Sam Cornacchione

Kamino Market Making Vaults have now: - Generated $6M in fees for LPs - Done over $5B in trading volume At $120M TVL, Kamino Liquidity will soon be the largest Liquidity Management platform in DeFi It's time for a deep dive🧵 We have been refining our Liquidity Vaults tech since mid-2022, building some of the most powerful automated market making strategies in DeFi. If you are a liquidity provider in DeFi, whether retail or institutional, it’s worth understanding how Kamino Liquidity works, and how we have designed it to serve your portfolio. At a glance: Kamino Liquidity is a market making product via which you provide liquidity into a huge range of liquidity pools on Solana. Kamino vaults: - Auto-compound all fee earnings - Auto-rebalance positions to ensure liquidity is in range and yielding at all times We’ve integrated the three main Solana DEXs, @orca_so, @raydiumprotocol and most recently, @MeteoraAG’s DLMM - which means Kamino is both: - The largest liquidity manager in Solana - The largest yield aggregator in Solana Part 1: How Kamino Liquidity Works Kamino has 3 main strategy types: 1. Drift 2. Tracker 3. Fixed Range Each of the strategies perform optimally in certain market conditions, with certain assets. Drift Strategy All SOL-LST vaults on Kamino are built on the Drift strategy. This strategy does not use price ranges, but instead uses the $SOL stake rate, enabling the protocol to deterministically rebalance vault at set intervals. This enables extremely tight, thus profitable trading ranges, and produces a rather mesmerizing rebalancing chart: Because the strategy uses the stake rate, instead of market price, to rebalance, depegs do not impact the vault ranges or rebalancing. A temporary LST depeg would not cause the vault to rebalance and realize losses. — Note that we’ve built a robust in-app analytics suite where the PnL performance, historical ranges, APYs and more can be tracked for every vault on the platform. app.kamino.finance/liquidity/adva… We take transparency seriously, and we aim to provide as much data, as accurately as possible. — 2. Tracker Strategy The tracker strategy uses two parameters: - Reset Range - Market Making Range The market making range determines where the vault deposits user liquidity into the underlying DEX, and the Reset Range determines at which respective upper and lower range the strategy rebalances. All of this is fully automated. Once ranges are set, the strategy runs autonomously using the assigned parameters. The tracker strategy is typically used for volatile pairs like SOL-USDC or JTO-SOL, and can produce rebalancing charts such as this: 3. Fixed Range Fixed range strategies use range presets, and do not auto-rebalance when a pool moves beyond the upper or lower bounds. These strategies are typically used in two scenarios: for LST-LST pairs, as it assumes the stake rate will be aligned over time, and for highly volatile pairs upon launch, with wide ranges to allow for price discover without rebalancing. How Kamino Liquidity Will Evolve The groundwork for the evolution of Kamino Liquidity is already laid, and can be summarized simply as: tokenization All Kamino Liquidity Vault positions are already tokenized into fungible LP positions - Kamino is the first protocol in DeFi to enable tokenization of these complex liquidity positions. Going a step further, these LP tokens (kTokens) can already be used to lever up via Kamino Lend - which has the ability to liquidate liquidity positions just like any other token The vision here is clear - enable leveraged liquidity provision via Kamino Liquidity & Kamino Lend Leveraged liquidity can unlock far deeper liquidity for the ecosystem, which has already proven a necessity if Solana DeFi is to mature. It also enables more sophisticated market-making strategies such as delta neutral or hedged positions. All of this is enabled due to Kamino’s tokenization of these liquidity positions - as well as the robust pricing infrastructure that unlocks their usage as collateral assets. If you want to build on Kamino Liquidity, use our SDK: github.com/hubbleprotocol… That's it for now - to go even deeper into Kamino Liquidity, we highly recommend reading the docs: docs.kamino.finance/v/automated-li… If you have any questions, don't hesitate to join us in Telegram: t.me/+z4XqPSCki-hhM…