MarginFi Introduces Staked Collateral Feature

MarginFi, a DeFi lending protocol on the Solana blockchain, has launched a new feature called “staked collateral,” which allows users to post their natively staked SOL as collateral and access SOL liquidity.

“This changes everything for stakers. No more choosing between optimal staking rewards and capital efficiency,” MarginFi said on X. “Secure the network, lock in the best rates for your SOL, and access margin with Staked Collateral.”

Previously, once a user staked their SOL, it was locked and could not be used until it was unstaked. This traditional approach takes multiple days and leaves users with two options: lock their SOL for rewards or stay liquid for more opportunities in the market.

Liquid Staking Tokens (LSTs) emerged as a solution, allowing users to access their liquidity while staking. However, LSTs have shortcomings, such as lower yields, unpredictable vote rewards, and added smart contract risks.

With staked collateral, neither LSTs nor unstaking are required. The staked collateral only requires validators to set up a pool to enable this feature on their account.

The staked collateral feature also minimizes liquidation risk. However, liquidations can occur in one scenario, as MarginFi highlighted in its post.

“Your stake stays safe. Liquidations only happen if your validator's APY drops below the $SOL borrow rate for an extended period of time — incredibly unlikely at the market APY.”

MarginFi is the eighth largest DeFi protocol on Solana, with a total value locked (TVL) of $412 million at the time of writing, according to DappRadar.