Kamino Finance, a brainchild of Hubble Protocol, has launched the first concentrated liquidity market maker (CLMM) optimization vaults on Solana. The first vaults Kamino has publicly released focus on stable asset pairs in Whirlpools, Orca’s CLMM product.
Providing liquidity on Orca’s Whirlpools has been challenging for users, especially when it comes to managing each deposit. With this launch, Kamino will provide users with major improvements in the UX of providing concentrated liquidity in decentralized finance (DeFi).
Kamino Finance Automates Concentrated Liquidity for Users
Kamino can be described as a liquidity robot that takes care of users’ concentrated liquidity deposits, which have been historically difficult to manage. Kamino automatically rebalances positions when they need to be rebalanced, and it compounds CLMM fees and rewards back into users’ LP positions, which boosts their yield.
Marius Ciubotariu, the co-founder of Hubble Protocol, commented on the challenges of providing CLMM liquidity and asserted, “Managing profitable LP positions has been notoriously difficult due to the complexities posed by CLMMs and the increased risk of impermanent loss when prices swing the wrong way, as well as front-running by bots - common on Ethereum.”
Ciubotariu said, “Thanks to the lightning-speed throughput of the Solana blockchain, Kamino is able toprovide LPs with higher yields and maximum capital efficiency. This fully realizes the potential of CLMMs. With Kamino, we hope to be paving the way for DeFi’snext explosive period of growth on the Solana DeFiecosystem.”
How Kamino Will Help Users Gain Additional Capital for DeFi
Kamino is also putting a spin on the deposit receipt token for providing CLMM liquidity. Liquidity providers (LPs) usually receive an NFT for providing concentrated liquidity on Orca’s Whirlpools, but this token is incompatible with other DeFi protocols.
By giving LPs a fungible LP token instead of a CLMM NFT, Kamino helps raise the composability of the Solana ecosystem. With these LP tokens, called kTokens, users can borrow Hubble’s stablecoin USDH, or kTokens can be used anywhere else as collateral in Solana DeFi.
Kamino Will Continue Making DeFiEasier for Everyone
Kamino, at first, will manage stable-asset and pegged-asset pairs on Orca. Over time, more pairs are expected to be added, and Kamino plans to build on additional decentralized exchanges that use CLMM technology to help users trade more capital efficiently.
Milan Patel, Head of Business Development at Orca, said about Kamino, "By building upon Whirlpools, Hubble has created a simple way for liquidity providers to access the benefits of concentrated liquidity without continuous rebalancing. Hubble's Kamino project demonstrates how concentrated liquidity on Orca can be easily harnessed by all users and protocols."
Hubble Protocol has incubated Kamino to address the UX issues faced by Solana’s DeFi users, and the project has also built innovative new features that enhance the functionality of concentrated liquidity DEXs. As DeFi on Solana grows, Hubble Protocol and Kamino are working hard to ensure users can access easy-to-use services.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.