Contemplating Solana DeFi #1 - Kamino Finance
A review and shallow dive into the go-to liquidity layer of Solana's DeFi ecosystem.
Something is brewing in the Solana DeFi ecosystem
The chain has been growing in confidence and applications are really starting to flex their innovative muscle. One DeFi protocol I've been following closely is Kamino.finance
A quick look back…
A reminder that Solana TVL is still down around 90-95% from ATH in 2021 📉
No surprise after it went tits up after FTX, yet it somehow pulled through and I think it is now positioned itself to have astonishing success in the coming months and years.
Solana devs have been quietly grafting away in the shadows - the most recent partnership announcements, DeFi application alignment, the thriving NFT ecosystem and switch in social sentiment are evidence to this.
One of the areas which it has arguably lagged behind (until now), is DeFi. I think it’s noteworthy to consider the rise of L2s on Ethereum could have exacerbated this with interest & liquidity being drawn into those ecosystems for airdrops and new applications.
In the quiet, seeds were sown and for a number of months now, there have been some pockets of growth for Solana DeFi 🪴
What is Kamino Finance?
Kamino is an automated liquidity tool which allows users to earn yield from providing liquidity to concentrated liquidity market makers - aka CLMMs - via token pair vaults.
Through this, it streamlines the LP process by enabling automated liquidity and yield optimization through position rebalancing and auto-compounding of fees and rewards.
Essentially the yields come from the fees earned from the token swaps on the underlying DEX pool which the user provided liquidity to.
What is the problem? 🤔
Liquidity providers are required to shuffle their positions as the yields fluctuate over time - this is inefficient and impacts opportunity cost.
Kamino aims to solve this by enabling users to take advantage of Kamino’s ‘set-and-forget’ methodology with automatic price-range optimization, easing the burden of having to manually track and amend positions to retain the best yield return.
Additionally to this, Kamino provides users with a fungible ‘kToken’ which can be utilized in other DeFi protocols - similar to an LST mechanism.
Note: Any and all DeFi applications involve risks - ensure practicing due diligence and research before depositing funds. Although certain applications offer flexible/immediate withdrawal of assets, NEVER deposit more than you can afford to lose.
The app review ✒️
UI/UX - 9.5/10
One of the most user friendly experiences in any DeFi application.
It’s simple and doesn’t overload on information, the tiles outlined for the different vaults available are easy to understand and only show the information you need to see
Easy and pleasant to review your portfolio and it keeps a track of any P&L for both fees earned and any price volatility
Accessibility - 7.9/10
Kamino is live and anyone with a native Solana wallet can access - there are a lot of choices when connecting the app
No referral codes required
Only available on Solana
Features - 9.6/10
Automation: Constantly assesses maximum returns for yield and curates possibilities to review based off the holdings in your wallet. It makes it frictionless to deposit in seconds. Yields are auto-compounding, removing any burden managing this manually.
Creator Vaults (USP): Users can set up their own permissionless liquidity vaults with custom strategies. A simple 2-step process which empowers users to create and incentivizes sharing with their network - users will soon be able to earn their own fees from users depositing liquidity into their vaults
Advanced Analytics: Allows you to track the historical short or long term movements and changes in any chosen vault with very intuitive charts
Easily track performance and compare how your vault pairs stack up against how you would have done if you decided to just hodl your tokens instead Monitor the rebalancing of the pool prices and APRs over time
Security - 5/10
Kamino have shared numerous times that security is a number one prio.
The team have gone through initiating at least 3 audits but as far as I can tell all were last updated 9 months ago. Kamino 2.0)
The audits were carried out by: @sec3dev @SmartStateTech @pwnednomore
Review the audits here: https://github.com/hubbleprotocol/kamino-audits… --------
What's next for Kamino?
Kamino feels still somewhat under the radar and this is likely because it launched just prior to FTX collapse in Aug 2022.
Since then, its TVL has grown consistently and enables liquidity deposits on many LSTs from other #Solana DeFi primitives - $JitoSOL, $mSOL, $bSOL and just a couple of weeks ago added $LST as it was released on margin.com
Recommendation: If you’re looking into dipping your toes and learning more about DeFi, Kamino is a very good place to get started as it requires very little input and proactive management. You can just deposit some liquidity to a vault and check in on it now and then.
Of course - DYOR before buying or investing in crypto.
Alpha: The team recently announced the beta of Kamino 2.0 - which will transform the platform from the go-to protocol for liquidity management, to an end-to-end DeFi powerhouse bringing together lending, borrowing, leverage and liquidity all under one roof.
You can join by jumping into the Discord and raising a ticket.
With Solana Break Point on the horizon, now is a great time to find great alpha growing on the Solana ecosystem - it is the most exciting time at the moment with mega opportunity leading up to the new bull market.
I hope you found this insightful!
Subscribe for regular write ups on defi and crypto applications, drop me a dm if you have any protocols you would like me to look into and sharing.
Thanks for reading!
f.