Kamino: Season 2 Distribution

Summary

Kamino’s Season 2 snapshot took place at midnight UTC, July 31st. This marked the transition from Season 2 into Season 3 of Kamino points. In this post we cover the Season 2 outcomes, upcoming Season 2 distribution, and a brief Season 3 intro.

Introduction

Kamino’s Season 1 airdrop was one of the widest DeFi token distribution events of 2024, with over 250,000 wallets receiving 750,000,000 KMNO (7.5%). Season 2 was announced shortly before the end of Season 1, with the goal of retaining users and maximizing KMNO staked.

Season 2 achieved both of its primary goals:

  • Kamino’s TVL saw very little drop-off following Season 1
  • Over 63% of the circulating Season 1 supply remained staked

KMNO stakers were able to accrue a total boost of over 75% by the end of Season 2, while earning 3 points per day for each Kamino staked. Keeping KMNO staked had a substantial impact on Season 2 points, as is explained later in this post.

In light of the Season 2 outcomes, the Season 2 disibtrution will be 350,000,000 KMNO (3.5% of supply), distributed linearly according to points earned in Season 2.

Let’s dive in.

Why 350,000,000? Why Linear?

The Kamino points system is designed to reward users for taking actions that align with the best outcome for the protocol. In return, users earn points, which they can further maximize by staking their KMNO. This achieves an equilibrium whereby users are rewarded, the protocol thrives, and the circulating KMNO supply remains staked.

Due to this system, the best way to express Season 2 rewards is as yield earned via KMNO in addition to yield earned natively on the protocol.

Yield Earned

Defined as yield, a 350MM KMNO distribution amounts to ~$14MM earned by users during Season 2. In this time, the protocol generated a total ~$21.6MM in native interest.

A 350MM KMNO distribution leads to a 64% increase in the total yield earned on the protocol in Season 2—amounting to a total of $37.6M.

As seen below, translated to actual APR, a 350MM distribution leads to a substantial yield increase across the most common user positions, assuming users kept their KMNO staked.

SOL Supply: SOL depositors earned an average 7.3% APR via KMNO, in addition to the SOL Supply APY of 4-5%—amounting to a total ~11% to 12% SOL APY.

Multiply: During this time, the only better SOL APY on Solana was also on Kamino, via Kamino Multiply, where users also earned a ~4.4% KMNO APY, in addition to the Multiply APY.

Leverage: Expressed as actual APR, the airdrop was extremely lucrative for leverage positions. At max leverage, JLP Leverage earned 17.3% APR in addition to the JLP APY, whereas users leveraging SOL could earn up to 23% KMNO APR.

User Loyalty

KMNO stakers were awarded substantial points boosts for staking their KMNO - and their benefit progressively increased via the staking multiplier if they were actively using the protocol throughout the Season as well.

Ultimately, the points system is far more beneficial to users who staked their KMNO from day 1. Here’s a comparison between the Season 2 rewards earned by keeping KMNO staked from day 1 vs. staking 0 KMNO:

KMNO stakers are first-class citizens in the Kamino system. This is reflected in the Season 2 distribution mechanism, and will progressively increase as the protocol matures and KMNO takes on a more significant role.

We believe a 3.5% linear distribution achieves the ultimate goal of Season 2, rewarding users who maximized on the two key actions in the protocol: bringing liquidity into the system, and staking KMNO.

Distribution & Season 3

The Season 2 distribution will occur mid-August 2024. The distribution will be fully unlocked and staked upon claiming. Users can unstake without any cooldown period. As KMNO governance goes live in the coming weeks, users will be able to stake their KMNO into the new Kamino Governance contract.

Season 3 Points have already kicked off in the background the moment Season 2 snapshot took place. Season 3 will align the protocol, points and governance mechanisms to achieve one singular goal: Kamino reaching $10B TVL.

We highly suggest you read our official Road to $10B strategy: Kamino: Road to $10B

5 Likes

I’m concerned that airdropping tokens might not be the best way to incentivize people to use the protocol, as it could harm the KMNO token’s value. Each time ‘free tokens’ are airdropped, they tend to be dumped on the market. This happened in Season 1 and Season 2, and I fear Season 3 may follow the same pattern.

2 Likes

I can definitely see your point. How do you think we should balance the need for continued and aggressive growth, without harming current holders?

Does it at all help that current holders can earn a significant boost to their points by staking KMNO?

the biggest thing I see is finding random things to give utility to KMNO to get people to burn it… like burn 100 KMNO to airdrop a token out to a snap shot of holders of something.

But the more KMNO is in more hands the easier it is for it to go up in price. You would rather have a million people with $1 in your protocol than 1 person with a million dollars.