Kamino LP Corner #6

BbyA...nMtW

24 Aug 2024

197

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 / CMC

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!

How did we do from last time?

Another positive period for us on Kamino. And even in sideways and down market. Again we see the positive effects of yield to help mitigate price action. Though just recently we've seen the market turn up nicely.

POPCAT just keeps on bringing in great yields. RETARIDO looks even better when you factor in the farm rewards.

We even picked up a reward for Season 2 on Kamino.

The candidates

If we followed the same strategy we have so far then the candidates look very similar to last time out.
POPCAT seems a no-brainer given the fees it continues to push out.
KAMA is seeing large fees and still coming off a low base as goes price.
You can make similar arguments for USEDCAR and KMNO.

But that's the obvious play. What's the less obvious play here?
Solana Breakpoint

Read more on X

There's a lot of hype building for the latest Solana conference, especially given it's in a non-US market with large growth potential.
We can see some of that reflected in the price of SOL.

https://www.coingecko.com/en/coins/solana

However... very rarely does the optimism from events like conferences translate into as much practical "good" news. There's unlikely to be any truly new things revealed at Breakpoint that the market hasn't already found out about from the teams announcing them. You can see this pretty clearly from previous conferences where teams have teased announcements only to have those be rehashes of earlier announcements or partnerships that have no tangible product delivery in the very near future.
This is pretty logical and good practice though. Why would you risk an important announcement being lost in the noise of a conference (with 100's of other competing stories) when you could announce outside of that and get a much better chance at 'clean air'?

So there's a chance we'll see a cooling off of enthusiasm after Breakpoint even if, overall, the sentiment for Solana remains quite positive.

Given Breakpoint isn't till mid September we still have a bit of time to catch that wave of enthusiasm.
But if we're not just going to hold SOL (or SOL where to best catch this sentiment via LPs?

It's like not SOL-SOL LPs

I'm betting it's from the biggest defi protocols on Solana right now: Jito, Kamino, Raydium, Marinade and Jupiter.
https://defillama.com/chain/Solana

Token prices

Let's look at our token price action.
Pretty much everything is taking it's lead from SOL with the lower MC tokens (KMNO, MNDE and WEN) all up large percentages.

To LP or not to LP

Here's the positions we went with.

KMNO has large gains of late so there's a chance we see negative price action but the yields are really high and the MC is still very low compared to comparably sized defi protocols on Solana so maybe there's a lot more headroom.

MNDE has historically underperformed but Marinade itself has consistently been a large defi player and the token price is still down from recent highs.

WEN & JUP instead of going with a JUP-SOL/xSOL pairing. WEN is a protocol under the broader Jupiter umbrella, though not strictly part of Jupiter. It offers more in fees and exposure to NFTfi, which is, IMO, undervalued right now.