Fee Adjustments in cToken and kToken Vaults

Stability Fees will soon be changed across two borrowing vaults: Kamino kToken Vault and cToken Vault.

The parameter changes will be as follows:

kToken Vault Fees

Adjustments:

  • 0% Stability Fee → 0.25% Stability Fee
  • 0% Minting Fee → 0.50% minting fee

The kToken vault is Hubble’s first integration with Kamino Finance, enabling users who deposit into Kamino’s USDH-USDC Vault to bring their kTokens to Hubble, mint USDH, and redeposit into Kamino to receive kTokens once again.

The kToken integration enables users to get more value from their capital via leverage. Via the integration, Hubble is providing value to Kamino users, and in turn, the integration can bring value to Hubble users, and USDH itself.

Hubble Native Yield

Via the Hubble Native Yield, all revenue produced by Stability Fees will flow to USDH stakers. The demand for kToken leverage via Hubble proved strong, with the initial $1M kToken cap being reached within a few hours. Thus, it’s evident that kTokens can add considerable value to USDH stakers on Hubble through Stability Fees.

HBB Staking

By raising the minting fee to 0.5%, HBB stakers will also receive increased rewards, as 85% of all minting fees are awarded to HBB stakers on Hubble.

In conclusion, raising stability fees and minting fees on USDH borrowing against kTokens can bring value to USDH and HBB stakers, while the increase in fees is temperate enough for kToken depositors to accumulate yield at a greater rate from Kamino than their debt will accumulate on Hubble.

cToken Vault

Adjustments:

1.25% stability fee → 0.25%

Solend cTokens were onboarded as collateral in September, and give users the ability to deposit yield bearing assets that accumulate interest via Solend, and mint USDH against it.

However, borrowing against cTokens has proven not to be in great demand, which can in part be due to the 1.25% Stability Fee currently active on the vault.

Lowering the Stability Fee to 0.25% will mean that 3 of the 6 cTokens accepted as collateral will earn automatic yields from Solend that exceed the Stability Fee itself:

  • cSOL = 2.79% APY
  • cETH = 0.66% APY
  • cRAY = 2.67% APY

Of course, users have a wide range of use cases to earn yields with USDH that far exceeds even the 1.25% Stability Fee, but lowering the fee to 0.25% can precipitate further adoption of the cToken Borrowing Vault.

This change will be announced in Discord before it is implemented, and will be consistently evaluated over time. Please leave any feedback below, or head to the Discord if you have any questions.

1 Like

All necessary steps! Good work team! :slightly_smiling_face:

2 Likes

0.25% stability fee and 0.50% minting fee for kTokens makes sense. a small price to pay for some sweet leverage

2 Likes

Fantastic work as always