Yield & APYs

Kamino produces yield from volume across the Solana ecosystem

Where does yield on Kamino come from?

Kamino automates concentrated liquidity DEXes on Solana, enabling users to earn fees from volume.

How a DEX works:

When User X swaps from Token A to Token B, this swap is facilitated by a pool that consists of both Tokens A and B. User X essentially deposits Token A into that pool, and in return receives Token B. For this service, User X pays a small swap fee, which is distributed to the liquidity providers.

What is a liquidity provider?

The total amount of Token A and Token B in this pool did not appear out of thin air. It was deposited by users that are willing to provide their tokens as liquidity, in return for a small swap fee.

What does Kamino do?

Kamino enables users to deposit their funds into liquidity pools, thus earning yield from swap fees. However, in a concentrated liquidity DEX (CLMM), it's not so simple to deposit your funds. You need to manually select the price range for your deposit, manually harvest rewards, and remove all your liquidity and redeposit it if your position is no longer in the correct price range.

Kamino automates all of this. Deposits, range selection, reward compounding, and rebalancing. It's Solana's first one-click solution for CLMMs.

How the APY on Kamino works

There are three APY values you will see on a Kamino vault page: Vault APY, Kamino APY and Total APY. Here's what they mean:

Vault APY

This is the APY from Strategy Fees, which includes trading fees and DEX incentives, as explained above. These earnings are auto-compounded regularly. The Vault APY is calculated according to the previous 24 hours of volume on a given pool, and is not an absolute value that users can always expect to receive.

Note that this APY does not account for impermanent loss, and purely reflects the APY according to the past 24 hours of trading volume. You can read more about impermanent loss in the Risks & Technical section, as well as the risks for each vault in the Strategies section.

Kamino APY

This is the APY from incentives provided by Kamino's partners. If a vault has these additional incentives, the amount and the reward token will be displayed in the vault interface. Kamino APY is either auto-compounded back into your position, or regularly claimable via the My Rewards tab. Kamino rewards are announced monthly in Discord, in the first week of every month.

Some of these rewards may also be in the form of options, which is covered in more depth here.

Total APY

The Total APY reflects the combined values of the Vault APY and Kamino APY. Total earnings from DEX fees and rewards, and Kamino incentives are all combined into this value.

A full overview of your earnings across all positions is shown in the Portfolio Portal.

Please note that the APY displayed on Kamino does not account for impermanent loss, and purely reflects the projected yield according to the APY of the past 24 hours. It's highly encouraged that you familiarize yourself with each vault, and how impermanent loss may come into play (predominantly for mixed strategies).

Auto-compounding

Kamino auto-compounds all DEX fees and rewards earned on a user's position. This means that users never have to harvest the fees & rewards they earn on their position. Auto-compounding occurs multiple times per day. In the case of fees, they are collected and deposited. In the case of rewards, they are sold for tokens A and B and then deposited.

Most of the Kamino incentives are auto-compounded back into user positions as well, though this can vary between pools, as well as from month to month. Details on incentives are updated in the first week of every month, and are announced in Discord.

Total Earnings Breakdown:

Your total earnings are a combination of all the yield earned on the vault, including all incentives from the DEX Rewards, Kamino itself (kRewards),and fees earned in each individual token. All rewards except kRewards are always auto-compounded. kRewards are often auto-compounded, but if not, they are claimable in the My Rewards tab of the Portfolio Portal.

In the above example, the earnings are broken down as follows:

SOL Fees - Auto-compounded trading fee earnings, earned in SOL

BONK Fees - Auto-compounded trading fee earnings, earned in BONK

BONK Rewards - BONK incentives on the DEX, auto-compounded into your position by Kamino

BONK kRewards - BONK incentives on Kamino, either auto-compounded, or manually claimable