Solar ☀️

I've been through every Solana @colosseum radar hackathon applications so you don't have to. ...and the DeFi track was full of hidden gems. Here's my top 7🧵

Yield farming was never about chasing the biggest APY. it's about finding the best risk/reward farms and surviving through every exploit, rug and depeg.

Slippage. Unstructured risk. Redemption periods. Three problems Kormos solves to unlock the highest quality yields in DeFi.

On risk isolation This is one of those things that everyone kind of gets intuitively but once you peel the onion you realise how many layers there are to it. This is my genuinely honest attempt to articulate it after thinking about it for a while. There are three fundamental principles, (1) risk profile, (2) risk non-fungibility, and (3) risk pricing. 1/ When you lend into a market, you essentially underwrite the risk of that market - the collateral (credit risk) along with operational risk (smart contracts, liquidations, oracles, etc). In an ideal world, operational risk goes to 0 over time and you are left with the credit risk of the collateral. Similarly with vaults, but not quite literally the same, you underwrite the risk of the **current** markets, along with the **mandate** and the skill of the risk manager. Let's call this "risk profile". Critically, that is a point-in-time decision, and not something you expect to change over time. A crude equivalence - when you buy a bond you don't expect it to switch from being a US Treasury to a junk emerging market bond. You expect the risk profile to be stable over time, and you price it accordingly. Therefore, adding tokens to a market or markets to a vault is expected to be done with this assumption. It's not a hard rule because DeFi is still nascent, but it's a strong convention you shouldn't violate. 2/ Risk is not fungible nor constant While risk usually collapses to a single value at a point in time (the credit / yield spread over the risk free rate) - the vector of risks that contribute to that value is huge and changes with time. For example, one yielding token commands a 5% spread due to collateral risk, another one due to duration, and yet they could have the same spread at this point in time. That doesn't mean they have the same risk profile and that spread will be the same tomorrow. Adding them to the same market without accounting for that is where the problem starts. Suddenly the collateral of the first token could degrade and the spread could go to 10%. The inputs affecting those risks change over time and therefore the yield. Just because the yield matches now, it doesn't mean the risk is the same. Risk is not fungible, therefore grouping tokens has to be done with care. 3/ Risk is priced by the market, not by the risk manager or by the protocol. The market is an aggregate of all participants out of which the risk curator is just one. Everyone has different perceptions and tolerances of "oracle risk" or "redemption risk" or "smart contract risk". Even more so, since RWAs, the vector of risks has grown exponentially, making the exercise of pricing them 100x harder. That basically means you can't just "lift the curve" or add a constant spread to a token and dump it in an existing market. Some existing lenders may agree, some may not, it's impossible to calibrate this value. So the solution is for the protocol / risk manager to allow the market to price the risk. The simplest way to do it (which people do now) is to simply sit it out - deposit if the yield compensates the risk you think you are taking, or not. A more complicated way would be to place lending intents at diff rates and see where the market clears. DeFi is still crude here but not stupid - given enough information the market will try to price the risk - a black box token is 100x harder to price than a token with SEC filings and audited financials. Disclosure is highly critical here which is not nearly enough spoken about. -- Taking all three into account we have: (1) a lender prices a risk profile and expects it to hold, (2) two tokens with the same spread today carry different vectors of risk that will diverge tomorrow, and (3) no single curator can price that risk on behalf of the market. Therefore, adding assets with a different risk profile to an existing market changes what lenders signed up for, exposes them to risks they never priced, and leaves no way to compensate them because no two lenders price the new risk the same way. The only way to solve all three is isolation - stable risk profile per market / vault and let the participants price it. The principle is as old as finance itself. -- Note: this is not a manifesto for "isolation at all costs". This topic is as deep as it gets and could turn into an essay, but for the sake of brevity, I kept a lot out.

@FabianoSolana @onrefinance

@DefiSolar @onrefinance in solar we trust

@shayonsengupta @sacha multichain working for their bags, can't blame that.

@HeyDrops @MetaDAOProject Pretty ballsy to pay founders 20x the average local salary when the company is still unprofitable and losing $140K a month.

easy skip this @MetaDAOProject new sale. Annual revenue $578K, yet asking $6M here. Monthly allowance per person is $3K ( growth and legal might goes to same stuff), not much but in India ₹3 lakh each month for this?? I don’t even think they need 25 people just to run a sub grade P2P service. All lies and extraction.

@Kormos_fi 👀

Users are missing out on some of the highest yield strategies in DeFi. Most are used to Kamino-like instant and free redemptions, but RWA strategies incur entry and exit slippage, which compounds quickly with looping. Kormos is built to capture this yield.

@markwasonline @kamino @kamino_swap @ExponentFinance 20% on stables? decent 😏

you can manually loop PT-eUSX on @Kamino for 20%+ APY and take advantage of $20k in new incentives. here’s how: swap stables → eUSX (@kamino_swap) eUSX → PT-eUSX (@ExponentFinance) supply PT-eUSX into the Solstice market on Kamino max borrow USX against it repeat until ~70% LTV Currently I’m getting paid to borrow USX as well. And as long as you keep LTV below ~80% you should be chillin.

@0xAlan_ coming for you ser

@DefiSolar As a top 5 points enjoyer, I like this article

@inno_ox 🙏

@DefiSolar what a read! defi goat.

@onrefinance 🧑‍🌾

@DefiSolar 🧑‍🍳

@DonDeFiMaster the spreadsheet is for 6x point multiplier

@DefiSolar Can you please send me the spreadsheet so I can calculate estimated APR for 5x and 6x point multiplier?

@dahviemaxi @onrefinance appreciate it haha

@DefiSolar @onrefinance You cooked with this

OnRe is one of the only airdrop worth farming in Solana DeFi. RWAs are the next big thing, and @onrefinance is one of the front-runners. 2 of my wallets have already ranked top 30. Full thesis below ⬇️

@Ekko234789 🤝

@DefiSolar Quality speculation!

@aut3z appreciate you!

@DefiSolar Bro… Great thread

A great read if you’re farming @onrefinance. If 1M points = $87 are you rich?

@ExponentFinance big.