TL;DR: Marginfi is a lending platform built on the Solana blockchain, boasting a TVL of $323.5 million, making it the leading lending platform and the third-largest dApp on Solana. With the introduction of its point system, Marginfi aims to reward active users and provide a means for them to stand out.
Marginfi in Numbers
Marginfi's primary product is its lending platform, allowing users to lend and borrow assets. Additionally, Marginfi offers a liquid staking feature, enabling users to mint LST with SOL, representing a TVL of $47.2 million. While this is considerably less than industry leaders like MarinadeFinance ($991.5 million TVL), Jito ($632.7 million TVL), BlazeStake ($216.1 million TVL), and JPool ($61.5 million TVL), Marginfi leads in the Lending category on Solana ($323.5 million TVL), surpassing competitors like Solend ($174.5 million TVL) and Kamino Lend ($143.5 million TVL).
Two crucial points to note:
- Unlike Solend, Marginfi does not have a token yet, making it a potential candidate for a future governance token airdrop (think of Marginfi as Solana's AAVE). While Kamino Lend is also well-positioned for an airdrop, it remains smaller compared to Marginfi and is a beta-play in my perspective.
- Pay attention to TVL variations, showing a 23.1% growth for Marginfi over the past month compared to 75.9% for Kamino Lend and 28.9% for Solend. Marginfi's competitors are gaining market share.
Best Strategies to Improve your Marginfi Ranking
Marginfi employs a point system allowing users to rank among all platform users. You earn 1 point per dollar deposited every 24 hours and 4 points per dollar borrowed every 24 hours. To climb the ranking, it's crucial not to overlook borrowing. But you might ask, how do you minimize APR on borrowed sums?
- Strategy 1: Borrowing SOL
The first strategy involves collateralizing a liquid derivative like bSOL, JitoSOL, or mSOL to create collateral indexed to SOL's value, earning staking rewards in addition to deposit interests. You can borrow SOL (currently around 5% APR) against your collateral. Then, liquid staking these SOL into bSOL, JitoSOL, or mSOL, as per your preference, can earn additional rewards (e.g., bSOL on Marginfi for extra BLZE token rewards). While the staked SOL costs you 5%, it should generate more (around 6-7%). Additionally, depositing them on Marginfi increases your collateral, allowing you to borrow SOL again and repeat the process. Note two things: diversifying derivatives in your collateral limits the risk of peg deviation that could liquidate your position, and borrowing SOL against staked SOL derivatives ensures your collateral and debt evolve similarly daily, limiting overall liquidation risk.
- Strategy 2: Leveraged Position on SOL
This riskier strategy allows you to take a leveraged position in SOL, increasing both upward and downward asset variations. Deposit a liquid derivative (bSOL, JitoSOL, mSOL) and borrow a stablecoin like USDC (the cheapest to borrow). Swap on platforms like Jupiter (to maximize future airdrops) to sell your stablecoins for SOL or staked derivatives, depositing them as collateral on Marginfi to borrow stablecoins again and repeat the process.
Both strategies are effective for growing your collateral and debt value, maximizing daily points earned on Marginfi. Note that both deposits and borrowings have protocol limits, so depositing JitoSOL and borrowing USDC or SOL can be challenging at times (as these assets approach their respective limits). If opting for the second strategy, since the interest rate is significantly lower for USDC compared to USDT, take your time and borrow USDC whenever a sum becomes available (requires frequent page refreshing and patience but is possible).
By implementing these strategies, anticipate daily progress in the overall ranking. However, be aware that at some point, your advancement in the leaderboard will be limited by the extent of your assets and debt. This indicates that you have reached a plateau, and your position should stabilize unless other participants repay their debts or withdraw funds.
Resources
Marginfi is expected to launch its airdrop in Q1 of 2024. You can start earning points by visiting the platform here. Remember that referrals are also a way to gain some points. I wish you good luck and would like to remind you of a crucial rule: never deposit more funds into DeFi than you are willing to lose (protocol hacks happen, and it would be unfortunate to lose a substantial amount and find yourself back at square one). On that note, I leave you with a small disclaimer and bid you farewell until the next article.
Marginfi: https://www.mfi.gg/refer/a79f2aa2-db61-493d-8582-9e0c61c8b4ca
App. to check your position's health: https://marginfi-borrow-caps.vercel.app/health
Dune Dashboard: https://dune.com/man0s/marginfi
This content is not financial investment advice. Investing in cryptocurrencies and using DeFi platforms involves risks. The author of this article cannot be held responsible for your actions with your funds, and this content is provided for entertainment purposes only. All mentioned projects are third parties.
