Multiply uses leverage. Leveraged positions amplify both gains and losses. Understand the risks specific to your strategy before opening a position — the risk profile of a SOL LST strategy differs fundamentally from a JLP or xStocks strategy.
Borrow rate risk
Borrow rate risk is universal across all Multiply strategies. Every Multiply position borrows at a variable rate. If that rate rises above the yield the collateral generates, Net APY turns negative and the debt balance grows faster than the collateral earns.
Net APY turns negative when: Borrow Rate > Collateral Asset Yield
Liquidation mechanics
Liquidation is triggered when a position’s Current LTV exceeds its Liquidation LTV threshold. The threshold is strategy and market specific — for example, 80% on JLP Market, higher under eMode for LST strategies.
At liquidation:
- Close factor: Up to 10% of the position is liquidated per transaction
- Liquidation penalty: ~0.1% (reduced 90% from ~1% in September 2025)
- Multiple rounds: If LTV remains above threshold after the first liquidation, additional rounds follow automatically until the position is healthy
The 0.1% liquidation penalty was intentionally set low to reduce the severity of each liquidation event. Positions do not lose large chunks of value in a single liquidation — but multiple rounds can still accumulate meaningful losses if the underlying condition (falling price or negative carry) is not resolved.
Strategy-specific liquidation risk
| Strategy | What triggers liquidation | Price risk |
|---|
| SOL LST | Borrow rate sustained above staking yield for an extended period | None — denominated in SOL on both sides |
| JLP | JLP price decline relative to USD | High — crypto basket exposure |
| xStocks | Underlying equity price decline | High — leveraged equity |
| Stablecoin / RWA | Borrow rate exceeds RWA yield; RWA default or redemption freeze | Low — near-USD collateral |
| Stable loops | Borrow rate spread inverts | None — both sides USD-pegged |
Stake-rate oracle
For SOL LST strategies, Kamino prices the LST collateral using the stake pool exchange rate — not the secondary market price. A temporary market depeg, where JitoSOL trades below its theoretical value, does not affect your LTV calculation. The oracle ignores market mispricing.
Auto-deleveraging
In extreme protocol stress scenarios, Kamino’s Risk Council can initiate auto-deleveraging — a systematic reduction of the largest leveraged positions to protect overall solvency.
Before auto-deleveraging is executed, affected positions receive a 72-hour warning. Auto-deleveraging has not been triggered in Kamino’s history. It is a last-resort mechanism, not a routine operation.
Historical liquidation events
| Date | Event | Collateral Seized | Bad Debt |
|---|
| April 6–7, 2025 | Broad market correction | $16M | $0 |
| February 5–6, 2026 | SOL -18%, ETH -15% crash | $19.4M | $0 |
Kamino provides a Liquidation Analysis Suite accessible from the Multiply interface. It allows you to model position health before and after opening leverage.
- Simulate time-to-liquidation under different market conditions and borrow rate scenarios
- Adjust leverage and theoretical yield to see break-even thresholds
- Run historical backtests on strategy performance across past market events
Use these tools before entering any leveraged position, particularly for JLP and xStocks strategies where price risk is the dominant variable.
Risk summary
| Strategy | SOL Price Risk | Depeg Risk | Borrow Rate Risk | RWA / Counterparty Risk |
|---|
| SOL LST | None | Eliminated (stake oracle) | Primary risk | None |
| JLP | High | N/A | Moderate | None |
| xStocks | High (equity) | N/A | Moderate | None |
| Stablecoin / RWA | Low | N/A | Moderate | Varies by issuer |
| Stable loops | None | N/A | Primary risk | None |
