I smell trouble brewing with Kamino Multiply…

A few days ago, the team at @KaminoFinance announced the launch of JupSOL on their platform by promoting its use in their Multiply product. It was a great educational series of threads.

I'm a fan of Kamino (daily user), but felt the risks were being underplayed.

In the days that followed, I've noticed a lot of people piling into Multiply, enticed by...
"~40%APY, NO DEPEG RISK!"

I'm now quite concerned for users of Multiply. I'd planned a whiteboard but that won't be ready in time...

New format, here we go 🫡

🧵 1/ Key point

It is my view that Kamino Multiply users are currently exposed to heightened risk.

Multiply only works if the interest rate to borrow SOL is less than the APY rate on the LST (JupSOL or hSOL).

The interest rate to borrow SOL is determined by the 'utilisation' (ratio of supplied SOL vs. borrowed SOL). This number goes up when more people borrow SOL or remove their SOL supply from Kamino.

Right now, SOL utilisation is sitting at 91% on Kamino's own risk dashboard (this is extremely high)...

In fact, it's currently higher than the quoted upper-bound of curve-control quoted by @KaminoFinance in their own hSOL multiply post. Screenshot below, or
full post here: .

https://x.com/KaminoFinance/status/1796567562118918276

Let me tell you why I @uselulo as my defi savings account and why it just might be the most egalitarian thing we've ever seen...

One thing is for sure, It's insanely ambitious..

and if it works, can really reshape the fabric of society.

I've been cooking this one for a couple of weeks… 😎

This whiteboard is for you if you:
- want maximal yield on stables, minimal hassle (me)
- have IRL friends asking how you get 15%+ interest on savings (me)
- like blue turtlenecks + round specs (also me)

🧵/ 1/ Let me set the scene

A couple months back, I had around 10 twitter followers and some idle USDC I wasn't sure what to do with. Looking for answers, I posted the following into the void…

Much to my surprise, a wild Lulo dev responded (yes, the dev *did* something).
I hadn't heard of Flexlend (now @uselulo) before but gosh darn if the dev was kind enough to answer all my questions, I owed it to him to try the product.

W @jstnwdev and W @uselulo 🤝and W @solana (only possible on solana).

Didn't catch the @sanctumso 'Tokenomics deep dive twitter space'?

No time to listen to the full 1hr 45 recording?

Worry not, I've got you...

In the only way I know how 😎

I present to you: Sanctum call TL;DL (R).

🧵/ 1/ Highlights

🗳️ Discord vote on token ticker
🥧 40% community alloc confirmed
🤝 "Earnest" behaviour rewarded
💡 Team open to my GTP proposal
👀 More for JUP??
🫂 Community >> Financial

Alright, let's jump into it.

I spent the last month fielding questions in the Sanctum (@sanctumso) Discord about LSTs and staking.

I bring you two glorious whiteboard explainers in one...

Why staking with LSTs on Solana is safer than you think and why CHADS laugh at 'de-peg risk'.

What to expect:
- How staking works on Solana
- Why your SOL is safe when staking (native vs. LSTs)
- Soyjaks, virgins and CHADS.

This one was a labour of love. Yes that's how we spell labour in Australia.🔖

🧵/
1/ Okay, I'll bite. How does staking actually work on Solana?

Let me explain with a tale of two stakers: Mr. Native Staker & Mr. LST Enjoyoor.

Let's start with Mr. Native Staker.

> He opens phantom, clicks SOL and selects 'Stake'. He decides to go with Mad Lads validator. He hopes to own one someday.

> Mr. Native Staker's Phantom wallet creates a stake account on his behalf, puts his 10 SOL inside and then delegates it to the Mad Lads validator.

*Important* The keys that control the staking account (purple container in my drawing), NEVER LEAVE Mr. Native Staker's wallet. The validator can never touch or access his SOL tokens. All it can do is use the voting rights of these 10 SOL tokens.

Why I'm voting Sanctum and you should too

It's not a game.
It makes no references to hats or apes.
And it sure as hell isn't another "blockchain x AI"

After 2 weeks deep-diving docs and bugging the team on discord, here's why I'm voting @sanctumso in the @JupiterExchange LFG this week. 🔖

🧵 1/ The opportunity is enormous.

95% of staked SOL is currently 'natively staked', locked away and unusable (big red squiggle below).

Bitcoin doesn't fix this, but Liquid Staking Tokens (LSTs) do.

Sanctum makes it easier for LSTs to launch on Solana and unlocks this dormant SOL.

I spent my Saturday digging through @sanctumso docs & whiteboarding so you don't have to. 🔖

By topic:
- How do I stake it?
- Example of how it works
- Where the yield comes from
- Why the yield is high
- What happens if some of the LST's suck
- Am I exposed to de-peg risk

🧵 1/ Okay so I've grabbed some INF, how do I stake it?

You DON’T!

INF is a token that represents a basket of LSTs. This means the staking happens behind the scenes. All you need to do is hold it.

Holding INF is like holding an index fund of LSTs but with some cool added bonuses.. Like higher yield and.. ☁️ 👀