Smart contracts on Ethereum have only been around for a few years, but the funds locked in DeFi projects have now exceeded $280 billion. The earliest DeFi projects such as MakerDAO and Aave are still very competitive and even dominant, but new and innovative projects are constantly emerging, hoping to gain a foothold.
On July 2, Kamino announced the introduction of PYUSD on the X platform and launched an incentive campaign. The incentives will be continuously updated based on the inflow of funds. Users simply deposit funds into Kamino Lendâs main market to receive rewards paid in PYUSD, and the more deposits, the higher the rewards. With a large amount of funds flowing into Kamino Lend, PYUSD's liquidity will grow significantly, while also bringing a wave of increments to Kamino.
01 Differentiated Competitiveness
Kamino Finance is a protocol built on the Solana blockchain and a liquidity and lending solution that has recently revived in the DeFi space. It has now been integrated into the OKX Web3 wallet.
Kamino Finance traces its origins to Hubble Protocol, which offers two tokens on Solana: the HBB governance token and USDH overcollateralized synthetic dollars. While Kamino has not publicly announced any fundraising plans, Hubble raised more than $18 million in 2021 and 2022. Today, Kamino is Solana's largest protocol by DeFi TVL, with $1.15 billion in assets, ahead of Raydium and MarginFi.
Kamino is different from other liquidity providers (LP) products. It supports a one-click automatic compounding centralized liquidity strategy, providing users with a unified and secure DeFi product suite. This feature has laid a solid foundation for the development of Kamino. Today, Kamino has become a DeFi protocol that integrates lending, liquidity, and leverage, providing users with transparent analysis, detailed performance data, and extensive position information.
On the Kamino platform, users can easily lend assets, provide leveraged liquidity to centralized liquidity DEXs, build automated liquidity strategies, and use centralized liquidity positions as collateral.
02 Core Functions
Kamino provides users with four core functions including borrow/lend, liquidity, multiplier, and long/short trading.
First, borrow/lend.
Kamino's borrow/lending function is an over-collateralized lending protocol, but it has two unique features: First, partial liquidation: part of the borrower's collateral is liquidated to bring it below the liquidation TVL threshold, rather than full liquidation. Liquidated collateral will be subject to a 5% to 10% liquidation penalty; second, using Pyth Network and Switchboard as oracle providers, for LST (liquidity token), Kamino uses a pledge rate formula to smooth prices and reduce liquidation risks caused by temporary decoupling.
Currently, Kamino offers three lending markets, including the main market, JLP market, and altcoin market.
Second, liquidity
Kamino's market making vault acts as a centralized liquidity market maker (CLMM), automatically providing liquidity for Orca, Raydium, and Meteora. Liquidity providers (LPs) can benefit from automatically compounded fee income and automatically rebalance positions to ensure liquidity is within range. Kamino's liquidity vault also provides token incentives (such as JTO and KMNO) or Meteora MET points.
The âkTokensâ obtained by liquidity providers can be used as collateral for loans, enhancing the flexibility and security of liquidity.
Third, the multiplier
Kaminoâs multiplier feature allows users to stake SOL by depositing SOL or liquid staking SOL tokens (such as JitoSOL, bSOL, and mSOL) and utilizing a leverage loop. This process includes: (1) depositing SOL or LST (2) borrowing a flash loan (3) exchanging SOL for LST (4) using LST as collateral
This cycle repeats until the desired leverage is reached, up to a maximum of 5x. If the borrow rate is continuously higher than the LST yield, the position will be liquidated.
Finally, long/short
Users can trade long or short on seven supported assets through leveraged loops. The process is as follows: (1) Deposit USDC or the desired token (2) Borrow a flash loan (3) Exchange USDC for the desired token (4) Use the token as collateral.
This cycle is repeated until the desired leverage ratio is reached, ranging from 1.7x to 6.7x.
03 Economic Model
KMNO is the SPL token on Solana, launched on April 30, 2024, with a total token supply of 10 billion. KMNO's functions include staking, liquidity provision, and incentives.
Users can stake KMNO to earn Kamino points and increase their earnings. For every $1 of KMNO staked, users can earn 3 times the Kamino points per day. Staking KMNO can also increase users' staking points, with the base multiplier starting at 30% and increasing by 0.5% per day, up to a maximum of 300%.
At the same time, in terms of liquidity provision, KMNO can be used to provide liquidity for supported KMNO pairs, such as pairs with JitoSOL, bSOL, mSOL, BLZE, jupSOL, and SOL. Users who provide liquidity for the incentivized KMNO vault can receive KMNO and/or other partner token rewards.
Of course, KMNO is also used to incentivize various operations on the protocol. Users who earn Kamino points will receive KMNO at the end of the points season. Users who provide liquidity can also receive KMNO token rewards. In the future, KMNO may also be used to participate in Kamino's governance, although the specific plans for the governance system have not yet been determined.
summary
Although many new projects are currently directly transferred from Ethereum to other emerging public chains in the form of forks, there are also innovative projects emerging, hoping to improve capital utilization, reduce risks, and reduce costs. Some projects are built on existing infrastructure to simplify user operations, optimize yields, and increase available leverage, such as Kamino, which may change the way liquidity is provided in the future.
