Solana

The KMNO token went live last week. After a quick selloff, it has doubled off its lows.

Bootstrapped by Hubble Protocol nearly two years ago, Kamino Finance has become Solana's largest protocol by DeFi TVL.

A deep dive into Kamino's features and the new KMNO token 🧵

Protocol Research /messari • Nomading the world 🌎

Kamino's beginnings stem from Hubble Protocol, which offers two tokens on Solana:

• The HBB governance token
• The USDH overcollateralized synthetic dollar.

While Kamino hasn't publicly announced the raising of any funds, Hubble raised over $18M across 2021 and 2022.

Kamino is Solana's largest protocol by DeFi TVL by a wide margin, commanding $1.15B in assets ahead of Raydium ($613M) and MarginFi ($478M). 

Kamino offers four core features for users, including (i) Borrow / Lend, (ii) Liquidity, (iii) Multiply, (iv) Long / Short.

(1) Borrow / Lend

Kamino's main feature is a typical borrow/lend protocol. However, Kamino implements partial liquidations. Kamino also leverages a stake-rate formula to smooth LST prices, reducing the risk of liquidation due to LST de-pegs.

Kamino offers three markets (Main Market, JLP Market, and Altcoins Market)

(2) Liquidity

Kamino's vaults serve as CLMMs, automating the provision of concentrated liquidity across Orca, Raydium, and Meteora.

LPs benefit from (i) auto-compounding fee earnings and (ii) auto-rebalancing positions. Kamino's top vaults offer token incentives (typically $JTO and $KMNO) or Meteora $MET points.

(3) Multiply

Users can stake SOL with leverage by depositing SOL or liquid staked SOL tokens (JitoSOL, bSOL, and mSOL) and leverage looping them.

Notably, positions can be liquidated if the borrow interest rate is higher than the LST yield for a sustained period of time.

(4) Long / Short

Users can go long or short on supported assets through leveraged looping.

KMNO is an SPL token on Solana with a total token supply of 10 billion.

KMNO’s functions include (i) staking, (ii) liquidity provisioning, and (iii) incentives.

Also, KMNO may be usable to participate in governance of Kamino in the future.

(1) Staking

KMNO can be staked to earn Kamino Points and boost Kamino Point earnings:

• For every $1 of KMNO staked, users earn 3x Kamino Points per day.
• For every 1 KMNO staked, a boost applies to 2 of your Kamino points per day. The multiplier begins at 30% and raises by 0.5% per day up to a maximum of 300%.

(2) Liquidity Provisioning

KMNO can be used to provide liquidity to supported KMNO pairs. Incentivized KMNO vaults earn additional KMNO tokens and/or other partner token incentives.

(2) Incentives

KMNO is used to incentivize actions on the protocol:

• KMNO is distributed to Kamino Point holders at the conclusion of Kamino Points Seasons.
• Users that provide liquidity to incentivized KMNO vaults, such as KMNO-JitoSOL and KMNO-bSOL, earn KMNO token incentives.

What does the future hold for Kamino? Likely further incentives.

• 2.75 billion KMNO (27.5% of the total token supply) is allocated to “Community & Grants.”
• 1 billion KMNO (10% of the total token supply) is allocated to “Liquidity & Treasury.”

Kamino Points Season 2 is slated to end at the end of July 2024.

Users earn points by using any Kamino feature, including (i) Borrow/Lend, (ii) Liquidity, (iii) Multiply, (iv) Long/Short, and (v) KMNO Staking. 

However, point earning varies based on dynamic boosts.

KMNO may be usable to participate in governance of Kamino in the future. Plans for a governance system have yet to be confirmed. Details have been very limited.

However, it “could include voting on user reward campaigns, protocol grants, revenue allocations, or certain aspects of protocol risk management.”

Kamino is here to stay, serving as Solana's largest liquidity layer. Want a deeper dive into Kamino and its KMNO token?

Our new Messari Diligence Report is live!

https://messari.io/project/kamino-finance/diligence-report