kToken Collateral

Kamino Lend can take concentrated liquidity (CLMM) LP positions as collateral, making it the first protocol in DeFi that allows users to provide leverage CLMM liquidity across a wide range of strategies.

These LP tokens, called kTokens, are minted when depositing into Kamino's automated liquidity vaults.

LP yield is always auto-compounded When your kToken is deposited in Kamino Lend, it will continue to earn all the yield from the LP position. kTokens are built to be the ultimate yield-bearing collateral asset.

How it Works

• When you deposit into any of Kamino's liquidity vaults, you receive a kToken in return, which represents the value of your liquidity position. All the fees & incentives you earn in the liquidity position (trading fees, DEX incentives, and Kamino incentives) are auto-compounded into your kTokens

• kTokens can be deposited as collateral into Kamino Lend, just like any other token like SOL or USDC. While deposited, you continue to earn the yield from the liquidity

• You can borrow assets against these kTokens to loop your liquidity, or even borrow assets to remain delta-neutral

kToken Lending Strategies

The ability to use kTokens as collateral creates a wide range of strategies for users. We'll cover some of these below:

Yield Loop

This kToken strategy type will soon be automated in a one-click Multiply vault

Description

Deposit a SOL or stablecoin kToken & borrow the underlying asset to loop yield with minimal liquidation risk

Applicable kTokens

Any with price exposure to a single asset (eg. mSOL-SOL, UXD-USDC, bSOL-JitoSOL etc.)

Example: mSOL-SOL

If you deposit into the mSOL-SOL vault on Kamino, you receive the kmSOL-SOL kToken. You can then deposit this kToken into Kamino Lend. If you borrow SOL, you maintain SOL-only exposure in the position.

The borrowed SOL can then be redeposited into the mSOL-SOL vault, which means you mint more kmSOL-SOL tokens. These kToken can once again be deposited into K-Lend to borrow more SOL.

As long as the liquidity vault yield remains higher than the borrow APY of SOL, your position earns positive Net APY.

Strategy Benefits

• Minimal liquidation risk

• Boosted yield

Strategy Risk

• Asset depeg risk

Delta Neutral

Description

Deposit a blue-chip kToken & borrow the volatile asset to leverage exposure

Applicable kTokens

Any with a volatile-stable asset pairing (eg. SOL-USDC, tBTC-USDC, mSOL-USDC etc.)

Example: SOL-USDC

If you deposit into the SOL-USDC vault on Kamino, you receive the kSOL-USDC kToken. You can then deposit this kToken into Kamino Lend. If you borrow the correct amount of SOL, you can maintain delta-neutral exposure.

Delta-neutral means that you do not have exposure to price movements. If you are delta-neutral with SOL-USDC, it means your position value is minimally impacted by SOL price action.

Maintaining a delta-neutral position requires you to consistently monitor and adjust your SOL borrow position to remain delta-neutral. This is NOT a passive strategy.

If you do remain delta-neutral you can earn the transaction fees on a vault while minimizing the impact of impermanent loss. This is a particularly valuable strategy for vaults like SOL-USDC that tend to earn the highest yields in DeFi

Strategy Benefits

• High yield earnings

• No exposure to price movements

Strategy Risk

• Requires consistent manual management

SOL Long

Just like supplying SOL to borrow USDC, and acquire more SOL to loop your SOL exposure, you can do the same with kTokens.

Applicable kTokens

Any SOL-only kTokens (eg. mSOL-SOL, JitoSOL-SOL, JitoSOL-bSOL etc.)

Example: JitoSOL-bSOL

If you deposit into the JitoSOL-bSOL vault on Kamino, you receive the kJitoSOL-bSOL kToken. You can then deposit this kToken into Kamino Lend. If you borrow USDC, swap it back into either SOL token, and redeposit into the vault, you can redeposit the kTokens into Kamino.

This has the same effect of looping a token using the Long/Short vaults.

These positions are high-effort to manage, and should not be viewed as a passive liquidity strategy

Strategy Benefits

• Earn yield while long

Strategy Risks

• Liquidation Risk - just like in a standard leverage long, you can be liquidated

• Exposure to both assets in the kToken (thus the position entails depeg risk)

Current LP tokens accepted as collateral:

UXD-USDC

JitoSOL-SOL

mSOL-SOL

bSOL-SOL