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E-Mode Caps is a novel risk management mechanism that enables each collateral/debt pairing on Kamino to have a unique debt limit. This introduces granular per-pair risk control into a pool-based lending model — a capability that most lending protocols lack.

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The Problem with Pool-Wide Caps

In a traditional multi-asset lending pool (Kamino Lend V1, Aave V3), borrow caps are set per asset — not per pair. If the protocol raises the USDC borrow cap by $10M, users can borrow that additional USDC against any available collateral in the pool. But not all collateral is equal. SOL is deeply liquid and can be liquidated efficiently at large sizes. A newer token might have thin liquidity and high liquidation risk. In a pool-wide cap model, the borrow cap is constrained by the riskiest available collateral — because the protocol must assume that all new borrows could be collateralized by that weakest asset. This creates a scaling problem: to protect against risk from low-quality collateral, the protocol must restrict borrowing capacity against high-quality collateral. Conservative caps for the weakest asset penalize users of the strongest asset.

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What E-Mode Caps Enable

E-Mode Caps decouple borrow limits by collateral/debt pair. Instead of a single USDC borrow cap, the protocol can set:
PairCap
SOL / USDC$50M
wBTC / USDC$30M
JUP / USDC$5M
Other / USDC$0 (no E-Mode access)
Now the SOL/USDC cap can be raised aggressively — reflecting SOL’s deep liquidity and efficient liquidation — without increasing exposure through JUP/USDC, where liquidation risk is higher. The result: more capital efficiency for borrowers using high-quality collateral, without compromising protocol safety.

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How E-Mode Works

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Automatic Detection

Users do not need to manually enter or exit E-Mode. The system automatically detects whether a user qualifies for E-Mode based on the assets in their loan:
  • Single collateral + single debt that matches an E-Mode pair → E-Mode cap applies
  • Multiple collateral or debt assets → standard pool-wide caps apply

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When You CAN Access E-Mode

Using the example above (SOL/USDC and wBTC/USDC E-Mode pairs):
  • A loan with only SOL supplied can borrow USDC up to the SOL/USDC E-Mode cap
  • A loan with only wBTC supplied can borrow USDC up to the wBTC/USDC E-Mode cap

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When You CANNOT Access E-Mode

E-Mode Caps support single-collateral, single-debt combinations only. Any position that does not contain exactly one collateral and one debt asset within an E-Mode grouping cannot access E-Mode:
  • A loan with both SOL and wBTC supplied cannot borrow PYUSD via E-Mode — the position has multiple collateral assets
  • A loan with SOL supplied and USDC already borrowed cannot additionally borrow PYUSD via the SOL/PYUSD E-Mode — the position already has debt outside the E-Mode pair
  • A loan with SOL and another collateral supplied cannot access any SOL-based E-Mode

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Accessing E-Mode with Existing Positions

If you want to access E-Mode borrow capacity but your current loan contains assets outside the E-Mode pair, you have two options:
  1. Remove non-E-Mode assets from the position (repay other debts, withdraw other collateral)
  2. Open a separate loan from a different wallet dedicated to the E-Mode pair

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Why This Matters for Risk Management

E-Mode Caps transform how the protocol manages collateral risk:

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Targeted Scaling

High-quality collateral pairs (SOL/USDC, JitoSOL/SOL) can be scaled aggressively because the liquidity and correlation characteristics are well-understood. Low-quality pairs can be capped tightly or excluded entirely. The protocol grows where it’s safe, and restricts where it’s risky.

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Precise Liquidation Sizing

Because each pair has its own cap, the maximum position size for each pair is known. This allows market risk analysis to verify — per pair — that the maximum position can be liquidated profitably given the collateral’s specific liquidity profile. Pool-wide caps cannot provide this guarantee because the maximum position could use any collateral.

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Risk Isolation

If a specific collateral asset deteriorates (liquidity drops, volatility spikes), only the E-Mode cap for that pair needs to be adjusted. Other pairs are unaffected. This provides surgical risk control without disrupting the broader market.

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Correlation-Aware Parameterization

Correlated pairs (e.g., JitoSOL/SOL) can have higher E-Mode caps because the collateral and debt move together — the LTV ratio is inherently stable. Uncorrelated pairs (e.g., SOL/USDC) need more conservative caps because a SOL crash directly impairs the collateral while leaving the debt unchanged. This distinction — which pool-wide caps cannot make — is central to capital-efficient lending with sound risk management.

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Interaction with Other Safeguards

E-Mode Caps operate alongside other risk mechanisms:
  • Daily caps: Even within an E-Mode pair, daily caps limit how quickly new positions can be built
  • Supply and borrow caps: Global per-reserve limits still apply — E-Mode caps provide additional granularity within those limits
  • LTV limits: Each E-Mode pair can have its own LTV parameters, reflecting the specific risk profile of that collateral/debt combination
  • Auto-deleverage: If conditions deteriorate for a specific collateral, auto-deleverage can target positions in that E-Mode pair specifically