Multiply positions carry liquidation risk. Higher leverage reduces liquidation buffers. Liquidation triggers include sustained borrow rates exceeding staking yields or LST smart contract exploits.
eMode Explained
Elevation Mode (eMode) permits elevated loan-to-value ratios between price-pegged assets.
Example: JitoSOL/SOL Multiply vault supplies JitoSOL while borrowing SOL. Standard LTV permits 75% (4x leverage), but eMode raises this to 90%, enabling up to 10x leverage.
Yield Assessment
Monitor your Net APY to track profitability. Positive Net APY occurs when yield-bearing asset returns exceed borrow costs. As Net APY remains positive, your SOL balance should increase.
Yield Sources
Positioning yield derives from two channels:
- Staking yield: Tokens like mSOL, JitoSOL, bSOL generate staking returns
- Market making yield: kTokens earn trading fee revenue through Kamino liquidity vaults
Some vaults combine both (example: kJitoSOL-SOL).
Flash Loan Mechanics
Flash loans allow uncollateralized borrowing within a single transaction, repaid before completion.
Opening process:
- Protocol borrows SOL via flash loan
- SOL converts to target asset (JitoSOL)
- Target asset deposits into K-Lend
- SOL borrows against deposited collateral
- Borrowed SOL repays flash loan
- Position establishes at target leverage
Fee Structure
- Flash loan fee: 0.001% per transaction
- Borrow APY: Already incorporated in Net APY calculations
- Swap slippage: Jupiter swaps incur variable slippage costs
Liquidation Risk
Positions face liquidation when:
- Borrow interest rates persistently exceed LST staking yields, increasing debt relative to LST holdings beyond liquidation thresholds
- LST platform smart contracts experience exploits
kToken Multiply Positions
Leveraging kTokens follows similar mechanics with key differences:
- Dual asset exposure: Collateral includes two assets instead of one
- Hybrid yield: Combines staking and market-making returns
Practical Example
Scenario: User deposits 1,000 SOL into JitoSOL/SOL vault with 8x Multiplier
Market conditions:
- JitoSOL/SOL ratio: 1.2
- JitoSOL APY: 7%
- SOL borrow rate: 6%
Position breakdown:
| Metric | Calculation | Value |
|---|
| Total SOL Exposure | 1,000 × 8 | 8,000 SOL collateral |
| Equivalent JitoSOL | 8,000 ÷ 1.2 | 6,666 JitoSOL |
| Total SOL Debt | 8,000 - 1,000 | 7,000 SOL |
| LTV | 7,000 ÷ 8,000 | 87.5% |
| Staking Yield | 8,000 × 7% | 560 SOL earned |
| Borrow Cost | 7,000 × 6% | 420 SOL paid |
| Net SOL Earned | 560 - 420 | 140 SOL |
| Net APY | 140 ÷ 1,000 | 14% |
