Kamino: The Kingmaker of Solana Money Markets

The growth in Kamino deposits is unquestionably impressive. While the Liquidity product launched towards the end of 2022, adoption was lackluster. Ultimately, the launch of Kamino Lend in Q4 2023 ignited Kamino’s recent success, as deposits in the Lend product have climbed to over $1 Billion, accounting for around 90% of Kamino TVL. No doubt, a resurgence in Solana network activity, coupled with the substantial appreciation of Solana assets, served as a tailwind for this growth. To be noted, deposits in Kamino Lend have flippened that of the incumbent competitors MarginFi and Solend. 

Certainly, some of Kamino’s growth is attributable to mercenary liquidity farming the KMNO airdrop, and some of these deposits may exit the product post-TGE. However, the snapshot for Season 1 was taken on March 26th when SOL deposits were at 6.25m, and they have since climbed to a new all time high of 8m SOL. This is in spite of the recent degradation in Solana’s network performance and the 40% drawdown in the price of Solana, suggesting some stickiness to user deposits. Additionally, by offering a 90-day Season 2 of points farming, where OG users receive boosted points, much of the mercenary liquidity may be incentivized to stay. 

Kamino has been a major beneficiary of the proliferation of Solana LSTs. These LSTs account for over 40% of the net deposits on Kamino Lend. Additionally, a recent report by Gauntlet found that Jito incentives to Kamino’s JitoSOL-SOL pool produced the highest return on investment in increasing JitoSOL TVL. The Jito DAO is targeting an additional 7.5m in JTO to be allocated to incentivized pools, like that in Kamino. 

Through the launch of the KMNO token, the protocol aims to progressively decentralize over time. Currently, with over 60% of the airdrop claimed, there is over 400m KMNO staked, representing ~40% of the float. This high stakerate, in addition to the continued growth in SOL deposits, suggests that users are keen to stick around. With the majority of the supply overhang 1 year out, this leaves 600m in unstaked KMNO for the market to price the leading money market on Solana.