Lightspeed Newsletter: Marinade V2 introduces stake auction marketplace

Today, enjoy the Lightspeed newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. Subscribe to the Lightspeed newsletter.

Howdy!

Its a shorter newsletter today, since the office is closed for Juneteenth.

Well be back to the full program tomorrow, assuming I survive this ungodly heat wave.

Marinade reveals another piece of its ‘V2’

Marinadeis building a so-called stake auction marketplace meant to raise yields for Marinade stakers, the platform announced today. Basically, the marketplace, which is not yet live, will have validators bid for delegation from some staked solana.

It‘s part of Marinade’s so-called v2, where the project is focusing on elevating yields and reducing risks.

Marinade core contributor Michael Repetnytold me the stake marketplace will have validators bid for 1,000 solana every epoch, a time period equal to about two days. By doing so, Repetny thinks Marinade can raise staking yield above 9% — possibly even to 10%. Most validators currently offer between 7-8% APY, according to Solana Compass.

Repetny compared the platform to “Booking.com for staking.”

In the current world, validators already bid for stake in the sense that they have to offer a competitive yield to users based on a mostly open marketplace. However, this validator market isn‘t the most efficient. Coinbase’svalidator doesnt offer the most attractive yields or rarest slot skips, yet it has the most stake delegated of any validator — likely because of the Coinbase brand, as Blockworks Research analyst Hayden Tsutsuipointed out in a recent report.

Repetny told me that Marinade‘s stake auction marketplace is different from the current marketplace for stake because it lets validators share block rewards with stakers. This is not possible as things stand today. Also, validators can set a higher yield on Marinade staked SOL than their typical yield, essentially bidding more for Marinade’s extra stake.

The stake auction marketplace is one piece of Marinades v2. Marinade has also debuted native staking. This reduces the risk involved with depositing staked solana into smart contracts, and protected staking rewards, which introduces something akin to slashing for underperforming validators.

Repetny said v2 is partly an institutional play, since institutions want things like protected yield and lower smart contract risk.

A “dry-run” phase of the stake auction platform is expected to roll out at the end of this month, followed by a phased fuller rollout in Q3 and Q4, Repetny said.

Interestingly, Marinade‘s v2 has little explicitly to do with liquid staking tokens (LSTs). Marinade’s mSOL is the second-largest LST, behind JitosJitoSOL.

MSOL‘s yield will stay competitive, Repetny said, but since the large majority of staked SOL isn’t in LSTs, Marinade is “mainly…interested in this 95% untapped market.”

— Jack Kubinec