CASH Borrow Incentives
Via the CASH Growth Initiative, Kamino is collaborating with Phantom to scale CASH Borrows on Kamino.
Below, we'll dive into the technicalities of how CASH borrow rewards work. However, in a nutshell, rewards work as follows:
Users earn incentives on CASH borrows, against specific collateral assets (PSOL, USDC and SyrupUSDC in this case). The more CASH you borrow against an eligible collateral asset, the more incentives you earn.
Borrow Incentives Explained
Collateral: PSOL
Debt: USDC
In this scenario, borrow incentives are allocated according to the amount of CASH borrowed against PSOL. Reward amounts will scale as the total amount of CASH debt taken against PSOL collateral increases.
Rewards Criteria
A position must contain PSOL collateral and CASH debt
In a position with multiple collateral/debt assets, only the weighted amount of CASH borrowed against PSOL is considered
Rewards Calculation
There are two APY values to consider:
Max APY This is the value shown in the market list, and refers to the maximum possible APY a user can earn on their debt:
farm apy = total rewards per year / total CASH debt backed by PSOL in market
This is displayed as a blue value below the Supply APY of the Collateral Asset, as well as under the Borrow APY of the Debt Asset, shown below:
User APY This is the actual rewards a user is earning on their debt based on their collateral/debt composition:
user apy = farm apy * ( user CASH debt backed by PSOL / total user CASH debt )Whereuser CASH debt backed by PSOLis calculated as:user CASH debt backed by PSOL = user PSOL collateral / user total collateral * total user CASH debt
This is displayed as a blue value below the Borrow APY of the Debt Asset in the Position Overview of your active loan, and will display the actual APYs you are earning based on your exact position shown below:
A user’s reward amount thus considers the weighted amount of CASH borrowed against PSOL in their position, in relation to total CASH borrowed against PSOL in the market.
We’ll cover a few examples below:
Borrow Incentives Examples
Example #1: Position with only PSOL collateral and CASH Debt
PSOL Collateral = $100
CASH Debt = $50
user apy = farm apy * ( user CASH debt backed by PSOL / total user CASH debt )
user apy = 10% * ( 50 / 50)
user apy = 10%
In this scenario, the user earns the Maximum APY value on their debt. With 50 CASH Debt debt, the user would earn 5 CASH annually. At a 10% Borrow APY, for example, their CASH rewards would offset 100% of their annual borrow cost.
Example #2: Position with SOL and PSOL collateral, and CASH Debt
SOL Collateral = $50
PSOL Collateral = $100
CASH Debt = $50
In this scenario, we first calculate how much of the user’s CASH debt is backed by PSOL:
user CASH debt backed by PSOL = ( user PSOL collateral / user total collateral ) * total user CASH debt
user CASH debt backed by PSOL = (100 / 150) * 50
user CASH debt backed by PSOL = 33.33
This means, out of the total 50 CASH debt, 33.33 CASH is backed by the PSOL collateral. We can then calculate the user’s APY:
user apy = farm apy * ( user CASH debt backed by PSOL / total user CASH debt )
user apy = 10% * ( 33.33 / 50 )
user apy = 6.6%
In this scenario, the user earns a 6.6% APY value on their debt. With 50 CASH debt, the user would earn 3.3 CASH annually. At a 10% Borrow APY, for example, their CASH rewards would offset 66% of their annual borrow cost.
Example #3: Position with PSOL collateral, and CASH and USDT Debt
PSOL Collateral = $100
CASH Debt = $50
USDT Debt = $20
In this scenario, the user is borrowing at a 70% LTV, but is earning rewards on only the CASH portion of their debt. In practice this comes down to the same calculation as Example #1, where the user earns:
user apy = farm apy * ( user CASH debt backed by PSOL / total user CASH debt )
user apy = 10% * ( 50 / 50)
user apy = 10%
In this case, the user earns 10% APY, but only on the CASH portion of their debt, so 5 CASH annually. Were the user to switch their USDT debt to CASH, they would be earning 7 CASH annually.
This rewards initiative thus encourages users not only to deploy PSOL into Kamino, but to borrow CASH against it, thus leading to a net increase in CASH borrow activity.
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