What is marginfi?

marginfi is a decentralised lending and borrowing protocol on Solana — one of the network's core "money markets," alongside Kamino. It's the on-chain equivalent of a bank's deposit-and-loan desk, except there's no bank: smart contracts match lenders and borrowers and set rates automatically.

How an on-chain lending market works

You deposit assets (SOL, stablecoins, liquid-staking tokens and more) into a shared pool and earn interest paid by borrowers. Borrowers post collateral and take out loans against it. Interest rates float algorithmically with utilisation: when most of a pool is borrowed, rates rise to attract deposits and cool demand; when little is borrowed, rates fall. Nobody sets the rate by hand.

Crucially, loans are over-collateralised — you must deposit more value than you borrow. That's what lets a permissionless system lend safely to anonymous borrowers: there's always more collateral than debt backing each loan.

Cross-margin accounts

marginfi uses a cross-margin design: all your deposits collectively back all your borrows in one account. That's capital-efficient (idle collateral in one asset supports a borrow in another) but it also means a problem in one position draws on your whole account, so it pays to keep a healthy buffer.

What people use it for

• Earn yield on idle assets by lending them.
• Borrow without selling — access liquidity against your holdings while keeping price exposure (and avoiding a taxable sale).
• Leverage and shorting — borrow an asset to go long or short, or loop deposits and borrows to amplify a yield position.
• A base layer for other protocols, which build leveraged and automated strategies on top of marginfi's markets.

Liquidations — the key risk

If your collateral falls too far in value relative to your debt, your account becomes eligible for liquidation: liquidators repay part of your loan and seize collateral (plus a penalty) to bring you back to health. In fast crashes, liquidations can cascade. The defence is simple but easy to ignore: borrow well below your limit and watch your health factor.

Points and the MRGN token

marginfi ran one of Solana's best-known "points" campaigns, rewarding early lenders and borrowers ahead of a token; its ticker is MRGN. Points programs like this became a standard way for Solana protocols to bootstrap usage before a token launch.

Risks to keep in mind

• Liquidation in volatile markets, especially with cross-margin tying positions together.
• Oracle and smart-contract risk — pricing of collateral relies on oracle feeds, and any contract can have bugs.
• Bad-debt risk if a liquidation can't be completed fast enough in extreme conditions.

For the latest marginfi news, see the marginfi project page, or read What is Solana? for the bigger picture.