February saw one of the sharpest market downturns of the past year, significantly impacting Kamino Lend. Deposits declined by 25% to $2.9B, while borrows fell 28% to $1.1B. This was driven by lower prices with a net positive flow of $3.17B deposits vs $3.13B withdrawals.
Market volatility throughout February triggered substantial liquidations on the protocol totaling $35.2M in collateral seized across 3,616 unique wallets. The Main market was most heavily impacted, accounting for 68% of all liquidation volume.
Despite the market turbulence, Kamino's liquidation ecosystem performed efficiently, with 80 active liquidators participating.
Interest rates fluctuated in response to volatility, with Dollar borrow rates peaking over 10% multiple times. Ultimately utilization decreased from 81% to 75% for Kamino Dollars and 92% to 74% for SOL, reflecting deleveraging across the platform.
Transaction volume decreased to $7.9B (-28% vs January), concentrated in periods of volatility. Despite these challenging conditions, users remain loyal with 130k unique wallets (down only 3% since last month). The Main market continues to dominate in deposits, followed by JLP and Jito.
🔎 Check out Kamino February 2025 Dashboard & February Monthly Snapshot for more details
1. Overview of Market Performance
Kamino Lend experienced significant liquidity contraction in February, with broad-based decreases across key metrics driven by the severe market downturn. Total deposits fell to $2.9B (-25% month-on-month), while borrowing declined to $1.1B (-28% MoM), leading to a 22% TVL reduction to $1.8B.
The number of active positions decreased slightly to 154,891 (-4% compared to January), while the number of unique wallets actually increased to 130,441 (-3%), suggesting users remain loyal despite market conditions.
February was characterized by extreme price volatility, particularly in the latter half of the month when SOL price declined by approximately 35%, from around $200 to $130, with a modest recovery toward month-end. This volatility triggered significant deleveraging across all Kamino markets.
These conditions emphasized the solid liquidator ecosystem with a record number of participants which kept bad debt at zero throughout the downturn.
2. Supply/Borrow Trends and Protocol Revenue
The Main market remains the largest, holding $1.7B in deposits (-23% MoM) and $694M in borrows. JLP follows with $722M in deposits (-31% MoM) and $231M in borrows, and Jito $368M in deposits (-25% MoM) and $183M in borrows.
While all markets experienced significant supply contraction, there was some notable SOL deposit activity, a whale position providing $120M of SOL collateral to borrow USDC.
The overall debt decrease was primarily driven by stablecoin borrowing reduction, while SOL and JitoSOL borrows actually increased by $42.5M, indicating a strategic shift from long to short positions as users adapted to the declining market.
Kamino generated $8.8M in interest revenue from borrowers in February, down 18% MoM, reflecting the reduction in leverage, prices falling and a shorter month.
3. Kamino Dollar & SOL
February saw fluctuations in borrow rates, especially in the SOL market, where rates spiked multiple times throughout the month. The rapid stabilization highlighted responsive user behavior and market efficiency.
Demand for SOL-denominated leverage continued, with a slight 7% increase in SOL borrows to 3.5M. SOL supply grew significantly to 4.7M SOL (+30% MoM), driven by a single 883k SOL deposit. As a result of this large deposit, utilization fell from 90 to 70% pushing the borrow rate from 7.5% to 5%. The market is gradually absorbing this additional liquidity, creating opportunities for borrowers.
Both Kamino Dollar supply & borrows contracted significantly this month, supply by 28% to $694M, and borrows by 23% to $519M. This contraction was accompanied by a slight decline in utilization 81% to 74%, signalling deleveraging trends across the platform. DeFi Dollar supply rates declined from 5.7% to 4.3%, reflecting this reduction in demand.
USDC experienced the largest decline in both absolute supply and borrowing, reflecting its position as the dominant stablecoin.
4. Transaction Volume and User Behavior
Kamino's total transaction volume reached $7.9B in February, marking a 28% decline from January’s $10.9B. This drop was primarily driven by price action rather than user disengagement. Liquidity remained balanced, with $3.17B in deposits nearly offset by $3.13B in withdrawals.
The global utilization rate held relatively stable at 39%, despite a slight reduction in demand where repayments ($966M) marginally surpassed new borrows ($883M). Transaction activity peaked during the highest volatility periods around February 25-26, demonstrating that users remain actively engaged during market stress. This pattern indicates a measured deleveraging rather than panic selling, with users maintaining positions while adjusting leverage levels.
5. Liquidations and Risk Events
February’s market downturn triggered significant liquidation events, with $35.2M in collateral liquidated across 12,683 positions, impacting 3,616 unique wallets—a nearly fivefold increase from January’s $7.3M.
The majority of liquidations occurred in the Main and JLP markets, with SOL positions accounting for $20.1M and the JLP market seeing $10.2M in liquidations following a 23% price drop. Notably, while the JLP market’s seized collateral represents 97% of all liquidations since its launch, it accounted for 2% of the market’s total collateral JLP deposits.
Kamino’s largest single-day liquidation events occurred on February 25 and 26, coinciding with SOL's price drop below $140. Liquidation cascades were particularly pronounced in the Main market, where highly leveraged SOL positions were unwound rapidly.
Given the severity of the market conditions – with an average -23% return and an average max drawdown of -37% for assets listed on Kamino – the level of liquidations was remarkably contained. The $35M of collateral seized represents less than 8% of last month's ceteris paribus stress testing projection for a -30% market event, showcasing effective risk management from both Kamino and its users.
The liquidator landscape has moderate concentration with increased participation of 80 liquidators. The top 11 liquidators, handled 96% of the volume, each seizing more than $1M of collateral. Various liquidations strategies can be observed, some focused on transaction size and others on frequency.
6. Stress Testing
The distribution of collateralization levels has flattened compared to last month, with price action impacting the margin on some positions, while others have been topped up by prudent users managing their risk exposure.
Analysis of distance-to-liquidation metrics confirms that remaining positions have healthier collateralization ratios, with fewer positions within 10% of liquidation compared to January.
In case of market shock, the largest exposures —USDC and SOL— would likely be repaid first in a liquidation scenario, they are also most liquid assets able to sustain large transactions with small price impact.
Total Collateral at Risk & Bad Debt Exposure (ceteris paribus):
- In a -30% market event, $254M (-44% MoM) could be liquidated, potentially resulting in $3.5M in bad debt (+59% MoM)
- In a -60% market event, $823M could be liquidated (-18% MoM), with bad debt rising to $117M (-30% MoM)
These figures represent improved resilience compared to January's stress test results despite the market turbulence, suggesting that the February liquidations removed the most vulnerable positions.
7. Conclusions & Risk Considerations
February’s market downturn served as a critical stress test for Kamino’s risk systems, which remained effective despite elevated liquidation volumes. The protocol demonstrated strong resilience in handling extreme volatility.
Key risk takeaways:
- Liquidation mechanisms operated as intended, with 80 active liquidators ensuring full market coverage during periods of high volatility.
- The reduction in leverage and utilization rates across markets suggests a more conservative positioning by users, reducing systemic risk.
- Interest rate mechanisms responded appropriately to volatility and to the sudden SOL supply growth, with temporary spikes incentivizing deleveraging when needed.
Going forward, efforts to diversify stablecoin usage, improve liquidation efficiency during extreme volatility, and continue incentivizing prudent leverage levels will be important for maintaining system stability.
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