Kamino LP Corner #1

BbyA...nMtW

11 May 2024

243

Welcome to the first in (what I hope to be) a series of posts examining Kamino Finance's LP Vaults.

If you're unfamiliar with Kamino Finance see my explainer post here https://www.bulbapp.io/p/34c42de2-547e-47a8-b72d-9b8b61c6fde2/use-cases-for-kamino-finance?s_id=2936eabf-734f-4bf5-9069-4a3ef2173b8c

My process is pretty simple:

Look the analytics on Kamino for each LP
Look at the token prices on CoinGecko

Remember always: An LP IS a trade. It's a different type of trade as you're buying position on yield curve and you're collecting transaction fees, but it's still a trade so the normal assessments as goes price applies.

Generally we're looking over a 3 week time period in the LP. Each period we'll close out our positions entirely and start afresh with new ones. Obviously if you're doing this yourself you'd want to keep some positions much longer than that but we're looking to make this educational and as accessible as possible so we're coming from a start fresh approach each time.

Let's dive into the analysis!

The candidates

This time we're going to look at only TVLs over 100K.

Kamino Vaults

Token prices

Token prices are very important as they'll determine a large part of the performance of the LP due to impermanent loss.

Here's the tokens from the candidate LPs above

To LP or not to LP

The price of $SOL is going to affect all of our LP candidates, so that's a factor already locked in.

We now need to decide which of the other tokens we want to go with.

$POPCAT has been on a crazy tear recently. Now it's a memecoin so possibly it just continues the way it's been going, but normally these things peak and then trend downwards (though always slower than they went up).
The fees have been great but there is a risk here that $POPCAT itself will fall faster than the fees it can generate.
However there seems to be sustained interest in the token so it's a calculated risk we're taking here.

We're going allocate 20% to the smaller LP. It's risky but the rewards are possibly quite good.

https://app.kamino.finance/liquidity/9k53PMwaY2wJNhVJ9Hv2hjir24FLhXxywgXNDnsdBkUY

Read more on X

$KMNO hasn't been live a long time, but has seen reasonable price gains since launching (after falling quite sharply from pre-token prices initially). The return on the $SOL pool is good so far and there's incentives on the LP (which are guaranteed yield). We're betting that $KMNO continues to rise in price, or at least stays stable.
Combined with that the Kamino Foundation has only just been established and hasn't yet launched any initiatives. We expect that the first ones won't be far off and that should be positive for the token price when those are announced.

We're allocating 40% to this LP.

https://app.kamino.finance/liquidity/CGmwW1Rj2FQZahgDL2Ge67o8ogZjRFZd11ExFG9ZkJHc

Read more on X

KMNO Launch & Tokenomics

In similar vein to $KMNO (above), we're actually quite bullish on $ZEUS despite the token price taking a beating in recent times. The yield is decent, there's incentives on the LP, and Zeus Network have just announced their next upgrade is about to go into production.

https://app.kamino.finance/liquidity/Db6r4t3g8Dx1ULENF27VNnmrZ1YpTy7DdBhYy8PvqFeD