Fixed Rates

Fixed Rates introduces predictable borrowing costs to Kamino by letting borrowers lock in a rate for a defined term — 1 month, 3 months, 6 months, or longer — without exposure to utilization-driven rate swings. A 5.5% 3-month loan charges 5.5% through maturity regardless of what the variable rate market does. For lenders and liquidity vaults, Fixed Rates introduces Conditional Liquidity: capital stays deployed and earning in variable reserves until a fixed-rate borrow match is found, eliminating the opportunity cost of pre-positioning. The system generates DeFi’s first on-chain yield curve — a live, market-priced term structure visible across all active fixed-rate reserves.

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The rate grid

Each market maintains multiple reserves per debt token. Instead of a single USDC reserve, the market exposes a full rate grid: one variable reserve plus one reserve per rate-and-duration combination currently offered. Each reserve is independent — it has its own liquidity, its own utilization, and its own borrowers. A position in the USDC 5.5% 3m reserve has no interaction with the USDC 6.0% 6m reserve. Example rate grid for USDC debt in a single market: Not every cell is populated. Curators and governance determine which reserves exist; liquidity is not guaranteed across all combinations. Reserves with no active lenders have no borrowing capacity regardless of demand. Reserve isolation matters for risk. A large repayment or withdrawal in USDC 6.0% 6m does not affect liquidity in adjacent reserves. Borrowers and lenders interact only within their specific reserve.

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Conditional Liquidity

Liquidity vaults face an inherent problem when offering fixed-rate lending: capital sitting in a fixed-rate reserve earns nothing until a borrower arrives. Conditional Liquidity solves this by letting vaults signal capacity on fixed-rate reserves without moving capital. Capital remains in variable-rate reserves, earning the live variable yield. The vault posts a conditional signal on one or more fixed-rate reserves, declaring that it can fill up to a specified amount at that rate and duration. When a matching Borrow Order is submitted, the protocol atomically:

1. Pulls the required amount from the vault’s variable-rate position
2. Deposits it into the target fixed-rate reserve
3. Delivers it to the borrower

No capital sits idle waiting for a match. Between signal and fill, the vault earns variable-rate yield. A single pool of capital can be conditionally signaled across multiple reserves simultaneously — if the USDC 5.5% 3m reserve fills first, the signal on USDC 6.0% 6m is satisfied from the same capital pool, first match wins.

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Borrow Orders

Borrowers access fixed-rate reserves through the Borrow Orders system. A Borrow Order specifies the desired debt token, rate ceiling, term, and amount. The protocol matches the order against available conditional and committed liquidity across the rate grid and fills at the best available rate up to the borrower’s ceiling. See Borrow Orders for the full mechanics of order submission, partial fills, and matching logic.

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Early repayment

You can repay a fixed-rate loan at any time before maturity without waiting for the term to end. During the first term only, an early repayment penalty may apply. The penalty compensates lenders who committed capital for the agreed duration. After a rollover into a subsequent term, there is no early repayment penalty. The penalty is calculated based on the minimum interest that would have accrued had the loan run longer. Interest already paid on the loan reduces the penalty proportionally — the longer you have been in the loan, the smaller the effective penalty on early exit.

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Rollover

Fixed-rate loans have a maturity date equal to loan_start + term_duration. At maturity, the protocol attempts to automatically roll the loan into a new fixed-rate term. The new term runs at the same rate the borrower already has, or at a lower rate if a cheaper reserve of the same duration is available. The borrower stays in a fixed-rate position across maturity by default and can repay at any point during the rollover window to close out the loan. If both fixed-rate rollover paths are blocked at maturity, the protocol falls back to the paths described below. This typically happens when withdrawal tickets are queued in the target reserves or when those reserves lack liquidity.

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How auto-rollover works

At maturity, the protocol evaluates the following paths in order and executes the first one that succeeds:

1. Rollover — same fixed-rate reserve. If the reserve has sufficient available liquidity and no withdrawal tickets are queued, the loan extends for another full term at the same rate.
2. Rollover — better fixed-rate reserve. If a lower-rate reserve of the same duration is available, the loan migrates there for a new term at the lower rate.
3. Fallback — variable-rate reserve for the same asset. If both fixed-rate paths are blocked but the market has a variable-rate reserve of the same debt asset with enough free liquidity, the loan is converted into that variable-rate reserve at the prevailing rate. The position remains open under variable-rate mechanics from that point on.
4. Liquidation eligibility. If none of the paths above succeeds, the loan becomes eligible for liquidation after the grace period. This includes situations where the market lacks a variable-rate reserve of the same asset, and situations where that variable reserve has insufficient free liquidity to absorb the position.

Queued withdrawal tickets are the most common reason same-reserve rollover is blocked — lenders requesting capital back take priority over loan extensions. See Withdrawal Queue below and Concepts for details.

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Grace period

A grace period of approximately 6 hours applies after maturity. During the grace period the position remains healthy and any of the rollover paths above can complete without penalty. After the grace period expires, if none of the rollover paths has succeeded, the position becomes eligible for liquidation regardless of the collateral health ratio. An expired fixed-rate loan that has exhausted every rollover path is treated as a protocol-level breach in its own right, independent of price action.

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When the variable-rate fallback applies

Whether the variable-rate fallback is available depends on the structure of the market the loan lives in. A market that lists both a fixed-rate reserve and a variable-rate reserve for the same debt asset has a fallback path. A market with only fixed-rate reserves for that asset moves directly toward liquidation when fixed rollover paths fail. The variable reserve’s own liquidity also matters. If it is at or near full utilization at the moment of rollover, it cannot absorb additional debt, and the fallback path effectively closes. Borrowers should check the structure and current state of the relevant variable reserve before treating fallback as a safety net.

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Withdrawal Queue

Fixed-rate reserves lock lender capital for the duration of the term — lenders cannot withdraw on demand mid-term. To exit a position before borrowers repay, lenders submit a withdrawal ticket specifying the amount they want returned. Tickets enter a per-reserve FIFO queue. Queued tickets are filled as capital re-enters the reserve through borrower repayments and liquidations. There is no guarantee of fill timing; a reserve with low repayment activity may take the full remaining term to return queued capital. The queue directly affects borrower rollover eligibility. Any queued ticket in a reserve blocks rollover for all borrowers in that reserve. This is by design: lenders who have signaled intent to exit cannot be re-committed to a new term without their consent. Borrowers planning to roll should check whether any withdrawal tickets are queued before maturity.

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The emerging yield curve

The rate grid is more than a product feature — it is DeFi’s first live term structure for lending rates. Each populated cell represents a market-clearing price for capital at a specific duration. The difference in rate between a 3-month reserve and a 6-month reserve for the same token is the term premium: the additional yield lenders require to lock capital for longer. This structure enables real price discovery for duration risk. When demand for 6-month USDC borrowing rises, rates in 6-month reserves rise relative to 3-month reserves, signaling to the market that longer-term capital is scarce. Vaults can observe the spread across the grid and allocate conditional liquidity to the cells offering the best risk-adjusted yield for their duration tolerance. For borrowers managing treasury exposure or structured positions, the yield curve provides a reference: you can see exactly what the market charges across all available terms before committing, and choose the duration that best matches your liability profile. Variable-rate borrowing remains available via the standard reserve for positions where term certainty is not required — see Borrowing for how variable-rate positions work.