Skip to main content
The Insurance Pool lets you lock your own capital into your vault as a loss backstop. If the vault incurs bad debt and losses are socialized, your locked capital is used to compensate affected depositors. This is the strongest trust signal you can offer depositors. Because Insurance Pool funds are deployed into the vault like any other deposit, they earn yield in line with the vault’s APY — your backstop capital is productive while it’s locked.

​
Setting up the Insurance Pool

1

Create the Insurance Pool farm

If your vault doesn’t already have a farm, create one first. The Insurance Pool is configured as a dedicated farm on your vault — technically an escrow account.
2

Configure token

Set the deposit token. The Insurance Pool has a mandatory 30-day cooldown on withdrawals — this is not configurable.
3

Deposit capital

Deposit your capital into the Insurance Pool. You receive vault shares (kTokens) that are staked into the pool. The deposited amount is visible on-chain to all depositors.
This can be done via the UI or SDK (KaminoManager class). It is not currently available via CLI or API.

​
Farm ownership

As the curator, you own the Insurance Pool farm. After creation, transfer farm ownership to a multisig and add Kamino as a signer — this aligns with the 2/2 multisig model used for emergency withdrawals.

​
Key parameters

ParameterTypeDescription
InsurancePoolFarmPublic keyThe escrow account holding the insurance pool capital
TokenToken typeThe asset deposited into the insurance pool
Cooldown Period30 daysFixed cooldown — capital cannot be withdrawn for 30 days after initiating withdrawal

​
Withdrawal mechanisms

There are two ways to withdraw from the Insurance Pool. Understanding both is important — they serve fundamentally different purposes.

​
Normal withdrawal (30-day cooldown)

Initiate a standard withdrawal to remove your insurance commitment. The mandatory 30-day cooldown begins when you initiate, and the withdrawal is a public, on-chain signal — depositors and anyone monitoring the vault will see that you are exiting. This is the expected mechanism for curators who wish to exit their insurance position. The 30-day window gives depositors time to assess and react.

​
Emergency withdrawal (instant, 2/2 multisig required)

Emergency withdrawal is designed for one purpose: quickly accessing Insurance Pool funds to compensate depositors after a loss event. It bypasses the 30-day cooldown. Because of this, emergency withdrawal is gated behind a 2-of-2 multisig:
  1. Kamino’s security council wallet
  2. A curator-nominated wallet (set by you)
Both parties must sign. This prevents using emergency withdrawal to avoid losses — Kamino’s security council will only co-sign when the withdrawal is for legitimate depositor compensation.
Using emergency withdrawal to extract funds and avoid compensating depositors — rather than to make them whole — defeats the purpose of the Insurance Pool and would constitute a breach of the curator’s commitment.

​
How loss compensation works

When your vault incurs bad debt, the compensation process is manual. There is no automated on-chain loss detection — this is consistent with industry practice, as fully automating loss detection and distribution is complex and without precedent.

​
Process

  1. Kamino socializes the loss — Kamino calls socialize_loss on klend, which distributes the bad debt across the vault. Depositors incur the loss at this point.
  2. Detect and estimate the impact — you (and/or Kamino) assess what happened, which reserve incurred bad debt, and how much was lost.
  3. Release funds from the Insurance Pool — either via normal release or emergency withdrawal (with the 2/2 multisig) if urgency is required.
  4. Identify affected depositors — a point-in-time snapshot determines which depositors held positions when the loss occurred.
  5. Distribute compensation — funds from the Insurance Pool are distributed to affected depositors via a script, making them whole for the socialized losses.
The Insurance Pool covers losses up to its full balance. Only if the pool is fully depleted do depositors bear any remaining loss.

​
Kamino matching program

Kamino matches curator Insurance Pool deposits up to $250K. If you deposit $200K, Kamino contributes an additional $200K — bringing the total Insurance Pool for your vault to $400K. Deposits above $250K are not matched beyond the cap. This effectively doubles the protection for your depositors at no additional cost to you (up to the cap), and signals that Kamino stands behind your vault alongside you.