INF is one of the worst performing Multiply options on Kamino.
Kamino Season 4 has just launched and it’s going to focus on rewards based on APY. This will make INF an even less attractive prospect.
Any ideas on how Sanctum can make INF more competitive in arguably the important LST market on Solana?
In comparison here are the top SOL loops on Multiply right now
(the lightning bolt indicates incentives make up part of the total APY)
Here’s all the options in Multiply. As you can see, the perps fee generating tokens (JLP, ALP) have the best performance.
INF is unique amongst LSTs in that it’s swap fee + staking rewards. So it’s closer to JLP/ALP than any of the of the other LSTs. By that theory it should have a more competitive yield given it has a diversity of yield sources.
I’m just using it hoping for a 10% gain ( I have it at 2x leverage when it drops to around 1,7 leverage I will roll the profit back in and take it back up to 2x leverage ) that is added to the 9% Inf earns against sol , that will give me the equivalent of about 19% more sol a year which I am pretty happy with .
That’s incorrect, Season 4 significantly impacts everything that isn’t in the Earn section. From the Kamino Governance post
For the launch of Season 4, rewards are allocated exclusively to Earn Vaults, with the goal of directing the bulk of lending activity on Kamino into the Earn layer. As Season 4 evolves, rewards will be dynamically adjusted to ensure consistent product growth.
Previous seasons all positions on Kamino earned points. The points varied across the platform but everything earned points.
Therefore your INF Multiply position earned points, and since previous seasons weighted borrowing more highly than lending, all Multiply positions (which have lending & borrowing in them) earned better points than most.
Season 4 that all ends. It’s only Earn that accrues points. There are, at present, 10 positions in Earn. That’s compared to many many dozens of positions elsewhere on Kamino. It’s going to shift things dramatically methinks.
INF is a serious asset so it should be one of the prominent assets on all Solana defi
Loopscale is a good idea. As long as they can make it back from the recent exploit they do have a different lending mechanism which would offer an alternative for people.
Kamino is THE giant in Solana defi, least the more “serious” side of Solana defi, so maintaining a position there is important. It would just be nice to see that position be more competitive.
A vault on Meteora might be a good idea Home | Meteora. Though how serious that product is is up for debate. They’ve still got stSOL listed…
RainFi doesn’t have any INF pools Rain.fi | Effortless Token & NFT Lending on Solana
You can loop INF on looper - marginfi , though I wouldn’t. Who knows what that team is doing. I heard they outsourced their development to a low cost country so expect them to get hacked any day. That and they’ve made a complete mess of The Arena. They failed to liquidate underwater positions (at all!) so now a heap of people’s deposited funds are locked (I’m one unfortunately).
INF isn’t on https://defituna.com/ at all
Drift have INF for insurance vault staking and lend/borrow Drift but they’ve recently launched their Amplify product How it works – Drift Protocol which very much looks like the old Super Stake SOL product (which is just Kamino Multiply).
Thank you for this post this has been a subject that has been in my attention for some time. I am a user myself of this product and I have been noticing how it has been performing almost daily.
The TVL has been decreased and the APY hasn’t been very good since incentives run out.
Unfortunately I think that there are 2 important points that are of concern.
Msol multiply (the one on their market) has been performing even worse than us but lenders get almost 2.5% extra rewards in incentives.
2.Utilization Curve and incentives
Utilization curves basically give a direction to the market to what % it is intended to borrow SOL by reflecting increasing borrowing apys as utilization rises.
INFs APY has been down due to less activity on the network and INFs growth which resulted in trading fees contributing less in terms of apy (fees didn’t have the same growth as INF did which has doubled in mc)
I believe the curve was designed having in mind INF would be 9.5-10.5% in APY so at the moment it doesn’t fit very well.
I think the curve should have its turning point at a level where borrowing apys are around 8.7% so they cant be maintained above 8.5% for long (considering INF APY is at 8.4%)
In my humble opinion being just better than the marinade market is enough (Both multiply and SOL supply apy)
Ultering the curve will also bring down the apys closer to our competitors so I think adding incentives is a must to be competitive.
In summary I think that due to high incentives by other protocols such as Marinade, SOL hasn’t been supplied to the levels desired.
Also due to INFs apys decrease and the way the utilization curve has been designed the multiply strategy has been underperforming.
The main reason for this is not INF necessarily. It’s because Kamino have not (or will not?) list INF in the main pool on Kamino. What this means is INF is sectioned off in a separate corner (called the Sanctum market, in DeFi lingo called an isolated pool) of INF, dfdvSOL and SOL. The problem here is the SOL pool in the Sanctum Market is really small (approx. $5mil) in comparison with the main pool (approx. $950mil SOL). This makes it really hard for INF multiply to be competitive looping compared with the others despite INF having a much higher APY as they have access to a much bigger SOL pool = lower borrowing rates to run the Multiply strategy.
Have to remember the two biggest factors for Multiply returns are:
Probably the answer is to lobby Kamino to add INF to the main LST pool with the same leverage ratio as other LSTs - unclear what appetite there would be for this. I imagine they don’t want to for some reason though given they haven’t yet.
In conversation I had in their discord they claim INF has more smart contract risk than other LSTs because it is also an LP token.
I am suggesting to add a borrow cap again like we had in the very first stages. The market is too small atm to let it entirely free.
Ahhhh i missed that (I’m in that discord).
Mmmmm…. It’s not a traditional LP token. It baffles me a bit, its supposed to have two fee sources (validator and a percentage of swap fees) but regularly is one of the lower yield LSTs
If no incentives are in place and no Borrow or even supply cap is in place this market will never work
Not quite true, INF is consistently the highest yielding APY (on average) without number fudging incentives. For example, some of the LSTs on multiply aren’t true APY’s, they drop extra SOL in one epoch to make the APY shoot up real high but it doesn’t sustain.
The Sanc Q2 report highlighted INF outperformance (link here: DocSend) & screenshot here:
This is I did not know.
so if we’re prepared to incentivise via INF rewards why not just do incentives like this?
That way you get the ‘sort order’ premium (search ranking if that’s an easier analogy)
Because it’s not sustainable. Sanctum = earnest, no need to play number fudging games. INF is the best APY compared to all other LSTs on Solana
Yeah sure but we’re already doing farm rewards so…..
It doesn’t matter if it performs better.
Regarding multiply APY of the underlying LST doesn’t mean anything on its own. Net APY between LST apy and sol borrow apy is important. Because of that , and the fact that SOL apys are consistently around 8.5% on the Sanctum market it doesn’t really matter if INF is the best. An isolated market works on its own. The only people who benefit atm are athe lenders.
In the past month(or more) multiply apy was consistently negative or under 8% making it basically a loss for every multiply user.
The premise was that you can achieve better SOL supply apys than main market ,and any other market, and attract big lenders, due to INF outperforming every major LST. That never happened cause incentives have run out and were less than competitor’s incentives in the first place, resulting in lenders depositing their sol in other markets that offer similar or better supply apys and have less risk due to larger size.
I suppose that dfdvsol was added in sanctum market because there might be an opportunity to loop INF against other LSTs that are consistently performing a lot worse.
I ve run the numbers and came up with this formula regarding INF-LST loops (which could be done manually and with the numbers that we see today in the Kamino market would result in a 15 % apy.(Just a thought but could work)
INF LST loops are weird because if I understand correctly they are shifting liquidity from partner LSTs to INF, meaning you’re kind of shifting stake from partner LST to INF - meaning INF is kind of cannibalizing its partner LSTs.
That aside, I understand how multiply and utilisation curves work. Point is, you won’t have low SOL borrow rates in an isolated pool - there’s no incentive for depositors to move unless the deposit rate is higher. The only way for INF multiply to be competitive with other LSTs is if it has access to the same pool of naked SOL. Ultimately, this is Kamino’s decision given its their market.
Good news for INF holders is its still the best average APY compared with the biggest LSTs (jitosol, msol, etc.). But, in short, I don’t see the path for competitive multiply without having access to the same naked SOL pool in the main market as the other LSTs.
Unfortunately it makes no sense to me either, I think they do it more to protect the rest of the LSTs than because they think INF is not safe. After all their connection with jito is apparent
