Pool mechanics
When you supply an asset, it enters a shared liquidity pool alongside all other lenders of that asset. Borrowers draw from this pool and pay interest on their outstanding debt. As a lender, you earn a proportional share of that interest — your share of the pool determines your share of the yield. There is no lender-borrower matching; the pool itself intermediates.
kTokens
On deposit you receive kTokens — for example, kUSDC or kSOL — that represent your claim on the pool. These are standard fungible tokens and can be transferred or used as collateral for other positions within Kamino. When you withdraw, you redeem your kTokens for the underlying asset plus all interest that has accrued since deposit.
The exchange rate between kTokens and the underlying asset increases monotonically over time. As borrowers pay interest into the pool, each kToken becomes redeemable for a larger amount of the underlying asset. Your kToken balance does not change — your yield is entirely expressed through the appreciating exchange rate.
How your yield is calculated
Supply APY is a function of two variables: the borrow rate and the utilization ratio.
Supply APY ≈ Borrow Rate × Utilization
Utilization
Utilization is the ratio of borrowed assets to total deposited assets in a reserve. It is the primary input to Kamino’s interest rate model. When utilization is high, borrow rates rise — this simultaneously discourages new borrowing and attracts new supply, pushing utilization back down. When utilization is low, borrow rates fall — this stimulates borrowing and may prompt lenders to redeploy capital elsewhere. The interest rate curves are parameterised to keep each reserve operating within a target utilization band, balancing competitive supply yields against adequate withdrawal liquidity.
What Supply APY includes and excludes
The Supply APY figure reflects only interest paid by borrowers and passed through to lenders. It does not include KMNO emissions, external token incentives, or farm reward programs. Where such programs exist for a given reserve, they are displayed separately and stack on top of the base supply APY.
Withdrawal liquidity
You can withdraw at any time as long as the pool has available liquidity — that is, not all deposited assets are currently borrowed. Kamino’s interest rate curves are designed to prevent full utilization from persisting: as utilization approaches 100%, rates escalate sharply, creating strong economic pressure for borrowers to repay and new lenders to deposit before the pool is exhausted. In practice this means a buffer of idle capital is maintained in all healthy reserves, and withdrawals are available under normal conditions.
→ See Concepts for a full explanation of how the rate curve and kink work.
