Liquidation Risk
Multiply vaults establish debt positions that face liquidation when loan-to-value ratios exceed liquidation thresholds.SOL Multiply: Liquidation occurs if the borrow interest rate is higher than the LST yield for a sustained period of time.JLP Multiply: Liquidation happens if JLP value declines relative to USD, reaching the liquidation threshold.
Depeg Risk
Multiply positions carry no depeg risk.
Deleveraging
Kamino operates an automatic deleveraging mechanism that systematically unwinds debt and collateral to maintain safe asset levels on the protocol’s balance sheet.
The process occurs automatically and typically leaves positions with improved LTV ratios. However, users should monitor Kamino’s social channels for notifications about margin call periods before deleveraging initiates.
Socialized Losses
If K-Lend accumulates bad debt, losses distribute proportionally among all protocol users. This pushes all positions closer to liquidation thresholds and may trigger additional liquidations. Users should structure positions to withstand extreme interest rate scenarios without liquidation.
Smart Contract Risk
Liquid-staking tokens (JitoSOL, mSOL) and LP tokens (JLP) originate from external smart contracts. Users should conduct independent research into the safety of products beyond Kamino’s protocol.
