What is mSOL?
mSOL represents your staked SOL in the Marinade stake pool. Here's what that means and how it unlocks your liquidity.
mSOL is a liquid staking token that you receive when you stake SOL on the Marinade protocol. These mSOL tokens represent your staked SOL tokens in Marinade's stake pool.
They act as a receipt, allowing you to exchange them later on for your staked SOL and the earned rewards. Meanwhile, you can use mSOL in DeFi while the token's price accrues in value vs. the price of your SOL.
mSOL is a rewards-accruing liquid staking token. This means that after each Solana epoch (2-3 days), its value is recalculated based on the staking rewards earned by the Marinade Stake Pool. The price of mSOL is calculated as follows:
Price of mSOL = total_staked / tokens_minted
As the protocol cannot mint new mSOL without SOL being exchanged for them, only the total staked amount is going up (for any new mSOL minted, the same amount of SOL, at the current price of mSOL, has to be staked and also joins the total staked amount).
This means that the price of mSOL is going up each epoch relative to SOL as long as staking rewards are distributed for the SOL staked in the protocol. If you keep mSOL for a year, its value against SOL will have gained 7-8% (Marinade's APY at the time of writing).
No. You will realize your SOL staking rewards when you unstake mSOL for SOL, but the value of your mSOL is continually growing. If you choose delayed unstake, you will need to return to the Marinade DApp to claim your SOL. You can sign up for Dialect alerts by clicking on the bell icon next to your wallet in the Marinade DApp to be notified when your stake is ready to be claimed via email, telegram, SMS, or wallet. If you choose instant unstake, your SOL plus SOL staking rewards minus the unstake fee will be sent to your wallet immediately.
As long as the Marinade protocol earns staking rewards and you hold mSOL, your SOL stake is growing. So how does Marinade ensure that the protocol is safe?
Marinade has undergone a series of audits to ensure that the code cannot be exploited. Many of the elements of Marinade are open source, and the mSOL smart contract is under control of a 13-party community multisig that requires six signers to make a change. Smart contract risks always exist in DeFi, but mSOL's tokenomics and the Marinade protocol are both designed with security first and foremost. You can learn more about this on this page:
Our delegation strategy is also built to improve decentralization rather than focusing on pure APY, aiming to secure the network. You can learn more about it in our delegation strategy below.
mSOL tokens already have dozens of use cases in our growing ecosystem. They allow you to access DeFi protocols while enjoying your staking rewards and helping the network. To help you get started, here is a non-exhaustive list of DeFi options where you can use mSOL:
- Borrowing/Lending - mSOL can be used as collateral or borrowed on multiple platforms.
- Liquidity provision - You will find many liquidity pools using mSOL in DeFi. They can be divided into two categories:
- mSOL/SOL pools - These pools are a way to use your mSOL in DeFi while avoiding impermanent loss.
- mSOL/XXX pools - These pools will be subject to impermanent loss but will allow you to provide liquidity on a large number of pairs.
- Trade on DEXs - mSOL is available on most decentralized exchanges and can be traded for other crypto tokens. Remember, by trading your mSOL, you also trade your accumulated staking rewards.
- Trade on CEXs - mSOL is also available to trade on centralized exchanges such as Coinbase, Kraken or Gate. From these exchanges, you can move the mSOL to your crypto wallet and fully utilize it in Solana DeFi.
And this is just the start. Liquid staking tokens like mSOL could theoretically replace SOL throughout the Solana DeFi ecosystem. Any protocol that is currently using SOL could integrate mSOL using Marinade's permissionless SDK. By doing so, the network would become more secure and decentralized and our users would all earn their staking rewards while enjoying DeFi as they currently do.
If you still have any questions left or if you want to get involved in our community, join us on Discord and come meet us in the kitchen!