Project 0 Integrates Solana DeFi giant Kamino in boost to liquidity

Crypto prime broker Project 0 is integrating Solana-based liquidity layer Kamino. The tie-up will enable users to manage risk, collateral, and capital efficiency across a range of DeFi applications.

Most notably, users will now be able to borrow against their Kamino and Project 0 deposits using a single pool of credit that collates loan-to-value (LTV), borrow weights, and interest rate figures across platforms in one click. This also introduces a unified margin account, opening access to leverage opportunities without needing to manage multiple sets of collateral.

"By enabling cross-margin across multiple venues, users can now manage their entire portfolio under a single margin account, addressing a long-standing inefficiency in DeFi and providing clearer oversight of portfolio-wide risk," Project 0 founder MacBrennan Peet said in a statement.

In other words, Project 0 is meant to give decentralized finance users greater flexibility by consolidating their deposits, also boosting liquidity.

"Under the existing DeFi market structure, users are required to overcollateralize separately on each platform, which fragments capital and increases the chance of liquidation even when offsetting positions exist elsewhere," the project wrote.

Flash crash

The move comes just days after the largest liquidation event in crypto history, when, on Friday, nearly $10 billion in open interest was eliminated by a flash crash in prices and multiple exogenous and endogenous risks to crypto derivatives. To some extent, the event has sparked a reevaluation of crypto market structure.

"Project 0, in partnership with Kamino, has spent extensive time modeling situations like the market flashcrash and the impact that has on solvency, market liquidity, and liquidations," Peet told The Block via email, noting that the models provided the insight that Project 0's risk parameters could have absorbed the drawdown and protected lenders. "With Project 0 integrating Kamino, there are no new risks added to Kamino's systems. This is because Project 0 cannot change Kamino's imposed risk parameters. All risk parameters live on Kamino are set by the Kamino team only."

Notably, both Kamino and Project 0 appear to have escaped the flash crash without issue. On Friday, Kamino wrote that its users incurred $0 worth of bad debt and that the liquidation engine "performed exactly as expected." Likewise, Peet noted Project 0 processed over 2,000 liquidations while maintaining solvency. This is in light of some riskier collateral assets, like the memecoin BONK, seeing double-digit drawdowns.

By integrating Kamino, Project 0 takes on the Kamino risk profile, which is intended and how the platform functions. However, Kamino is not taking on Project 0's risk profile, a spokesperson said.

"[W]e have partial liquidations to ensure we only liquidate the minimum that brings users back to full health," Peet said.

The integration will be rolled out on Kamino beginning with Project 0's top 5,000 users and then introduced via a staggered public integration over the next few days.

Editor's note (Oct. 13 — 16:55 UTC): Clarifies that Project 0 is integrating Kamino and taking on its risk profile.