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To understand the answer to this question, first, we need to learn how Kamino APY works-

  • what happens – On Kamino, lending relies on utilization rates and interest rate curves to determine yields. This indirect model means funds aren’t always matched efficiently, leading to idle capital and inconsistent returns. Lenders have no control over how or when their capital is deployed, making it dependent on broader platform dynamics rather than borrower demand.

  • Solution – Instead of relying solely on utilization curves, PayStream directly matches funds with borrowers at optimized rates. If no match is found, funds continue earning yield through Kamino or Marginfi, ensuring your capital never sleeps.

To calculate APY - Vault APY:

  • APY from trading fees and DEX incentives.
  • Calculated based on the previous 24 hours of trading volume.
  • Fluctuates with trading activity and price range efficiency

Kamino APY:

  • APY from external incentives (e.g., bonuses or tokens distributed by Kamino partners).
  • May include claimable or auto-compounded rewards.

TOTAL APY= VAULT APY + KAMINO APY Remember this doesnt involve impermanent loss as mentioned in the docs-

This creates a difference in borrowing APY and Supply APY(lending APY + Incentives APY)

why is this not 24.62% which is beneficial for both parties i.e. lenders and borrowers? also, this is just not Kamino-specific you can see stats in any lending protocol for ex- Margin fi

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APY spread issue-

  • When prices move outside the selected range, liquidity becomes inactive, reducing trading fees hence impermanent loss occurs.
  • Automated rebalancing ensures positions stay in range but incurs costs from swaps and potential impermanent loss.
  • Sudden market volatility can lead to periods of low APY if positions are frequently rebalanced.

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How PayStream Complements Kamino APY Spread

  • Improved Utilization

    PayStream redirects idle liquidity from Kamino vaults into lending opportunities when trading volumes are low.

    Example: A user deposits $10,000 in a Kamino USDC-SOL vault. If the trading volume decreases, PayStream dynamically allocates some funds into its lending pools to earn interest from borrowers.

    Kamino liquidity providers can opt to lend out unused liquidity via PayStream’s P2P matching or pooled lending, ensuring steady income even during market lulls.

    Impact:

    • Liquidity providers enjoy stable returns without relying solely on DEX trading fees.
    • Kamino retains its user base by offering enhanced utility for its vaults through PayStream.

  • Earn Yield on your collateral

Borrowers locking collateral in Kamino vaults can use these assets as security for loans on PayStream — and continue to earn yield on their collateral while borrowing.

This setup makes PayStream attractive to new user segments like freelancers, startups, and DAOs, who benefit from flexible borrowing terms.
Example: For a 10,000loanwith10,000 loan with 15,000 collateral at 150% LTV (assumed), after repaying 5,000,therequiredcollateraldropsto5,000, the required collateral drops to 7,500 to maintain the same LTV.

  • Stable Returns

    PayStream can direct liquidity to lending pools during periods of low trading volume, providing liquidity providers with a stable yield alternative.

Conclusion- If a user uses Paystream over any lending PLF be it Kamino, or Margin-fi, during P2P(peer-to-peer) matching Paystream engine can find a suitable Borrower/lender both parties will get the best rates(in most cases it is the average of both APYs) if not it will revert to the traditional lending/liquidity pools.