Kamino is the first concentrated liquidity automated vault protocol on Solana.
In this deep dive we’ll break down what Kamino is and how we’re using their platform to generate high and sustainable liquidity-providing yields.
Kamino is a Concentrated liquidity vault management tool, let’s start by explaining what concentrated liquidity is:
In traditional AMMs the LP assets (liquidity) are distributed evenly along an X*Y=k price curve from 0 to Infinity which you can see below.
Distributing LP assets evenly across the whole price curve has two main disadvantages:
1- Most of the liquidity in the price curve is unused and won’t earn fees for liquidity providers.
2- Spreading the liquidity out causes less depth so trades have higher slippage.
CLMMs (Concentrated liquidity market makers) allow liquidity providers to select where to place liquidity within the price curve instead of distributing it evenly.
This means LPs can provide liquidity in tighter price ranges where more of the price action / volume is happening:
CLMMs allow the liquidity to become more efficient, this means that LPs can earn more fees and the liquidity creates more depth for trades (less slippage)
However, CLMMs do have some drawbacks as manually managing and setting price ranges can be complex and time-consuming.
This is where Kamino comes in.
Kamino’s vaults are built on top of existing concentrated liquidity pools to vastly improve both their performance and ease of use:
Kamino’s automated CLMM vaults allow you to simply deposit your assets and Kamino will do all the work.
No more managing positions manually, plus your yield from trading fees & rewards are automatically compounded to maximize your returns.
Below are some of the vaults currently available on Kamino.
At a glance, you can see what the projected APY is, who the pool provider is and more:
Some users attribute high APY to high risk, however when you view each vault you can see what the source of the yield is:
The majority of the APY on this SOL-USDH pool is being generated purely by trading fees rather than emissions, which means the APY is far more sustainable.
This is due to the power of concentrated liquidity.
To deposit we can simply enter the amount of SOL to be deposited.
Kamino allows single-sided deposits, so it will auto swap the tokens via Jupiter to even amounts and then deposit them into the vault.
After depositing we can monitor our positions from the “My portfolio tab”
The liquidity can be withdrawn at any time (this can incur a withdrawal fee, which may vary between vaults)
Simple, Sustainable Hassle-free yield 👨🌾
For those with any security concerns, you’re in safe hands as Kamino has had two security audits, with a third continuous audit via @sec3dev:
Kamino was incubated by @Hubble which contains some of the greatest DeFi minds + builders on Solana.
Hubble + Kamino are backed by some of the most prominent VCs in crypto
Kamino is already increasing the depth of liquidity across the whole of Solana. Kamino provides a much-improved user experience for anyone who wishes to improve the efficiency of their liquidity mining through concentrated liquidity.
The team behind Hubble/Kamino has already proven their abilities so we’ll be keeping a close eye on both protocols.
To chat with us about Kamino or anything relating to the Solana ecosystem feel free to join the Solana Insiders community:
Which Solana project would you like to see us cover next? Let us know and we’re on it! Until next time Insiders!
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