A wave of FUD hit the markets from 16-18th of February following the collapse of a token endorsed by Argentina’s president. This triggered a broad sell-off across crypto markets, with significant drawdowns on Solana assets impacting Kamino. Trading activity surged as users rebalanced, repaid debt, and managed risk. Liquidations levels were low with $4M of collateral, mainly SOL and Altcoins, and was handled efficiently by the protocol. Interest rates briefly spiked before stabilizing.
For an in-depth look, see the February 16-18th Dashboard.
Panic spread after a token promoted by Argentina’s president, collapsed. Market sentiment turned bearish, leading to a risk-off trend. Risk assets, including SOL and altcoins, faced sell pressure as traders deleveraged triggering some liquidations.
Volatility on Kamino Assets
Many tokens available on Kamino experienced significant decline, albeit slower and less aggressive than at the beginnig of the month. SOL dropped from $195 to $165m and altcoins saw even greater volatility, with some experiencing drawdowns up to 40%. On average, assets listed on Kamino assets lost 9.3% of their value.
How Users Responded
Trading activity surged as users actively managed their positions. Total protocol transaction volume over this period reached nearly $906 million, as many users opted to rebalance, repay loans, and reduce exposure. Liquidations reached $4 million, with 1,281 wallets affected across 1,881 liquidation events. Despite the sharp market decline, liquidations remained below 1% of volume, indicating that users were actively managing risk and that the system held up well under stress.
Interest rates saw temporary spikes as a reaction to market stress. SOL borrow rates briefly surged past 20% APY, and USDT past 50%, making leveraged positions unsustainable. However, borrow costs quickly returned to more typical levels, reflecting the willingness of users to rebalance swiftly.
Deep Dive into Liquidations
Liquidations were concentrated in the Main and Altcoin markets, with $3.9M and $200k of collateral seized respectively. SOL accounted for 94% of liquidated collateral and 91% of total liquidations. Only 18 liquidations involved more than $50,000 in collateral, all of which were SOL-backed positions securing stablecoin debt. The repaid debt was also highly concentrated, with 66% in USDC. These patterns indicate resiliency, as SOL remains the most liquid collateral and USDC the most liquid debt asset, reducing systemic risk during sell-offs.
A total of 16 wallets saw over $50k in collateral liquidated, with many experiencing multiple liquidations, some up to six times. Kamino’s liquidation mechanism enforces partial liquidations as long as a position remains solvent, effectively minimizing user losses while ensuring the protocol remains solvent.
Liquidators were highly active, with 21 different participants seizing collateral. The market showed good diversification, with six liquidators capturing over $100,000 in collateral and handling 98% of total liquidations. 17 liquidators executed more than 40 liquidations each and up to 188. This suggests the presence of different liquidation strategies, with some liquidators opting for high-value transactions while others focused on a high volume of smaller liquidations.
Closing Thoughts
This period of market turbulence reinforced confidence in Kamino’s risk management framework. The system functioned as designed, protecting user positions while preserving protocol solvency. Liquidations were executed efficiently, interest rates adjusted dynamically, and market stability was restored quickly. While liquidation activity was concentrated among a subset of wallets and liquidators, systemic risk remained low. Kamino’s ability to absorb volatility without significant disruptions highlights the resilience of its lending markets.