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).

PSR Coverage Allocation:

• Validator’s Responsibility: Validators cover 100% of the rewards lost when their uptime falls between 50% and 99%.

• Marinade’s Coverage: Marinade covers the lost rewards corresponding to the lower 50% of uptime.

• 1% Grace Period: The first 1% of validator downtime and the first 1 percentage point commission increase are ignored.

Example: PSR Coverage Adjustments

• Scenario 1: Validator's uptime is 99.5% during an epoch.

  • Validator's Responsibility: No action is required as the downtime is within the 1% grace period.

  • Marinade's Coverage: None.

• Scenario 2: Validator's uptime is 90% during an epoch.

  • Validator's Responsibility: Validator covers the lost rewards corresponding to the upper 50% of uptime, which is 9%.

  • Marinade's Coverage: None, as the validator's uptime is above 50%.

• Scenario 3: Validator's uptime is 40% during an epoch.

  • Validator's Responsibility: Validator covers the lost rewards corresponding to the upper 50% of uptime, which is 49% of the total amount of expected rewards in the epoch.

  • Marinade's Coverage: Marinade covers the lost rewards corresponding to the lower 50% of uptime, which is 10% of the total amount of expected rewards in the epoch.

Setup for Validators

Validators can set up and fund their bond by following the CLI instructions in the Github: Funding Bond Account.

Audit: The bond program was audited by Neodyme and can be viewed here: Audit Report.

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: PSR Reports. View each validator's current bond amount and validator stake here: PSR Dashboard.

Validator FAQ for PSR bonds

Q: 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.

Q: 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.

Q: Are funded bonds required for enhanced stake?

Yes, you will need a bond to receive MNDE-enhanced stake or to participate in the Stake Auction Marketplace (SAM) for Marinade’s TVL. Validators must set up a bond with 1 SOL per 10,000 SOL of Marinade stake to be eligible for SAM and MNDE-Enhanced stake allocations.

Q: 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.

Q: 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.

Q: Will the stake account in my bond be redelegated to other validators?

No, the stake accounts in your bond will always stay delegated to your validator and can be considered self-staked.

Q: Does the PSR bond count for the self-stake requirement of the Solana Foundation Delegation Program?

Yes, the SOL in your bond counts towards the self-stake requirement of the Solana Foundation Delegation Program (SFDP).