Documentation Index
Fetch the complete documentation index at: https://kamino.com/docs/llms.txt
Use this file to discover all available pages before exploring further.
The core innovation: collateral that never touches a smart contract
In standard on-chain DeFi lending, collateral is locked in a smart contract. The protocol enforces the loan because it physically controls the collateral — a borrower cannot withdraw pledged assets without first repaying. Off-Chain Collateral removes this constraint. The collateral (native SOL, staked SOL, BTC) stays in a regulated custodian account at Anchorage Digital Bank. It never moves on-chain. Three mechanisms replace the smart contract lock:| Mechanism | Role |
|---|---|
| Chainlink Proof of Reserve | Publishes the custody balance on-chain so the smart contract can calculate LTV |
| Mirror token | Gives the borrower an on-chain representation of custodied collateral to post as Kamino collateral |
| Account Control Agreement | Legal contract that enforces the loan — the custodian follows Kamino’s instructions, not the borrower’s, when LTV is breached |
Chainlink Proof of Reserve (PoR)
Chainlink’s oracle network reads Anchorage’s custody systems directly and publishes the actual collateral balance on-chain in real time. This is what allows Kamino’s smart contract to calculate LTV without the assets ever moving.- The balance of specific assets in the borrower’s custodial account at Anchorage
- Solvency of the custodian
- Quality of custody operations
- Protection against custodian counterparty failure
Mirror tokens
A mirror token is a synthetic token representing a specific borrower’s custodied collateral. It is minted by Kamino and scoped to that borrower’s isolated market. Key properties:- Not traded on any market
- Not transferable to other protocols or wallets
- Has no independent value — it is a pure accounting unit
- Scoped to a single borrower’s isolated Kamino market
| Stage | Mirror token state |
|---|---|
| Collateral deposited at Anchorage | Minted, calibrated to PoR-attested balance |
| Loan active | Active — tracks PoR balance in real time |
| Full repayment, collateral withdrawn | Inert — PoR feed reports zero; nothing can be borrowed against it |
The mirror token is not burned at repayment. Once all collateral is withdrawn from Anchorage, the Chainlink PoR feed reports a balance of zero and the token becomes inert rather than destroyed.
The Account Control Agreement (ACA)
The ACA is the legal enforcement mechanism for Off-Chain Collateral. It is the functional equivalent of a smart contract lock — applied in the legal domain rather than the technical domain. It is a three-party contract between:- Borrower (pledgor) — the institutional entity pledging SOL or BTC
- Anchorage Digital Bank (custodian) — holds the assets; neutral gatekeeper
- Kamino / Collateral Agent (secured party) — holds first-priority security interest on behalf of lenders
Two operating modes
| Mode | Condition | Who can instruct Anchorage |
|---|---|---|
| Joint control | Normal operation | Borrower and Kamino jointly — both must approve any movement |
| Exclusive control | After Notice of Exclusive Control | Kamino / Collateral Agent only — borrower is locked out |
The ACA is governed under South Dakota law and structured under UCC Article 8, which treats the pledged collateral as a “financial asset” with Anchorage Digital Bank as the “securities intermediary.” This structure perfects Kamino’s first-priority security interest in the collateral.
Solana epoch mechanics (staked SOL)
A Solana epoch is the protocol’s ~2-day cycle between which staking rewards are distributed and staking/unstaking events settle. Staked SOL cannot be instantly liquidated. Unstaking requires waiting until the end of the current epoch — a maximum of approximately 2 days. This creates a gap between when a Notice of Exclusive Control is issued and when the collateral can be converted to USDC. Staked SOL liquidation sequence:| Event | Timing |
|---|---|
| Notice of Exclusive Control issued; unstaking initiated | Immediate |
| Unstaking completes | End of current epoch (max ~2 days) |
| Trade placed | ~24 hours before epoch end |
| Trade settlement | 24 hours after trade date |
| Total cycle | Maximum ~2 days |
This is why the LTV for native SOL collateral (which settles instantly) differs from staked SOL (which requires epoch-end unstaking). The collateral type determines how quickly enforcement can complete, which determines how much buffer the protocol requires.
Rolling loans and 3-month terms
Off-Chain Collateral loans operate on fixed 3-month terms. This is structurally different from standard variable-rate DeFi lending.| Attribute | Standard On-Chain DeFi | Off-Chain Collateral |
|---|---|---|
| Rate type | Variable — adjusts continuously with utilization | Fixed at origination for the full term |
| Repayment | Any time | Any time |
| Duration | Flexible | 3-month rolling |
| Renewal | N/A | Auto-renews at renegotiated rates unless terminated |
| Grace period at rollover | N/A | None — monitoring is continuous |
Segregated custody and rehypothecation prohibition
Segregated custody
The borrower’s collateral is held in a dedicated Pledgor Account at Anchorage Digital Bank. This account is legally and operationally distinct from:- Anchorage’s own balance sheet assets
- Other clients’ custodied assets
Rehypothecation prohibition
Rehypothecation is the practice of a custodian re-using client collateral — lending it out, pledging it, or using it in financing activity. In traditional finance, this is routine and generates returns for custodians. Anchorage is contractually prohibited from:- Lending the pledged assets
- Pledging or encumbering them in any form
- Using them in any trading or financing activity
Rehypothecation prohibition and segregated custody together mean the collateral has one purpose: backing the loan. It cannot be deployed, loaned, or encumbered elsewhere without breaching the ACA.