Marinade's Non-fungible Chefs
Q55. Marinade Finance officially launched their protocol governance system on April 4, 2022. In order to participate in governance, holders of the protocol's native MNDE token lock their tokens in exchange for an NFT. This NFT, which varies in size based on the total amount of MNDE locked, represents total voting power and is used to vote on proposals. Governance NFT holders will soon have direct control over a portion of the protocol's validator delegation strategy too.
How to cook Marinade NFTs: Recipe for successful Chefs
Marinade is a liquid staking protocol built on Solana which allows users to stake SOL to 400+ validators. In exchange, users receive "marinated SOL" (mSOL) token in return, which can be used to explore DeFi yields in a wide variety of protocols.
Apart from mSOL, the protocol also has a governance token called Marinade, MNDE. This token is meant to be distributed to the community with no presale, VC or private investors. Currently, a major portion (70%) of MNDE supply is reserved for the DAO and its treasury. One of the first MNDE distribution voted was the Liquidity mining, which plans to have a constant weekly supply of MNDE tokens into the market and deliver additional tokens once milestones of total SOL staked are reached. The remaining 30% will be distributed with current and future team members with a 2-year vesting period.
A next step in governace was taken with the launch of the Chef NFT on April 4th. This NFT will be minted after locking a certain amount of MNDE in them and give the owner voting right on governance proposals. Additionally, these NFTs can be traded in secondary markets. Burning them redeems the underlying MNDE, so they also have instrinsic value. The first 3.333 NFTs will be part of the limited edition, with the regular edition having no supply limit.
There are 5 levels of non-fungible Chefs for each of the two editions, each representing an increasing amount of MNDE locked:
- Level 1: 1000–4999 MNDE
- Level 2: 5000–24999 MNDE
- Level 3: 25000–99999 MNDE
- Level 4: 100,000–249,999 MNDE
- Level 5: 250,000 MNDE or greater
Methodology
After exploring the sample and my own mint transaction in the solana.fact_transfers
table, I reached the conclusion that the NFTs minted can be identified with transaction where mint = 'MNDEFzGvMt87ueuHvVU9VcTqsAP5b3fTGPsHuuPA5ey'
for MNDE token, index = 1
for transactions within the interaction with the NFT minting program and amount >= 1000
for the lower NFT level. This assumption will be verified in the conclusions section. The time frame used was since the launch on April 4th until the previous day of the analysis, April 18th, to obtain complete day data.
I used a case to group the transactions according to the levels defined above and calculated several metrics, which will be explained in the results section.
Figure 2. shows the distribution of NFT by chef level. Over 80% belong to the L1, followed by L2 and L3 with around 12% and 4% respectively. Then L5 takes over L4 with a total of 34 top tier NFTs (3%)for the former and only 11 (<1%) for the latter.
Figures 3. and 4. show the unique NFT minters, both per day and cumulative by level. The daily chart shows a similar trend as Figure 1. with an average mint per purchase close to 2 on the first day and closer to 1 afterwards, strengthening the idea of a frenzy launch followed by a limited growth.
Since Figure 4. only counts the unique minters by day, taking the data there to answer the question of how many L5 whales are ready to participate in the governance will give false results. Therefore, a separate analysis on this whale minters will be done below. I expect having no upper limit on the locked MNDE will bring some surprises...
A total of 18 whale minted 34 NFTs locking 19.8M MNDE tokens as a whole. Figure 5. shows the MNDE locked by each whale, grouping the addresses by number of NFTs minted. Most NFTs were minted with around 250k MNDE locked in them but there are some deep pocket users... one whale minted over 1M token on a single NFT and all whales minting 4 NFTs locked in well over 250k in average. The address most MNDE locked in total has 4 NFT with an average of 1.2M each. With the current MNDE price of 0.22 USD*, this NFTs should have an intrinsic value of around 250k USD, so we could be seing the inception of one of the most expensive NFT in Solana if they were ever sold...
*Price obtained from Marinade stats
Conclusion
We have analysed the explosion of the Marinade governance NFTs and have seen that aside from the high activity on the first two days, things are getting a bit too cold in terms of minting. We will see how it evolves but for the time being it is a great feature to improve the protocol's governance and in case the incentives align, if could trigger a rally of the MNDE token price if proposals deciding the reward allocation make a difference in the whole Marinade ecosystem.
We have seen how whales have minted below 3% of total Chef NFTs but account for around 80% of the TVL. It doesn't looked so promising as a decentralized governance.
Regarding the Methodology, even though technically I counted all transfers of more than 1000 MNDE and some non-minting transfer could have been added erroneously, if I compare the number of NFTs minted according to Marinade as 3333 - 2122 = 1211 Limited Edition minted NFTs with the results from Figure 6. of 1202 total mints, the approach is quite good and gives an error below 1%.
As a summary, Figure 6. and 7. show the number of minted NFTs and the TVL in MNDE daily and cumulative. A total of 1202 NFTs were minted locking almost 25M MNDE with a current value of around 5.5M USD