Automating concentrated liquidity positions on Solana can be complex. Kamino Finance Solana offers a suite of products to simplify this, with Kamino Multiply Vaults being a cornerstone for capital efficiency. This guide explains the mechanism and provides a step-by-step walkthrough.
Core Concept: What are Multiply Vaults?
Multiply vaults are single-asset deposit vaults that automate leveraged liquidity provision. A user deposits a single asset (e.g., SOL or USDC), and Kamino's backend handles the rest:
It borrows the other asset in the pair.
It creates a concentrated liquidity position on a DEX.
It auto-compounds fees and rewards.
This process is powered by kTokens, which are yield-bearing tokens representing your share in the vault. A deep dive into kTokens Explained shows they are the architectural backbone of the protocol's liquidity layer.
Step 1: Choose Your Vault
Navigate to the Multiply section. You'll see vaults for various pairs. Your choice depends on your risk tolerance and market outlook. For this guide, we'll use a SOL-USDC vault.
Step 2: Deposit and Select Leverage
Connect your Solana wallet.
Select the SOL vault.
Enter the amount of SOL you wish to deposit.
Use the slider to select your desired leverage (e.g., 3x). The protocol will automatically borrow the required USDC against your SOL collateral.
This is the core of the How to use Kamino Finance loop for leveraged positions.
Step 3: Monitor Your Position
Once your position is active, you can monitor its performance, including accrued fees and the value of your underlying kTokens. The vault automatically manages the price range to keep the position active and mitigate impermanent loss. This automated strategy is a simplified version of a Kamino Long/Short Strategy, where you are effectively long on the pair's trading fees.
For a complete breakdown of the architecture and smart contracts, refer to the Full Official Documentation. The protocol's on-chain automation is a significant step for DeFi users seeking efficiency.
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