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The Stake Auction Marketplace Explained

The Stake Auction Marketplace is a delegation mechanism that allows Marinade stakers to delegate their SOL to the validators offering the best end APY.

The scoring of validators is based on a single parameter called "max_yield", which is the maximum yield that a validator can return to a staker on some amount of stake (eg: 8% APY on 100k SOL delegated).

Every epoch, Marinade will rank validators based on their "max_yield," which includes the bid set by the validators and will distribute the stake to the highest-yielding validators while still respecting the eligibility criteria and decentralization constraints that are part of the strategy.

The Stake Auction Marketplace also has multiple benefits for validators:

  • It creates the opportunity for the validator to set a commission that's specific to Marinade, which can be lower than their public commission. By offsetting a part of their commission with a bid (CPMPE), validators can customize the commission that they offer to Marinade to be more competitive, without impacting the commission they have with their external stakers.

  • Validators can share additional revenue sources directly with Marinade stakers, like block rewards.

  • Validators can set a profitability level on an amount of stake that they feel comfortable with. If their offer is amongst the best in the Stake Auction Marketplace, they will receive stake from Marinade, and their bids will be charged. If other validators are offering a higher APY in the marketplace, the validator will just not receive stake, and their bond will not be charged.