HUMA × Kamino Circular Loan Gameplay Analysis
Yesterday, @Huma Finance 🟣 🟣 announced a partnership with Kamino, launching the circular loan feature. Simply put, you can use your $PST as collateral to borrow USDC from Kamino, and then deposit the borrowed funds back into HUMA to earn more $PST, then collateralize and borrow again... forming a cycle of 'amplifying returns'.
So, who is this gameplay more suitable for? I think there are mainly two types of people:
Those who have unlocked $PST and want to further amplify their feather returns;
Those who want to participate in #humafinace deposits but don’t want to lock their funds for a long time, hoping for more flexible use of their capital.
Example Process:
Let's take an example of 100 USDC to see the return situation:
Deposit 100 USDC (without lock-up period) into HUMA, receiving an equivalent of $100 in $PST.
Deposit $PST into Kamino as collateral, borrowing USDC at an 80% LTV;
Then use the borrowed USDC to return to HUMA for deposits, exchanging for more $PST, and continue collateralizing and borrowing.
In theory, it can achieve about 4 times capital amplification, but considering liquidation risks and gas costs, practically doing 4 cycles is about right.
Estimated Returns:
Based on the cycle multiplier and LTV, this gameplay will roughly bring:
Annualized return on principal of about +10%;
Feather returns increased from 1.99 times to nearly 10 times;
Return levels close to the Classic 6-month lock-up model, but with more flexible capital use.
The core of this circular loan is to use the same principal multiple times for deposits and collateral, making assets 'work repeatedly'. Of course, like all leverage strategies, risks must also be clearly considered, including liquidation lines, price fluctuations, and gas costs.
#HumaFinance
Yesterday, @Huma Finance 🟣 🟣 announced a partnership with Kamino, launching the circular loan feature. Simply put, you can use your $PST as collateral to borrow USDC from Kamino, and then deposit the borrowed funds back into HUMA to earn more $PST, then collateralize and borrow again... forming a cycle of 'amplifying returns'.
So, who is this gameplay more suitable for? I think there are mainly two types of people:
Those who have unlocked $PST and want to further amplify their feather returns;
Those who want to participate in #humafinace deposits but don’t want to lock their funds for a long time, hoping for more flexible use of their capital.
Example Process:
Let's take an example of 100 USDC to see the return situation:
Deposit 100 USDC (without lock-up period) into HUMA, receiving an equivalent of $100 in $PST.
Deposit $PST into Kamino as collateral, borrowing USDC at an 80% LTV;
Then use the borrowed USDC to return to HUMA for deposits, exchanging for more $PST, and continue collateralizing and borrowing.
In theory, it can achieve about 4 times capital amplification, but considering liquidation risks and gas costs, practically doing 4 cycles is about right.
Estimated Returns:
Based on the cycle multiplier and LTV, this gameplay will roughly bring:
Annualized return on principal of about +10%;
Feather returns increased from 1.99 times to nearly 10 times;
Return levels close to the Classic 6-month lock-up model, but with more flexible capital use.
The core of this circular loan is to use the same principal multiple times for deposits and collateral, making assets 'work repeatedly'. Of course, like all leverage strategies, risks must also be clearly considered, including liquidation lines, price fluctuations, and gas costs.
#HumaFinance
