HBB’s role within Kamino

This topic will serve as a discussion for the role of HBB within Kamino, and how Kamino can deliver value for HBB. Please read through the post and leave your thoughts.

Quick introduction to Kamino

Kamino Finance recently launched on Solana mainnet. Kamino offers automated vaults that manage concentrated liquidity positions, such as Orca Whirlpools.

This has been in large part possible by the help of Hubble, through which Kamino was incubated earlier this year. Kamino’s close relation with Hubble also feeds into the role of HBB within Kamino. There are a few aspects to the proposed role of HBB within Kamino. At present, these are as follows:

  • HBB as incentives
  • Rewards to HBB stakers
  • HBB buybacks via Kamino fees

Current use of HBB

Initially, HBB will be used as an incentive to bootstrap TVL for Kamino. HBB will be rewarded across all vaults, and users will immediately start earning HBB once they deposit into Kamino.

HBB incentives will be awarded as HBB Call Options, facilitated by Zeta Flex. Call options will be airdropped just as any other incentives. After receipt, users can choose if they want to exercise their options on the Zeta Flex portal (Zeta Flex 💪).

What could be next for HBB, with the growth of Kamino

The first phase is to draw liquidity for Kamino, though this will not be the only impact that Kamino has on HBB. To recognize the contribution that Hubble has made to Kamino, it’s desirable that inflows to Kamino’s revenue are also used to return value to HBB. Kamino’s revenue grows via fees, for example consisting of:

  • Deposit Fees
  • Withdrawal Fees
  • Performance Fees

There are a range of measures that could be employed to utilize these fees to benefit the HBB ecosystem, such as the following;

  • A portion of these fees can be distributed directly to HBB stakers as yield, thus incentivizing deposits into Hubble’s HBB Vault, and adding buy-pressure on HBB itself.
  • The fees earned by Kamino could be used to buy back HBB on the market. This has the potential to positively impact HBB price, as it reduces circulating supply.
  • HBB stakers could be incentivized to lock their HBB for a period of time, in order to receive Kamino fees

HBB’s holders feedbacks

We would like to invite the Hubble community to voice their own opinion and provide feedback on the above ideas, as well as provide any additional input.

We want to be as open as possible regarding what you, the holders of HBB, would like to see for the role of HBB within Kamino. Please share your thoughts below.

2 Likes

Adding buyback pressure on HBB IMO is one of the most important things to do at the moment, to avoid diluting the value of HBB. Without general voting power at the time of this proposal, HBB lacks intrinsic value.
Adding locking periods for HBB staking is also a great way to complement this strategy by reducing the supply of the token (UXD does something similar:https://stake.uxd.fi/). Together, both dynamics will enable a more stable price on HBB while both protocols evolve to bring more intrinsic value.

An additional good mechanic would be to ease the process of staking or reinvesting Kamino incentives. Allowing users to re-invest their rewards in their Kamino vaults will maintain and increase the Kamino TVL. If as an alternative, the user also has the opportunity to move their rewards from Kamino into their HBB vault, this would ensure the lock and reinvestment of the rewards.

Net: This proposal makes a lot of sense economically for the evolution of both protocols.

3 Likes

Interesting idea about moving HBB to the vault, but have you heard about the HBB call options rewards? Really cool way to incentivize core users to “choose their own adventure” and discourage pure farm dumping of the token. Wondering, if given the chance, would users opt for an option for discounted HBB or having it insta-escrowed for the incentives in this proposal. Could hedge 50/50?

3 Likes

gm, first post in this forum.

I absolutely think it’s the right way to go for HBB to play a key part in the revenue of Kamino. What way it should be, buy and burn or rewards is up to the lawyers he-he. There’s instances where a team or dev create a new project and the holders of the previous project’s token do not or to a little degree benefit from the new one which I think is wrong and immoral

1 Like

1/ Use Kamino Service Fees to buy SOL which is then invested on Hubble.

2/ Then mint USDH from the SOL @ ? LTV

3/ Hubble Protocol keeps half of USDH to maintain position

4/ The other half is distributed to HBB stakers on Hubble increasing APY

HBB has intrinsic value because it receives rewards based on the success of the ecosystem, UNLIKE Solend which is purely a governence token. HBB has so much potential and is underpriced v SLND.

The above method drives the TVL on Hubble to which a lot of people price the native token. HBB go UP🚀

Considering that HBB will be sold by the vaults to generate the autocompound yield, then a buyback is needed.

What SOL crashes and the position gets liquidated?

I guess this might be a chicken and egg thing.

Drive more TVL to Hubble borrowing now? Or drive deeper liquidity of $USDH to people are naturally more inclined to borrow more on Hubble?

Thank you @belami for putting this together. It is a very important topic of discussion for sure.

Historically speaking, protocol tokens have been a way for token holders to get exposure to the growth of the protocol. We went through DeFi summer and saw protocols fighting for attention / liquidity and threw out massive amounts of their token which led to hard dilution of the supply. We saw that exposure through dilution of the supply was not a sustainable approach.

We recently saw that Uniswap was discussing turning the fee-switch on, which finally gives users an opportunity to earn a piece of the ‘protocol revenue’ by having exposure to the protocol token. Seems like this is something that users want.

Sustainability
Hubble realised very early, that to build a stablecoin in a secure and sustainable way, we need to be careful with incentives and to allocate where it makes sense. We don’t want to dilute the supply by reducing our power in the future by spending too much now.

Value accrual to HBB
This seems to be the best way imho. Having fees accrue to whichever extent to HBB stakers is something which is a no-brainer for me. It gives holders of HBB, which in the # of holders is largely retail and opportunity to ‘be early’ and to be rewarded for believing in what we do, believing in that we can execute on our long term vision.
From a user perspective, I want to be rewarded for the risk I take of holding a volatile asset. Being early and potentially also knowing I’m earning actual yield / revenue from the protocol gives me a sense of security and wellbeing from the perspective of a user.

I see this as another ‘source of protocol revenue’ which adds utility to the HBB token. Actual utility for me means that HBB gains more and more trust in the broader Solana ecosystem as a token which has a reason to exist.

What I don’t have a clear opinion on yet, is which of the range of measures mentioned would be the better one. Curious to have more input from the community on this one.
Intuitively, I might be against the market buy backs since it seems more ponzi-like for an observer from the outside.

Rewarding people who take on risk / who believe in what we do seems to be the name of the game and locking and / or distributing fees to HBB stakers as yield seem to be a fair way to approach things.

What would you suggest for easing the process of reinvesting the HBB rewards? What I gather from the way you’ve stated it, is that on the claim/exercise window, there should be two buttons:

  1. Exercise options (with an input that selects how much you want to exercise)
  2. Excercise & Compound (also with amount selection)

Is that more or less what you have in mind?

1 Like

If Sol crashes, the saved USDH from borrowing against the SOL can be used to reduce the position. However, SOL is the hardest asset in the whole ecosystem. At the moment Hubble’s TVL is based mainly on SRM

It does both. Rewards HBB holders and adds TVL to the protocol. Currently the TVL is predominantly SRM which concerns me.

1 Like

this is great input thanks! Locking periods is definitely something we’re taking seriously. And I love the suggestion about being able to reinvest the HBB incentives back into their HBB vault, to compound their yield from fees via HBB staking

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Yes, that sounds pretty straight forward and also simple for the users.
Or even an automatic setting at the time of entering any vault, to predefined the rewarding method. Making users more involved in their investments. This would also consider that rewards could be accrued daily and not monthly.