How rates are determined
Earn Vault yield is derived from the interest rates on the underlying Kamino lending reserves. Each reserve has its own supply APY, which is driven by borrower demand and reserve utilization. The vault’s overall APY is a weighted blend of the rates across all reserves it is allocated to.Why rates change
Interest rates in lending markets are variable. They move based on:- Borrow demand: when more users borrow from a reserve, utilization increases and supply rates rise. When demand falls, rates decrease.
- Reserve utilization: each reserve has a utilization curve that determines how rates scale. Higher utilization means higher rates for both borrowers and suppliers.
- Allocation changes: if the vault curator adjusts allocations, the vault’s blended rate shifts to reflect the new reserve mix.
What this means for depositors
- APY displayed on the vault page is a trailing figure based on recent performance, not a forward guarantee.
- Your effective yield can increase or decrease over time without any action on your part.
- Periods of low borrow demand across the vault’s reserves will result in lower yields.