Marginfi

marginfi is a non-custodial, overcollateralized lending and borrowing protocol built natively on Solana. It allows anyone to deposit crypto assets to earn yield, or to borrow against those deposits as collateral—without credit checks, intermediaries, or surrendering asset custody. The protocol addresses the need for a high-performance, composable money market on Solana that serves both passive yield seekers and active leveraged traders within a single ecosystem.

Core mechanism

marginfi operates as a peer-to-pool system. Lenders deposit supported tokens into shared liquidity pools and receive interest paid by borrowers. Borrowers must supply collateral before drawing funds, posting more value than they borrow. Positions are governed by a health factor—a real-time weighted ratio of collateral value to outstanding liabilities, adjusted by asset-specific risk parameters. When the health factor falls below 1.0, positions become eligible for liquidation.

Interest rates are utilization-based: as the ratio of borrowed-to-deposited assets rises, borrow rates increase automatically to attract new supply. Rates steepen sharply above 80% utilization, which can push borrow costs from single digits to double digits within hours during demand spikes.

Three market types

marginfi organizes its lending markets into three distinct layers, each with its own risk profile:

• Global Market: The main interconnected pool where established assets are listed. Collateral supplied in one asset can be used to borrow any other asset in the pool.
• Isolated Markets: Independent risk pools for higher-volatility or lower-liquidity tokens. Positions in isolated markets do not share risk with the Global Market, protecting broader protocol health from idiosyncratic asset failures.
• Native Stake Market: A dedicated market for liquid staking tokens (LSTs), accepting staked collateral and allowing users to earn both staking yield and lending APY simultaneously.

Supported assets

Core Global Market assets include SOL, USDC, USDT, ETH, and BTC. The Native Stake Market supports major Solana LSTs including JitoSOL, mSOL, and bSOL. A longer tail of Solana DeFi assets—including BONK and JTO—are available in isolated markets. Oracle pricing is provided by Pyth and Switchboard.

Risk parameters and liquidations

Asset-specific loan-to-value (LTV) ratios reflect relative risk: stablecoins like USDC carry conservative LTVs near 90%, while volatile assets like SOL sit closer to 50%. When a position crosses the liquidation threshold, marginfi employs partial liquidations rather than full account wipes—selling only enough collateral to restore a healthy position. The liquidation penalty is 5%, split equally between external liquidators (as an incentive to act quickly) and the affected asset's insurance fund (as a protocol-level backstop). The protocol operates its own in-house liquidation bots while also encouraging external liquidators to maintain a competitive, resilient system.

Product suite

Beyond the core lending interface (mrgnlend), marginfi ships several complementary tools:

• mrgnloop: An automated leverage tool that executes flash-loan-powered looping strategies, allowing users to amplify exposure to an asset without manual multi-step transactions—for example, compounding SOL staking yield.
• The Arena: A trading venue focused on memecoin and speculative asset markets.
• Liquidity Incentive Program (LIP): An incentive layer that distributes rewards to lenders and borrowers in designated markets via weekly airdrops, requiring no manual claim.

Security and audits

marginfi v2 is open-source with verifiable builds—users can confirm the deployed binary matches the public source code using tools like solana-verify. The protocol has been audited by OtterSec and subjected to internal security reviews.

The most significant security event occurred in September 2025, when Asymmetric Research privately disclosed a flash loan vulnerability that could have enabled unrepayable borrows, putting up to approximately $160 million in protocol funds at risk. The team patched the vulnerability before any exploit occurred, with no user funds lost. The incident highlighted both the severity of smart contract risk and the value of responsible disclosure processes. The protocol charges a 12.5% spread on interest for USDC, USDT, and SOL, and 13.5% on other assets, with liquidation fees fixed at 5%.

Team and history

marginfi was founded in 2021 and built by MRGN, INC. (known on GitHub as mrgnlabs). The protocol launched its v2 implementation on Solana mainnet in mid-2023. In a significant structural development, Project 0 (0.xyz) subsequently acquired marginfi and announced plans for a token generation event (TGE). Users who accumulated marginfi points are eligible for 1:1 token migration, provided they maintain active deposits through the migration window. The acquisition is expected to expand the protocol's capabilities into cross-venue margining, with integrations with platforms such as Kamino referenced as a future direction.

Solana ecosystem fit

marginfi is positioned as a core lending infrastructure layer on Solana, providing composable money markets that interact with more than 100 Solana DeFi protocols including spot, futures, and options venues. Its support for LSTs as collateral tightly integrates the protocol with Solana's staking economy. Solana's high throughput and low transaction fees make active liquidation management and leveraged looping strategies economically viable in ways that would be cost-prohibitive on slower chains. The protocol reported Q1 2025 revenue of approximately $88.5 million, generated from around $1.7 billion in liquidation volume, reflecting meaningful scale within the broader Solana DeFi stack.