Solana DeFi's KMNO Airdrop Sparked Outrage. Kamino Responded With Changes

The Solana DeFi protocol will give extra KMNO to its "longest" users.

AccessTimeIconMar 11, 2024 at 6:43 p.m. UTC
Updated Mar 11, 2024 at 6:45 p.m. UTC
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  • Kamino Finance is changing some parameters for earning points ahead of its KMNO airdrop, slated for April.
  • The turnabout will pay dividends for longtime Kamnio users, but key details are still missing.

It ain't so easy to give out free crypto money these days. That seemingly paradoxical reality has come for Solana-based crypto yields protocol Kamino, which on Monday overhauled the mechanisms it plans to use for its upcoming airdrop of the KMNO token.

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  • The new rules will give additional – albeit unspecified – rewards to "OG" users of Kamino, which hosts various decentralized finance (DeFi) products for borrowing, lending, staking and earning interest on Solana tokens. Points-earning strategies will also be lessened, Kamino said in a post on X, formerly Twitter.

    "We hear you," Kamino's account posted mid-Monday, trying to quell four days of blowback it has faced from users since announcing the details of its airdrop, scheduled for April.

    The turnabout underscores the profits and perils of using points to divvy up tokens on Solana – These mechanisms give protocols a way to quantify their users' contributions and a means for those users to measure their rank against everyone else. But it also opens the door to gaming the system, especially when the people in charge are overly transparent. That's exactly what came for Kamino.

    Protocols don't usually tell users the full rules of the points system before everyone's finished playing it. This ambiguity may be frustrating but it limits opportunities to game the system. Kamino, which announced its points program immediately after the Jito airdrop, eschewed this mantra; it played instead with an open hand.

    Kamino's April Airdrop

    Earlier this month Kamino confirmed it was on the verge of rewarding its users with an airdropped token and slated the distribution for April. As expected, Kamino said it would tie users' allocations to the number of points they accrued by borrowing, lending and participating in its various DeFi products.

    Many people had long awaited this news and had tied up thousands of dollars-worth of crypto on Kamino in order to earn its points and get more of the KMNO token. But the airdrop announcement rocked their calculations by tethering their future allocations purely to the total number of tokens they could accumulate by the end of the month when Kamino would take the all-important snapshot.

    Kamino's total-value-locked jumped 69% in the past five days to nearly $900 million, according to DeFiLlama. That jump can be attributed to surging deposits from traders taking advantage of the weeks remaining before Kamino said it would take the snapshot.

    Even if late to the party, these newcomer depositors were likely angling to get a good position in the April airdrop by piling massive sums into the many token products that Kamino incentivizes with extra points. They could do this with more certainty than is usually found in the murky world of points-for-airdrops: last week Kamino said it would doll out tokens in a "linear" fashion, meaning based purely on how many points one holds.

    On the one hand, it makes sense for a protocol such as Kamino to use linear models for its airdrop. When Jito did its widely successful JTO airdrop in December, it used a tiered model that gave big rewards to users with many accounts. Linear models do away with this kind of gaming. But confirming the model publicly, and giving everyone extra weeks to play it, left Kamino vulnerable.

    The new rules will lessen the impact of newcomer deposits, if only slightly. Starting Tuesday, Kamio will no longer offer eye-watering boosters on deposit into a wide array of its products and stick instead to SOL and stablecoins, tokens that most users seek. Pools that earned 5x as many points will now earn fewer under the new rules.

    A little less clear is what Kamino will do for its "OG" users. In its Monday post, Kamino said it would give extra airdropped tokens to "the users who have used Kamino the longest," without defining this category or saying how much they would get.

    Edited by

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    Danny Nelson

    Danny is CoinDesk's Managing Editor for Data & Tokens. He owns BTC, ETH and SOL.


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