokens to validators, who operate the fundamental infrastructure that powers and secures the Solana blockchain.

Validators are responsible for verifying blockchain transactions, like token transfers and onchain cryptocurrency trades. In exchange for providing this crucial service, validators earn rewards paid through $SOL token emissions.

But Solana’s staking landscape has evolved in recent years, with fierce competition growing between validators as they fight to attract more stake from depositors.

As one of Solana’s oldest DeFi protocols, Marinade Finance has consistently been at the center of Solana’s staking ecosystem. Since the successful launch of its V2 staking platform, Marinade has pushed native staking on Solana to new heights and now offers the highest APY in the ecosystem.

Understanding Marinade’s Stake Auction Marketplace

Marinade Finance’s Stake Auction Marketplace (SAM) is the trump card of its V2 platform.

Instead of simply distributing block rewards to $SOL stakers, Marinade’s SAM flipped the script and unlocked previously unavailable sources of revenue, including network transaction fees and MEV rewards.

The SAM automatically helps stakers delegate their SOL to validators offering the best returns. Validators compete by bidding on staker’s delegated $SOL, and Marinade distributes stake each epoch to the highest-yielding validators, while ensuring decentralization and eligibility requirements are met.

Leveraging this innovative new system, Marinade native staking rewards have exploded to over 10%, a figure previously considered unrealistic by the wider ecosystem. 

According to the Marinade’s V2 dashboard, the previous auction-winning APY was as high as 15.83%, suggesting that native staking rewards could theoretically still go higher in the future.

What Are Protected Staking Rewards?

On top of the SAM, Marinade’s V2 platform also introduced Protected Staking Rewards, or PSR. While the SAM offers generous rewards for stakers, Marinade’s PSR promises security and consistency.

All validators that receive stake from Marinade through the SAM are required to create a $SOL Bond at a 10,000:1 ratio to guarantee yield. In the event stakers lose out on rewards due to validator downtime or a commission change, this $SOL bond is automatically paid out to stakers.

Combining heightened yield and the assurance of protected rewards, Marinade is perhaps the most comprehensive native staking platform on the Solana network. 

With investment firms like VanEck EU offering institutional-scale Solana staking options to its clients, Marinade is well-placed to onboard the influx of TradFi capital that is touted to flow into the Solana ecosystem.

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