Support Solana Validators with Cogent Crypto’s Liquid Staking Token cgntSOL and Marinade mSOL
Earn dual yield and MNDE rewards providing liquidity for SOL liquid staking tokens with cgntSOL from Cogent Crypto and mSOL from Marinade Finance.
Note: This article is not financial advice. Kamino Finance does not endorse any tokens or platforms mentioned in this article.
Overview
- Maintains 100% exposure to SOL while earning staking rewards
- Reduces the risk of impermanent loss with two pegged assets
- Supports Solana validators by providing liquidity for liquid staking tokens
Kamino Finance is proud to launch the cgntSOL-mSOL vault on Orca. This addition to Kamino’s SOL Strategy vaults represents some of the best Solana validators working to keep the network secured, censorship resistant, and further decentralized with liquid staking tokens and some of the most capital-efficient swaps through Orca Whirlpools.
Cogent Crypto’s recent launch of its liquid staking token, cgntSOL, joins the DeFi composability club spearheaded by Marinade Finance in 2021 with mSOL. Providing liquidity for these tokens is like a Solana staking maxi’s dream since SOL yield can be stacked from staking rewards and yield earned from fees providing liquidity.
Users who provide liquidity for cgntSOL-mSOL on Kamino will also be eligible for MNDE rewards. In the vault’s first month, 30k MNDE rewards will be supplied and auto-compounded into each user’s position while providing liquidity on Kamino Finance.
What is Liquid Staking?
Next-generation blockchains like Solana have moved away from a Proof-of-Work (PoW) consensus mechanism, which was introduced by the Bitcoin network, toward Proof-of-Stake (PoS). By securing the network with PoS consensus, Solana is one of the most energy-efficient blockchains on the market, and this is possible through staking tokens with validators.
When users stake SOL with even the best Solana validators, they must wait for the next epoch (usually around two days) to unstake their tokens. Plus, when tokens are staked with SOL validators, they cannot be used to participate in decentralized finance (DeFi) protocols to earn lending APY or yield from providing liquidity.
Liquid staking tokens, like Marinade’s mSOL and Cogent Crypto’s cgntSOL, accrue rewards from staking SOL while simultaneously providing users with a token that can be used as collateral or liquidity in DeFi through the power of composability on Solana. Moreover, users don’t need to use a SOL staking calculator, because the tokens calculate everything.
For example, if the current SOL price is around $22, then the mSOL price will be about $24, since mSOL tracks the price of SOL and adds Marinade crypto profit gauges from staking to that price. More than just bearing the Solana logo on their branding, Solana liquid staking tokens can be used in the DeFi ecosystem just like SOL while earning APY from staking.
Why Provide cgntSOL - mSOL Liquidity?
Marinade Finance and Cogent Crypto have different approaches to liquid staking. For Marinade, the goal is to stake SOL with as many worthy validators outside of the super-minority as possible; for Cogent Crypto, the goal is to optimize staking rewards with advanced code and hardware.
By providing liquidity for Marinade mSOL and Cogent Crypto cgntSOL on Kamino, users can maintain 100% exposure to SOL and the staking rewards from both liquid staking tokens. Users don’t have to whip out the impermanent loss calculator with APY on this vault minimally affected by mSOL price and cgntSOL price divergence, since they both track SOL.
What is Cogent Crypto cgntSOL?
Cogent Crypto is one of the leading validators on Solana, with enough SOL staked to place it in the super minority of 32 validators that control 33% of all SOL validator staked SOL. At the time of writing, Cogent Crypto stakes over 1.9 million SOL tokens and offers a staking APY higher than the cluster average according to Stakewiz validator analytics. These staking rewards are recorded by cgntSOL as users hold the token.
For example, cgntSOL earns a higher APY than another popular Solana validator, Solana Compass, with an APY of around 7.4% over 6.4% at the time of writing. However, users holding cgntSOL do not need to wait for a Solana Compass epoch to end before being able to use their SOL, since cgntSOL earns APY and can be deposited on protocols like Kamino.
Users can earn additional APY by staking Cogent Cog NFTs. For example, after acquiring a Cogent Cog, users can stake Cogent Cogs to earn 0.01% of the Cogent Crypto validator revenue. Cogent Crypto also offers several tools for the Solana community, including a Validator Leaderboard, calculators, and guides.
Solana DeFi Calculators
- Validator Profit Calculator
- MNDE Gauge Profit Calculator
- Lending APY Calculator
- Impermanent Loss Calculator
Solana Staking Guides
What is Marinade Finance mSOL?
Marinade Finance is the first protocol to introduce liquid staking tokens to Solana. Their main goal is to increase the network's decentralization by distributing staked SOL to a wide array of validators who meet strict criteria for earning SOL deposited by Marinade’s users in exchange for mSOL crypto tokens.
Marinade has implemented an innovative governance model with Marinade Chef NFTs. The NFT Chefs, such as an Octopus NFT, can be staked in a sort of NFT referral program requiring locking MNDE crypto, Marinade’s native token, to direct gauge rewards from Marinade’s weighted gauges.
What are cgntSOL - mSOL Risks?
Providing liquidity for cgntSOL and mSOL exposes users 100% to SOL price, so Solana price volatility is always a factor. Besides market exposure, additional smart contract risk is involved with liquid staking tokens, which means additional exposure to an exploit by a bad actor.
While both of these tokens follow SOL price and therefore reduce the risk of impermanent loss due to divergence, if one or both tokens experiences a de-pegging event, then extreme impermanent loss is possible until the peg is regained. For example, in 2021, Lido Finance’s stETH, liquid staked ETH, experienced a minor de-pegging event.
Conclusions on cgntSOL - mSOL
For users who want exposure to SOL staking APY without having to figure out how to stake Solana assets with the best Solana validators, taking positions in liquid staking tokens from Marinade and Cogent Crypto are one of the most user-friendly utilities in DeFi for staking. By supplying liquidity for cgntSOL and mSOL, users can also earn yield from trading fees.
During the first month after launching cgntSOL-mSOL on Kamino, users will also earn MNDE crypto rewards to incentivize users to participate and provide liquidity. Users can earn a share of 30k MNDE by helping support the liquidity, decentralization, and security of the network through liquid staking and providing concentrated liquidity on Orca.
