Kamino (@KaminoFinance): Introducing: Multiply Liquidation Analysis Suite

Introducing: Multiply Liquidation Analysis Suite Despite the growth of DeFi in recent years, most platforms still lack adequate tooling for users to truly understand their positions Most users seeking in-depth analysis need to manually log position data, and run their own calculations. From a product point of view, it's pretty clear that DeFi needs better user-facing risk tooling. With over $1.1B in deposits, Kamino Multiply has an enormous user-base. Via the Liquidation Analysis suite, we're taking a huge step in putting useful data in the hands of users. The Liquidation Analysis suite enables every Multiply user to assess their position risk with real time data and simulations. Data is the language of risk management. The more data users have at their disposal, the more informed the decisions they can make. Kamino ingests an astronomical amount of data (take a look at risk.kamino.finance for a look under the hood)—and over time the goal is to incorporate this into the product suite to establish Kamino as the home of sophisticated borrowers in DeFi. The Liquidation Analysis suite consists of 4 core sections: Overall Stats Your Risk Summary Interest Rate & Utilization Simulation Historical Utilization Each of these enable users to better understand their position risk. Before we explain how, we first need to cover what exactly position risk entails in Multiply Thanks to Kamino's LST oracle infrastructure, SOL Multiply positions cannot be liquidated via depegs, which means the primary risk to SOL Multiply positions are SOL borrow rates spikes—i.e. interest rate risk. JLP Multiply acts as a typical leverage position, thus is substantially different from LST Multiply. Liq analysis is also available already in JLP Multiply, but we'll just be covering LST Multiply in this post Interest Rate Risk Explained Interest Rate Risk comes into play when the delta between LST APY and SOL Borrow Rates on Kamino becomes smaller. The closer borrow rates are to the LST APY, the less you earn If borrow rates go higher than the SOL APY, positions can become unprofitable—and in extreme cases, could be pushed towards liquidation Just how extreme does this need to be for Multiply users to be concerned by interest rate risk? This is precisely what the Liquidation Analysis Suite answers for users. We need to look at four values for an idea of risk: SOL Borrow Rate LST APY Resulting Net APY (positive Net APY=no liq risk) Given the above, we are able to simulate the all-important value for expressing position risk: Time to Liquidation—simulated this using real market data. Let's dive into the Liquidation Analysis Suite: Liquidation Analysis Suite As mentioned, the suite consists of 4 sections: 1. General Stats Showing the overall stats of users using this Multiply product, indicating where the market's risk appetite is. Stats include: Average Leverage, Average LTV, and Average Net APY 2. My Risk Summary This shows you a general overview of your own position risk. Notice that the position above has a positive Net APY, and thus time to liquidation shows as infinite, which means that in its current state the position is profitable, and thus will never be liquidated. Now for the real magic: 3. Interest Rate Impact Here is where Kamino's rich data ingestion and idiosyncratic product UX meet This simulation shows a user the risk of their position given the various key stats: LST APY Borrow APY (determined by utilization) Resulting Net APY Time to Liquidation (given Net APY) 90D PnL At 90% Utilization, for example the SOL borrow rate is 7.74%—thus implying no liquidation risk. In fact, given these rates, users can even project their SOL earnings over time, indicated by the 90D PnL column. As far as rates go, during utilization spikes, new lenders typically step in to flatten the rates, which means positions quickly become profitable again (covered in the next section) However, in the theoretical (albeit unlikely) scenario where utilization spikes even beyond 90% and remains at an unprofitable level, how high is liquidation risk? This is what the Liquidation Analysis Suite is designed to quantify for users. In the above position, for example, at a 95% SOL Utilization, with a JupSOL APY of 8.2%, and 4.8x leverage, the position would reach liquidation levels after 316 days Users have full freedom to play around with these values, select different leverage values, adjust the theoretical LST APY, and even input a custom utilization This feature gives a user total flexibility in assessing position risk. Users can also make use of this suite to simulate the risk of an increased leverage multiple before pulling the trigger. Givent he above, however, it's crucial to contextualize the seemingly adverse risk of a 100% Utilization against the actual historical utilization. This brings us to the final section of the suite: 4. Historical Utilization Utilization is determined by the amount of supplied SOL that is actively being borrowed. The larger the % of supplied SOL that is borrowed, the higher utilization becomes, and thus the higher borrow rate moves. The critical question here is how does utilization behave, and how stable are borrow rates? In the Historical Utilization Chart, you can see rates up to 1 year back, which shows that rates typically hover around 90% utilization, with spikes flattening very promptly. Very soon, we'll be adding the concrete values for average utilization over 30D, 90D, 180D, and 360D periods, giving users even more info to work with.