What is mSOL?
mSOL tokens represent your staked SOL in the Marinade stake pool. Here's what that means and how it unlocks staking 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.
No. mSOL is a frictionless token. This means that each epoch (2-3 days), its value is recalculated. Staking rewards are earned based off the SOL staked in Marinade. 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).
As long as the Marinade protocol earns staking rewards, your SOL investment is growing. So how does Marinade ensure that the protocol is safe?
Marinade has undergone a series of audits to ensure that the code is safe. Many of the elements of Marinade are open source. 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.
- Single-asset staking - It is possible to stake your mSOL to earn MNDE, Marinade's governance token. This is only possible on Marinade.
- 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 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.
Curious on how you can utilize mSOL in DeFi for additional rewards? Visit the Marinade mSOL Cookbook to learn about all the various strategies.
And this is just the start. mSOL could theoretically replace SOL in the whole DeFi ecosystem. Any protocol that is currently using SOL could integrate mSOL using Marinade's permissionless SDK. 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 our kitchen!