USDH issuer Hubble Protocol has kicked off the operation of its concentrated liquidity market maker (CLMM), Kamino Finance, on the Solana network after its initial launch on the Orca exchange.
It is expected that Kamino will help users make higher yields on their investments. Users are only required to deposit their crypto assets into “whirlpools” linked to Orca’s liquidity.
Hubble Protocol co-founder Marius Ciubotariu said that managing profitable liquid providers was challenging due to the complexities and higher risk of loss whenever the prices “swing the wrong way." Ciubotariu also said that bots further made it difficult for liquid providers to do their job.
“Thanks to the lightning-speed throughput of the Solana blockchain, Kamino is able to provide LPs with higher yields and maximum capital efficiency,” Ciubotariu said.
“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.”
Kamino Finance is developed on decentralized exchanges and supported by concentrated liquidity, the capacity of liquidity providers to choose a specific price range to give liquidity.
Kamino takes advantage of Solana’s low-cost, high-speed processing to run the protocol. As a result, the market-making solution can lower slippage and accommodate larger trades since the liquidity price range is more narrow.
The automated program was built on quantitative modeling, allowing non-expert consumers to use the tool without difficulty. Liquidity providers can “set it and forget it” to optimize their earned fees and minimize impermanent loss when offering liquidity via Kamino.
Not only that, Kamino’s protocol enables a mechanism that compounds the fees and rewards them back to the providers. As the providers' position size grows, they will see an increase in yields.
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Users at Kamino do not receive NFT as a deposit receipt like in common CLMM practice. Instead, they receive a fungible token for a liquidity provider. The token can be collateral to borrow USDH. With USDH, users can make transactions and more yields on Solana's DeFi ecosystem.
Kamino’s vaults on Orca’s whirlpools are dedicated to pairs of stable-asset and pegged-asset. According to Milan Patel of Orca exchange, the vaults enable liquidity providers to utilize the advantages of concentrated liquidity “without continuous rebalancing.”
“Hubble’s Kamino project demonstrates how concentrated liquidity on Orca can be easily harnessed by all users and protocols,” Patel said.
About Hubble Protocol, USDH
Hubble Protocol is known for USDH, a “censorship-resistant” stablecoin. According to the developer, USDH enables users to access liquidity while still optimizing their yields in Solana’s DeFi ecosystem. Users at Solana can deposit tokens like BTC, ETH, and daoSOL to stake USDH up to 80 percent.
USDH is minted against a collateral debt position, which Hubble claimed helped make it a sustainable stablecoin. Each token is supported by collateral worth at least $1.20. A user who mints a USDH can gain the collateral as long as they are paying the USDH debt regardless of the market price.
The USDH issuer explained that it aimed to make the stablecoin an important currency within the DeFi system. Hubble also said they were working to improve their current USDH borrowing platform.