Hubble Protocol, home of the USDH stablecoin, has launched Kamino Finance: the first concentrated liquidity market maker (CLMM) optimizer of its kind on the Solana blockchain.
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Kamino Finance, launching initially on next-generation decentralized exchange (DEX) Orca, will allow users to earn higher yields in a fully automated way simply by depositing their crypto into vaults linked to Orca’s liquidity “whirlpools.”
Kamino Finance builds on the advantages of CLMM’s, which reduce slippage and facilitate larger trades by narrowing the price range at which users provide liquidity.
By automatically adjusting positions so they are set in an optimum range to capture the most fees and provide the deepest liquidity, Kamino removes common pain points for CLMM liquidity providers (LPs). In addition, Kamino automatically compounds CLMM fees and rewards back into users’ LP positions, boosting yields as position sizes grow.
Marius Ciubotariu, the co-founder of Hubble Protocol and core contributor to Kamino Finance, says: “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.
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“Thanks to the lightning-speed throughput of the Solana blockchain, Kamino is able to provide 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’s next explosive period of growth on the Solana DeFi ecosystem.”
Instead of the usual CLMM NFT, Kamino will provide LPs with a fungible LP token as a receipt of deposit. This LP token can be used as collateral to borrow USDH, Hubble’s censorship-resistant stablecoin, which can then be used to transact or earn further yield in Solana DeFi.
The first Kamino vaults will be built on top of Orca’s concentrated liquidity whirlpools. At launch, vaults will be dedicated to stable-asset and pegged-asset pairs, with additional vaults added in the future.
Milan Patel, Head of Business Development at Orca, says: “By building Kamino Finance on Whirlpools, Hubble has created a simple way for liquidity providers to access the benefits of concentrated liquidity without continuous rebalancing. Kamino Finance demonstrates how concentrated liquidity on Orca can be easily harnessed by all users and protocols.”
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