A new planet full of liquidity has just been found by the Solana ecosystem...
Note: This article is not financial advice. Kamino Finance does not endorse any of the tokens or platforms mentioned in this article.
Kamino is on a mission to become Solana’s ultimate liquidity destination – a corner of the DeFi universe where capital efficiency reigns supreme.
What is Kamino?
Kamino is a tool that automatically rebalances concentrated liquidity (CLMM) positions, auto-compounds rewards, and utilizes Solana's bandwidth to fine-tune the protocol’s strategies for capturing value.
Though initially built on Orca’s CLMM Whirlpools, Kamino’s easy-to-use vaults are designed to manage liquidity across multiple next-generation DEXs. Kamino makes it possible for any user to provide liquidity and earn fees from trading with the click of a button.
Why We Need Kamino
Orca’s CLMM Whirlpools currently attract multiple times the 24-hour trade volume as their counterparts, liquidity pools reliant on the traditional AMM structure.
In the example below, Whirlpools attract 7x the volume as Orca’s classic AMM pools – with half the liquidity deployed by users ($61M versus $27M).
This difference in volume demonstrates a massive increase in capital efficiency, but the complexity of setting and managing concentrated liquidity positions has been a barrier to increased adoption.
Furthermore, studies have shown that the impermanent loss (IL) from concentrated liquidity positions often outweighs fees earned by a significant margin, leading to a large proportion of loss-making positions.
Kamino’s strategies aim to protect users from IL and optimize yields earned from fees when providing concentrated liquidity. The image below demonstrates a historical model of Kamino’s performance over a one-month period managing the USDC-USDT Whirlpool. As can be seen, Kamino outperformed the estimated APY advertised by Orca.
Concentrated liquidity is an incredibly powerful tool that could propel DEXs to the center stage of global crypto trading. As the decentralized trading environment improves, and as more users are attracted to concentrated liquidity, Kamino can help optimize the fees users can capture while minimizing the complications of market making with CLMMs.
Why Hubble Protocol Incubated Kamino
Hubble Protocol has been providing DeFi solutions on Solana for nearly a year. Incubating Kamino Finance is an extension of Hubble’s mission to improve the capital efficiency and liquidity of the DeFi landscape on Solana, especially for stablecoins like USDH.
Kamino will be doing much more than simplifying life for LPs. Kamino can help provide deep liquidity for USDH, and it creates additional collateral that can be deposited on Hubble via kTokens (Kamino LP tokens). By helping further composability in Solana DeFi, Kamino increases opportunities for users to mint USDH and use kTokens independently.
Kamino is held to rigorous security standards. The protocol’s code has been submitted to three independent audits on top of multiple tests performed throughout Kamino’s development.
Find out more about Kamino, and get started by visiting kamino.finance.