Hey folks, today I’m going to be doing a bit of a deep dive on Kamino Finance, which at nearly $1.5 billion in TVL, makes it Solana’s premier lending/borrowing protocols. If you’ve been trying out Kamino yourself since I wrote about them in my $bSOL article last month, then you may have noticed that Season 2 points have now have already begun to start accruing as of today:
Season 1’s snapshot was taken earlier today (March 31st) and their second season immediately started after its conclusion — another 3 month period and will continue up until June 2024. Although it’s hard to say with certainty how much Kamino’s new token ($KMNO) might be worth, in today’s article I’m going to weigh out why the returns we see from Kamino’s Season 1 might be the biggest one we’ve seen from Solana yet.
As I mentioned before, Kamino Finance is one of the premier decentralized applications on Solana which has seen parabolic TVL since late 2023:
With their launch version 2.0, Kamino has seen crazy inflows especially in the last month, as they’re offering some of the highest rates on both $SOL and stablecoin yields — all with little impermanent loss and simplified multipliers.
Incidentally what’s gotten the most attention is their points system, which with their recent snapshot, has promised liquidity suppliers a linear distribution of their $KMNO token. In other words, anyone who has supplied liquidity over the past few months — whale or guppy — will be getting an allocation, dependent on how many points they have earned:
Apart from the default rates, users are able to earn additional “Boosts” depending on whether or not they were users of Kamino prior to the launch of Kamino Lend (October 2023), and also if they were suppliers of incentivized LPs detailed here, ranging from 2x to 5x multipliers in points:
Obviously there’s a bit of hype around Kamino since there’s been an impending airdrop surrounding the protocol, but arguably there’s been other borrowing/lending protocols with similar point systems such as Marginfi, which has only been able to attract/maintain less than half the TVL that Kamino has. Why? Let’s get into that next…
Apart from the potential to earn $KMNO through their point system, there are several reasons why Kamino is perhaps one of the best places to park your liquid staked $SOL and stablecoins in the entire Solana ecosystem. These include…
CLMM Vaults: The primary mechanism behind their strategies are what’s known as “CLMM Vaults” or Concentrated Liquidity Market Maker Automated Vaults, which is basically a fancier way of saying auto-compounding. In a nutshell, whatever profits your LP or vault earns on Kamino, are continuously being reinvested into your LP, thus seamlessly adding onto your principal. And to be clear, many of these strategies incorporate some of Solana’s biggest players, including Orca, Meteora, Raydium and Jupiter:
Technically you could access these strategies directly yourself on let’s say Raydium, however Kamino’s CLMM minimizes your exposure to $RAY (the native token to Raydium) and instead reinvests it back into your original LP.
Main Market — high LTV usually means high APYs: Under their “Main Market” which is their vanilla borrowing and lending, due to relatively high LTV ratios (otherwise known as utilization ratios), you can currently earn more than 20% APY on both your deposited $USDC and $USDT:
($UXD also has a high APY and high LTV, yet this is most likely subject to change as the total supply is relatively much smaller making it probably more volatile.) Perhaps most importantly, as you can see in the graphic above, each supply market is single-sided, meaning that there’s absolutely no risk of impermanent loss.
One-click leverage: In the same vein, with Kamino’s “Multiply” strategies you can leverage up your returns on your $SOL and staked-$SOL derivates — 3 options with little impermanent loss yet with more than 20% in maximum APYs:
Once you deposit your $SOL on Kamino, your $SOL is converted into an LST flash-loaned against to borrow more $SOL which is then swapped for more of the LST. This process repeated multiple times also leverages up the yields that you earn from your LSTs as well, thus turning a typical 7% APY into more than 20%.
As I mentioned before, Season 1 has now been wrapped up as of today (March 31st), with a Genesis Alrdop scheduled next month in April. Season 2 which has now begun will reportedly see a subsequent portion of $KMNO after June (Q2).
Total Supply: As far as I’ve found, there hasn’t yet been a full breakdown of the vesting release schedule for $KMNO, yet taken from a lot of different conversations going on in their Discord server, the $KMNO total supply is capped at 10 billion tokens, with 10% (100 million tokens) to be in circulation on day 1:
Additionally, although the above graphic shows 7% of the initial amount going to the community, technically the total 7.5%, with an extra 0.5% of total supply allocated for OG community members awarded on a tiered basis.
Utility: Beyond being a governance token, there’s been little information as to whether or not there will be any other significant utility-functions of the $KMNO token itself.
So what will I do once I get my share of $KMNO? It’s clearly not the end of a1rdrop season in Solana, but given how well previous tokens such as Jupiter’s $JUP and Jito’s $JTO have done in the past, I’m suspecting that $KMNO will do just as well, if not better:
Perhaps the biggest consideration that one has to make before trying to farm $KMNO are the opportunity costs. Many other Solana protocols also have their own point/token campaigns currently underway, and one has to measure where you’ll get the “most bang out of your buck.” Some of these include Marginfi, Drift, and Meteora, but there are several more (like Kamino) which will extend into multiple seasons. For me personally, I’m most bullish on Kamino because not only am I earning more points for a bigger allocation, but I’m also earning some pretty significant yields on my assets at the same time.
And as always, thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!
Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone! allocation, but I’m also earning some pretty significant yields on my assets at the same time.
