DeFi Land Launches on Kamino Finance
tl;dr: DeFi Land has launched the DFL-SOL Concentrated Liquidity Vault in partnership with Kamino Finance, giving you access to their automated concentrated liquidity protocol and 5 million bonus $DFL rewards.
DeFi empowers everyday users with ownership of the decentralized markets. Anyone across the world can contribute to the liquidity of the markets, while earning a share of the revenue produced by a decentralized exchange. In the latest wave of DeFi innovations enabled by the speed and efficiency of the Solana blockchain — commonly referred to as DeFi 2.0 — we have been introduced to a wide array of new products and incentives. These include lending, borrowing, leveraged yield farming, and concentrated liquidity platforms. Frankly, it’s become enough to make anyone’s head spin, but no one wants to miss out on the early opportunity to play a role in this growing industry.
This is where Kamino Finance comes in.
Kamino Finance is the smoothest onboarding platform for DeFi 2.0, giving you the ability to access real yield with a variety of different strategies and products. You can go into Kamino with a vision as simple as “I want to generate yield from my $SOL tokens” and explore a variety of opportunities based on your desired yield and risk tolerance. Kamino takes the reins of active yield strategies (like Concentrated Liquidity Market Making), so that you can reap the benefits without needing to rebalance your portfolio or manually compound rewards. Most importantly, Kamino Finance is a leader in providing extensive resources to learn about the risks, rewards, and underlying concepts of your DeFi journey.
Don’t forget to read Kamino’s FAQs in the info & risk sections!
DeFi Land Meets Kamino Finance
We are thrilled to announce that Kamino Finance will be our partner in building upon the liquidity of the $DFL token. We are launching the DFL-SOL concentrated liquidity vault to bring deeper liquidity, real yield from capital efficient CLMMs, and bonus $DFL rewards to our liquidity providers, while preparing for the higher trading volumes coming to Solana by reducing slippage on swaps. Today, we are going to break down the benefits of using Kamino Finance to manage your concentrated liquidity positions and why strengthening our token liquidity is an important next-step for the $DFL token. The Kamino Finance concentrated liquidity vault will…
- Provide a capital efficient alternative to classic Liquidity Pools
- Strengthen the liquidity of the $DFL token and add a high-liquidity trading pair
- Provide DeFi Landers an opportunity to earn Kamino Finance points and explore other opportunities on their platform
- Allocate 5 million $DFL tokens over 3 months as additional rewards
- Automate the greatest challenges of manual portfolio management
Access the DFL-SOL pool here to deposit $DFL, $SOL, or both!
The Concentrated Liquidity Market Maker (CLMM)
Concentrated Liquidity Market Making was pioneered by Uniswap V3 as a novel DeFi strategy that combines Automatic Market Making with the ability to choose price ranges to significantly increase fees earned by liquidity providers. The way this works can be broken down as follows:
- Liquidity providers speculate on a price range of the tokens in the pool before sending their tokens.
- Liquidity providers only earn fees when the token prices are within this predefined range.
- In a conventional liquidity pool, you share the fee revenue with all liquidity providers. In a concentrated liquidity pool, you share the fee revenue with only the liquidity providers whose positions are currently in range.
- The risk is that if you fall out of your defined range, you end up with 100% of the “lower-valued” token and you stop earning fees. This means you experience more impact from impermanent loss within a smaller price-range, and you will have to rebalance your position to continue earning rewards.
- In other words, CLMM positions offer higher real yield from trading fees at the cost of a greater impermanent loss risk. However, they can be managed strategically to maximize the benefits and reduce these limitations.
How about an ELI5 summary? In a CLMM, you earn fees from DEX activity (just like a classic Liquidity Pool) but more of your capital is actively being because you chose a specific price range. This makes a CLMM more capital efficient when you are within the specified price range. In other words, you have leverage in the pool. However, any time you are working with leverage both your up-side and down-sides are amplified. In particular, the impacts of Impermanent Loss are quicker to take effect in a CLMM position. You experience impermanent loss when the prices fluctuate and your position can stop earning yield entirely if your position falls out of range, and it will need to be rebalanced to earn rewards.
Kamino Finance Automates your CLMM Position
The two greatest challenges with the CLMM strategy are creating efficient price ranges and managing your position to stay within range. This dilemma is solved by Kamino Finance’s automated strategies. Concentrated liquidity vaults are monitored to stay in range, and each position is initiated with an efficiently established price range based on historical price fluctuations. That means the hardest parts of the CLMM strategy are automated for you in Kamino Finance. Ranges are optimized to be wide enough to not have to rebalance too often and tight enough to capture enough fees.
Kamino creates efficient price ranges based on historical price fluctuations of the underlying tokens, and then algorithmically adjusts your positions to stay in range and continue earning yield.
Liquidity as a Utility
Liquidity is essential for the health of a token in decentralized markets. Having strong liquidity gives a reason for project supporters to hold and gives “whales” the possibility and a reason to trade.
- A reason to hold: Offering incentives to liquidity providers is a form of token utility. If you are planning on holding a token for a long time, you can increase your exposure by earning additional rewards over time by participating in liquidity provision initiatives.
- A reason to trade: Price slippage is the impact a single trade can have on the price of a token, and it correlates inversely with liquidity. A greater liquidity pool means the price is protected from sudden changes in price caused by large trades. This makes it impossible for large traders, or “whales”, to efficiently enter and exit trades. Deeper liquidity with active trading pairs help create an accessible trading ecosystem for the $DFL token.
Of course, providing liquidity must come with incentives. This is why, in addition to the real yield earned from trading fees, we are providing 5 million $DFL rewards exclusive to the Kamino DFL-SOL concentrated liquidity vault. And don’t forget, using Kamino Finance as your DFL yield farming destination will earn you points on their platform!
Want to Learn More?
Please take the time to visit Kamino Finance and do your best to learn the concepts behind the technology. Here are some suggested articles from Kamino and our educational library:
- CLMMs and Kamino
- Vault Strategies
- DFL Education: Introduction to DeFi
- DFL Education: Liquidity Pools
- DFL Education: Impermanent Loss
Please note: In today’s article, we covered some of the fundamentals of DeFi technologies. Our statements should not be regarded as financial advice, rather an explanation of how the technology works. We aim to bring education of blockchain technology to the masses. We strongly suggest that you do in-depth research and consult the advice of experts before making any financial decisions.
Want to Learn More About DeFi Land?
DeFi Land is one of the OG Solana projects, with awards and funding dating back to 2021. We have a proven track record of delivering the very best in GameFi. Our mission is to make it simple and easy for anyone to take part in the exciting world of DeFi and crypto.
Additional Reading and Links:
- Article: Reintroducing DeFi Land
- Cutting-Edge NFT Utility: Fusion || Forging || Marketplace
- Our sold-out Gen-0 NFT Seed Launch, 2022
- Play our Game!
- Check out our socials here
