{"id":2200,"date":"2023-07-15T11:54:02","date_gmt":"2023-07-15T11:54:02","guid":{"rendered":"https:\/\/solanacrypto.news\/2023\/07\/15\/defi-lender-marginfi-fuels-growth-with-loyalty-points-spurring-talk-of-solana-renaissance-currency-news-financial-and-business-news-2\/"},"modified":"2023-07-15T11:54:02","modified_gmt":"2023-07-15T11:54:02","slug":"defi-lender-marginfi-fuels-growth-with-loyalty-points-spurring-talk-of-solana-renaissance-currency-news-financial-and-business-news-2","status":"publish","type":"post","link":"https:\/\/solanacrypto.news\/2023\/07\/15\/defi-lender-marginfi-fuels-growth-with-loyalty-points-spurring-talk-of-solana-renaissance-currency-news-financial-and-business-news-2\/","title":{"rendered":"DeFi Lender MarginFi Fuels Growth With Loyalty Points, Spurring Talk of \u2018Solana Renaissance\u2019 | Currency News | Financial and Business News"},"content":{"rendered":"
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Delta\u2019s frequent flyers earn miles for flights. Wawa convenience stores give loyal customers discounted hoagies. MarginFi, a lending platform for cryptocurrencies on the Solana blockchain, also has a points-based rewards program.<\/p>\n

What are the points for? MarginFi won\u2019t say. But many users told CoinDesk they\u2019re convinced points will turn into potentially lucrative tokens. This belief is spurring droves of airdrop farmers<\/a> to borrow and lend on the Solana ecosystem\u2019s fastest-growing protocol.<\/p>\n

That\u2019s paying dividends for MarginFi. The protocol is experiencing its strongest growth ever after incentivizing user activity with points. This two-week-old experiment in gamification has nearly quadrupled MarginFi\u2019s total value locked (TVL), breaking the $10 million mark earlier this week.<\/p>\n

While hardly earth shattering on a relative basis \u2013 MarginFi is the 14th largest protocol by TVL on a chain whose entire ecosystem is 85 times smaller than Ethereum\u2019s \u2013 the program is turning into a bright spot for certain corners of Solana-based DeFi. Some of the more bullish observers think it holds the makings of a second \u201cSolana Summer,\u201d a season of growth.<\/p>\n

\u201cWe\u2019ve been in a bear market for the past year and a half, but we\u2019re starting to see things blow up again in the right direction,\u201d said Christian Cuffy, head of business development for cybersecurity firm OtterSec, on a Twitter spaces<\/a> on Wednesday.\n\t\t<\/p>\n

MarginFi airdrop?<\/h2>\n

MarginFi\u2019s points system tracks \u201chow much a user has contributed to the ecosystem\u2019s success,\u201d according to a July 3 blog post. The program rewards borrowers with four points per dollar deposited, while lenders get one-for-one. The longer the term, the more points earned.<\/p>\n

“The idea is to quantify participation within the mrgn economy,” said the project’s lead engineer Jakob Povsic. “We\u2019ve identified some behaviors, some attributes” worth incentivizing \u2013 namely borrowing and lending. “It seems like points are motivating people to participate.”<\/p>\n

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Strategy 3: Up Only!<\/p>\n

Lend $Sol<\/a> \/ Borrow $UXD<\/a><\/p>\n

This position acts as a leveraged long on $sol<\/a> well also high points<\/p>\n

Risk: Liquidation (if $sol<\/a> down), expensive<\/p>\n

This is for the person who bullish on $sol<\/a> and @marginfi<\/a> and is willing to take on some risk for max rewards pic.twitter.com\/TbVDRhzIg1<\/a><\/p>\n

\u2014 Squid (@airtightfish) July 10, 2023<\/a><\/p><\/blockquote>\n

MarginFi founder Edgar Pavlovsky declined to comment on speculation the points would lead to a token airdrop.<\/p>\n

Other crypto projects have relied on point systems as a metric for distributing tokens to users. Communities can use these governance tokens to vote on how a protocol operates. Some protocols believe this process helps them \u201cdecentralize,\u201d a core ethos of crypto.\n\t\t<\/p>\n

Of course, there\u2019s the free-money angle. Tokens are volatile and potentially lucrative assets that recipients can try to sell for a gain. One MarginFi user who goes by the pseudonym BigPaperHand said they are \u201cfarming a lot of points\u201d because they believe it will lead to a windfall airdrop that they plan to sell when SOL rallies back to all time highs.<\/p>\n

SOL is trading around $30, nearly 90% off the heights reached during the late 2021 bull market. It’s currently sitting at levels seen right before the start of that year\u2019s \u201cSolana Summer,\u201d when the blockchain\u2019s buzzing ecosystem was an industry-wide focus.<\/p>\n

Moon juice<\/h2>\n

Points are fueling record growth for MarginFi, according to data compiled by blockchain infrastructure company Hello Moon: The platform more than doubled its user base in less than two weeks.<\/p>\n

\"MarginFi's<\/p>\n

Many of the users are depositing liquid staking tokens (LSTs) that represent the SOL they\u2019ve locked up with validators to chase 7% interest, Hello Moon\u2019s data shows.<\/p>\n

\u201cPeople just want to get something into MarginFi,\u201d said employee Anders Jorgensen, explaining that LSTs have the best yield for those who don\u2019t want to fully part with their SOL tokens. He called them \u201cthe obvious answer for what to deposit\u201d in search of points.\n\t\t<\/p>\n

Walker Guffey, the founder of Hello Moon<\/a>, said MarginFi\u2019s growth hack comes as the Solana ecosystem broadly embraces LSTs, repeating an arc first seen in Ethereum DeFi. The twin trends \u201camplifying each other and planting the seeds for what appears to be a renaissance in Solana DeFi.\u201d<\/p>\n

Two of the biggest LSTs on Solana, from Jito (jitoSOL) and Marinade (mSOL), have grown 47% and 18%, respectively, since MarginFi began its points program on July 3. MarginFi\u2019s jitoSOL pool<\/a> is the second-largest holder<\/a> of that token with nearly 15% of total supply.<\/p>\n

\"LSTs<\/p>\n

Growing pains<\/h2>\n

MarginFi alone won\u2019t be enough to drive all of Solana back up. It can only take so many tokens before things start to get messy.<\/p>\n

\u201cIf anything we’re slightly nervous because we’re almost hitting the caps of what the ecosystem can handle liquidity-wise,\u201d MarginFi\u2019s Anders said in a Twitter spaces Wednesday.\n\t\t<\/p>\n

Crypto loans platforms need to be able to liquidate the collateral of borrowers who default on their debts. But Solana\u2019s trading landscape is a bit thin these days, meaning lending protocols like MarginFi need to limit certain token deposits to levels they can \u201csafely liquidate on-chain,\u201d as Anders said.<\/p>\n

One token that keeps hitting the max is bSOL, the LST issued by Solana validator service SolBlaze. The 5,000 bSOL tokens currently deposited on MarginFi represent nearly 7% of all bSOL tokens in existence; even more are waiting on the sidelines, said the pseudonymous founder of SolBlaze (who goes by SolBlaze). The founder is cutting trading deals across Solana DeFi to increase bSOL\u2019s prominence, and thus its liquidity, and therefore its caps on MarginFi.<\/p>\n

\u201cThere\u2019s a new bSOL-SOL liquidity pool on Meteora, new incentives on three bSOL dual-LST liquidity pools on Orca, and a new Kamino vault launching later this week,\u201d the SolBlaze founder said in a Telegram message. BSOL\u2019s liquidity is up nearly 400% since it listed on MarginFi.<\/p>\n

Liquidity hack<\/h2>\n

For MarginFi to keep growing it needs more liquidity in the Solana ecosystem \u2013 the same problem for all of Solana DeFi. Maybe even for the price of SOL, the coin of the realm. If more people are building things that other people need SOL to use, then more people will buy SOL in order to use the things the builders are building.<\/p>\n

\u201cSomething needs to be the spark that lights up the fireworks,\u201d said Marius George Ciubotariu, the project lead for Solana-based stablecoin protocol Hubble. \u201cAirdrops and points help with that as it kickstarts the rotation play into Solana.\u201d\n\t\t<\/p>\n

On Thursday, Cypher, a trading protocol that often collaborates with MarginFi, announced it would soon roll out its own points system to incentivize growth.<\/p>\n

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RESPONSIBILITY POINTS COMING MONDAY<\/p>\n

what are points?<\/p>\n

responsibility points are rewards showing how much a cypher participant has contributed to protocol success<\/p>\n

how do i earn points?<\/p>\n

all activity on cypher will earn points!<\/p>\n

more details \ud83d\udc47 pic.twitter.com\/ZmYGB7BKQ2<\/a><\/p>\n

\u2014 cypher \u00a9\ufe0f (@cypher_protocol) July 13, 2023<\/a><\/p><\/blockquote>\n

\u201cIf your protocol is in DeFi and you aren’t doing something to incentivize activity, you are basically a detriment to the ecosystem,\u201d Barrett, the founder of Cypher, said in the Wednesday Twitter Spaces.<\/p>\n

This story originally appeared on Coindesk<\/p>\n<\/p><\/div>\n