Earn Yield and Decentralize Solana: Stake SOL with Lido Finance on Kamino
Note: This article is not financial advice. Kamino Finance does not endorse any tokens or platforms mentioned in this article.
Overview:
- Kamino Finance and Lido Finance have partnered on Solana.
- SOL deposited in Kamino's stSOL-SOL vault are staked with Lido.
- Composability can contribute to network decentralization.
Kamino Finance is proud to announce a huge milestone for increasing Solana's capital efficiency and network security. The latest development in the partnership between Kamino and Lido Finance can help users earn yield on their yield—while increasing the number of SOL staked on the network to strengthen the blockchain’s decentralization further.
Automated concentrated liquidity vaults on Kamino have made it possible to earn an additional yield on stSOL positions, which currently earn 5.5% APY from staking rewards. Providing liquidity for stSOL-SOL concentrated liquidity market makers (CLMMs) through Kamino, users can earn APY from exposure to stSOL and earn fees from trades.
Through a stroke of decentralized finance (DeFi) innovation, users can automatically stake their SOL with Solana through Kamino and Lido when they deposit SOL into Kamino’s stSOL-SOL vault. Besides earning additional yield on stSOL, this strategy means an increased amount of SOL will be staked to decentralize Solana.
How Does Staking SOL Through Kamino and Lido Work?
Before this latest integration between Kamino and Lido, single asset deposits of SOL made into the stSOL-SOL vault were automatically split using Jupiter Aggregator, which has become one of the most capital-efficient liquidity aggregators in DeFi.
Creating a liquidity position by trading SOL for stSOL already circulating in the market, though, does not help increase the amount of SOL staked with Solana validators. On the other hand, increasing the amount of SOL staked on Solana is one of the major reasons why stSOL exists, so finding a way to increase SOL staking has become a priority.
After this update, single asset SOL deposited on Kamino will be split into stSOL by minting new stSOL into the ecosystem through Lido. Consequently, the SOL deposited on Kamino into the stSOL-SOL vault will contribute to the expansion of Lido’s efforts to distribute SOL amongst an increasing number of Solana’s validators.
DeFi Liquidity Solutions Team Up to Decentralize Solana
Users who depend on Kamino to optimize their stSOL yield can also rely on the protocol to help secure the future of their positions. This can be done by helping increase Solana’s Nakamoto Coefficient, an important statistic for ensuring the sustainability of every blockchain through increased decentralization.
The Nakamoto Coefficient for Solana, which counts the minimum number of parties that would need to collude to overtake a blockchain network, increases when a wide range of validators receive SOL from other users to increase their ability to finalize transactions efficiently.
However, it’s not a given that users will make choices that efficiently raise Solana’s Nakamoto Coefficient.
Lido specializes in finding dependable validators that could further increase the Nakamoto Coefficient on Solana, and the SOL staked with Lido ends up in their hands. Solana currently has one of the highest Nakamoto Coefficients between proof-of-stake (PoS) blockchains at 31, and increasing this number is a huge goal for expanding the network’s security.
Kamino is now participating in Lido’s efforts to decentralize the network by staking SOL for stSOL instead of trading for it when balancing concentrated liquidity positions. It’s a major effort to increase the amount of SOL staked on the network in a highly efficient manner, thanks to Lido.
Mark Another Win for DeFi Composability on Solana
The extreme composability of DeFi on Solana allows for some incredible integrations between protocols. As a result, the composability of Kamino and Lido can help create sustainable ways to promote achieving deep liquidity, fostering new yield strategies, and increasing the decentralization of Solana through stSOL.
Lido’s liquid staking token on Solana, stSOL, is a powerful tool for increasing liquidity in DeFi and securing Solana through PoS consensus. When users deposit SOL into Kamino’s stSOL-SOL vault, they can help empower the network to decentralize further while earning real yield from fees on trades.
It will be interesting to see what the partnership between Kamino and Lido comes up with next. The projects are searching for new and creative ways to integrate innovative utilities for users and the future of Solana DeFi.
How to Deposit and Stake SOL on Kamino
Kamino makes it easy for market makers to earn yield with SOL tokens. Here's how to make a deposit to begin staking SOL while earning yield:
- Go to Kamino Finance and find the stSOL-SOL vault.
- Connect a wallet.
- Make sure the "Auto swap uneven amounts" box is ticked in the deposit window.
4. Enter the amount of SOL to deposit into the vault. Users can click "max" to deposit all but .01 of the SOL in their wallet.
5. Click "Deposit" and approve two transactions. Users will have to approve one transaction to mint stSOL and another transaction to complete the deposit.
When the transaction is confirmed, users can sit back and watch their concentrated liquidity position earn yield...on top of yield generated from staking with stSOL!
