Protected Staking Rewards

Marinade introduces Protected Staking Rewards to provide stakers protection from any unforseen performance losses in the validator delegation set.

Marinade introduced Protected Staking Rewards to its delegation strategy in April, 2024. PSR serves as performance protection for Marinade stakers by covering the balance of any unexpected underperformance of a validator in the the stake pool. This is done through an on-chain bond created by Marinade and each validator in the pool.

By implementing PSR, Marinade can fulfill its mission to decentralize Solana as best as possible by staking to more validators in the cluster without affecting the performance for stakers.

How Protected Staking Rewards work

PSR uses an on-chain program to cover any loss of performance from validator commission changes and prolonged downtime. Any validator who raises their commission in an epoch, or experiences extended downtime will cover the loss of rewards through their bond.

For validators to be delegated stake from Marinade, they must set up a bond and supply it with 1 SOL per 10,000 SOL of Marinade stake. (e.g. if a validator wants to be eligible for 100,000 Marinade stake, they must supply 10 SOL).

Marinade will also cover a part of this SOL bond from the operational treasury. Validators will cover the first 20% of the losses, while Marinade will cover the next 80%.

The first 1% of validator downtime and the first 1 pct point increase is ignored.

Example: When a validator performs at < 99% of the cluster's stake-weighted average credits, the first 20% of the potential loss to the staker is covered by the validator's bond. The next 80% is covered by Marinade.

PSR bond examples:

a) Validator at 99.5 % credits: No action

b) Validator is at 90 % credits: missing 10 % is covered by validator from the bond

c) Validator is at 30 % credits: missing 20 % is covered by validator from the bond, missing 50 % is covered by Marinade from the treasury

Setup for Validators

Validators can set up and fund their bond by following the CLI instructions in the github: https://github.com/marinade-finance/validator-bonds/tree/main/packages/validator-bonds-cli#funding-bond-account

Audit: The bond program was audited by Neodyme and can be viewed here: https://docs.marinade.finance/marinade-protocol/security/audits#audit-reports-1

Track PSR events

Each epoch, Marinade posts the results of PSR in Discord. You can see which validators fell below the performance threshold and will have SOL removed from their bond. Visit Discord and view the #psr-feed channel for details. Or view epoch-by-epoch reports in this Google Cloud link: https://console.cloud.google.com/storage/browser/marinade-validator-bonds-mainnet/ View each validator's current bond amount and validator stake here: https://psr.marinade.finance/

Validator FAQ for PSR bonds

How much SOL do I have to supply for my bond?

Nodes must have 1 SOL supplied per 10,000 SOL of Marinade stake. The more SOL that is supplied, the more stake you will be eligible for from Marinade.

What happens if my validator bond is not funded?

The delegation strategy will begin to factor in funded bonds at Epoch 608. Only 2% of stake is moved each epoch, so this will be a gradual unstaking over numerous epochs.

Are funded bonds required for directed stake?

Yes, you will need a bond to receive MNDE or mSOL directed stake.

Does a validator have to fund their own bond?

No, they can be set up and funded permissionlessly. However, only the validator can withdraw the bond. Please visit the Github link to see the difference between a validator funding the bond and a permissionless bond.

Is there a deadline to create and fund a bond?

You can fund the bond anytime but as of Epoch 608 you will not be eligible for Marinade stake if you have not yet supplied a bond.

Full Detailed instructions can be viewed on Github here: https://github.com/marinade-finance/validator-bonds/tree/main/packages/validator-bonds-cli#funding-bond-account