Kamino is a major DeFi player in the Solana network, combining roles as a lending protocol and yield farming platform.
Kamino offers a range of activities, including leveraged yield farming and depositing funds for passive income. Presently, Kamino's TVL stands at $250 million, placing it fourth in the Solana ecosystem.
Accessible through Solana network wallets like Solflare or Phantom, Kamino's lending section currently holds $144 million, with $103 million in its liquidity pool.
Kamino’s TVL. Source: defillama.com
This article provides an in-depth look at the Kamino DeFi app, explores the likelihood of a project token, and examines the platform's future potential.
Platform Features
Kamino was initially developed to provide an easy way to earn from liquidity farming. It has since evolved into a comprehensive protocol that combines liquidity, lending, and leverage. In the Kamino DeFi app, users can:
- Lend and borrow crypto assets;
- Develop automated liquidity farming strategies;
- Increase yield by providing leveraged liquidity on DEXs;
- Trade derivative contracts based on asset value fluctuations.
Kamino's Lending Protocol
The Kamino website opens with its "Borrow/Lend" feature, allowing transactions in various cryptocurrencies such as SOL, USDC, JitoSOL, bSOL, ETH, USDH, USDT, and others on Solana.
Interest rates for users vary by asset, typically between 2–5% annually. The base Loan-to-Value (LTV) ratio can reach up to 80%.
For first-time users of the lending protocol, Kamino offers a helpful "How it works" guide to navigate the lending system.
Kamino's Lending Protocol. Source: app.kamino.finance
Yield Farming on Kamino
In this segment, Kamino offers users the opportunity to earn through fees from decentralized exchanges and additional rewards for specific trading pairs. The JitoSOL/SOL pair is particularly liquid on Kamino, boasting a TVL of $30.6 million.
Kamino draws market data from other DEXs like Orca and Raydium, serving as an intermediary between the client and the final liquidity provider.
The profitability of farming depends on the parameters of the trading pair, such as overall liquidity and trading volume. In stablecoin pairs, yields can reach up to 12% annually, while certain assets can be farmed at yields of 600–700%.
Kamino’s Yield Farming Section. Source: app. kamino.finance
Leveraged Farming
Available in the beta version under the "Multiply" section, this feature allows users to purchase leveraged contracts for assets up to 10X with a single click, significantly amplifying potential gains.
This section requires DeFi tokens like bSOL, JitoSOL, and mSOL, which are allocated to users for liquid staking of Solana on various platforms. The TVL in these trading pairs has reached $20 million, indicating substantial user interest.
Leveraged farming also enables traders to boost yields by pairing assets with Solana's native SOL token, increasing potential profit while also introducing the risk of position liquidation in case of a Solana price drop.
Kamino's Leveraged Farming Platform. Source: app. kamino.finance
Kamino's Derivatives Section
Kamino's "Long/Short" section provides an opportunity beyond typical farming platforms, enabling users to trade assets with leverage in either direction.
This segment offers a variety of coins including TBTC, ETH, USDT, and several Solana DeFi tokens. The platform's leverage is cautiously capped at 6.7X, greatly minimizing trading risks.
Notably, most leveraged trades on Kamino require holding the stablecoin USDC.
Kamino's Derivatives Trading Section. Source: app.kamino.finance
The Points System and the Prospect of a Retroactive Airdrop
The "Points" section on Kamino's main page is designed for accumulating user points. As of now, this section is unfilled, with no ranking system, defined criteria, or referral program in place.
However, the current market climate is conducive for projects to issue their own tokens and reward early adopters with a retroactive airdrop. This approach was successfully adopted by the Jito platform, which distributed tokens among its traders through a points system.
Kamino might similarly integrate such a system, allowing for easy accumulation of points. Users can engage in transactions without risking their funds in leveraged trades. This can be done by participating in stablecoin farming or lending cryptocurrencies like USDT or USDC in the lending protocol.
Final Words
Kamino presents as an advanced and accessible protocol, offering a range of features and positioning its users for a potential retroactive airdrop.
Nevertheless, it's crucial for users to consider the risks associated with DeFi protocols and to invest thoughtfully after personal analysis, adhering to sound risk management practices.
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