E-Mode Caps

E-Mode Caps is a novel risk management mechanism that enables each collateral/debt pairing on the protocol to have a unique debt limit.

This introduces a new layer of granularity to risk management in a pool-based lending model.

What Does It Improve?

In the current multi-asset lending pool model (Kamino Lend V1 or Aave V3), if the protocol raises an asset's debt limit, the asset becomes borrowable against all available collateral in the pool.

However, some assets may be more desirable collateral for the protocol than others. For example, SOL collateral typically entails less risk than JUP. In the current model, however, raising the USDC debt limit by $10M would give users the ability to borrow as much USDC against SOL as against JUP.

In this model, borrow caps are essentially constrained by the risk profile of every available collateral in the pool.

What E-Mode Caps Enables

Instead of having to raise USDC caps for all available collateral, E-Mode Caps allows the protocol to adjust USDC caps for each collateral asset. Thus, the SOL/USDC cap can be raised by $10M, but the JUP/USDC cap can be kept as is.

Thus, caps can be managed more closely and potentially scaled up far more aggressively, specifically against high-quality collateral assets.

How E-Mode Works

Below we'll cover an example with various scenarios in which users can or cannot borrow with E-Mode Caps

Note that users do not have to manually enter or exit E-Mode. The system automatically detects whether a user can access an E-Mode or not based on the assets in their loan.

In the Main Market, PYUSD borrow caps are raised, but only via two E-Mode Caps: SOL/PYUSD and wBTC/PYUSD.

The PYUSD borrow cap remains $0 against all other collateral besides SOL and wBTC.

Scenarios Where You CAN Borrow PYUSD:

• Loan with only SOL Supplied

  • Can borrow PYUSD

• Loan with only wBTC Supplied

  • Can borrow PYUSD

Scenarios Where You CANNOT Borrow PYUSD:

E-Mode Caps support single asset & single collateral combinations. Any positions that do not contain the single collateral and single debt assets in an E-Mode grouping will not have access to that E-Mode borrow limit.

Some examples:

• Loan with both SOL and wBTC Supplied

  • User is not able to borrow PYUSD, as E-Mode Caps are not "intra-collateral"

  • One E-Mode Cap = One Collateral/Debt Combination

• Loan with SOL and any another collateral supplied

• Loan with SOL supplied and USDC Borrowed

How To Use E-Mode Caps

E-Mode Caps are automatically enabled when you contain the relevant collateral, or collateral/debt combination.

Eg. If you only have SOL supplied, you will automatically be able to borrow PYUSD via the SOL/PYUSD E-Mode grouping.

What If I Have Other Assets Supplied/Borrowed?

If you want to access E-Mode borrow capacity but your loan contains assets outside of that E-Mode, you will need to either remove those assets from the position, or open a loan from a different wallet.

Multiple Loans are coming to Kamino Lend V2 - but in the meantime, users will have to keep loans from the same market in separate wallets.