System architecture — how it all fits into one machine
After this module
You'll learn to combine lending, an LPLPLiquidity Provider — deposits tokens into a pool and earns a share of trading fees.Read the lesson → ladder, and options into one dynamic system with clear rotation rules — one that covers its own costs and naturally accumulates SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → even as the market swings.
What is this module about?
Dynamic position management is a system that combines three tools you already know (lending, LPLPLiquidity Provider — deposits tokens into a pool and earns a share of trading fees.Read the lesson →, options) into one working mechanism with clear rotation (moving capital between layers) rules.
The difference from Strategy B (Module 5.3): this framework doesn't just hold a position — it actively rotates as the price moves, letting capital keep working even while the market chops sideways.
Main idea
LPLPLiquidity Provider — deposits tokens into a pool and earns a share of trading fees.Read the lesson → yield is actually two streams:
- USDC fees cover the options' theta (the weekly "insurance" cost)
- SOL fees + range mechanics naturally grow your SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → amount
The system becomes self-funding in cash (USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson →) and compounding in SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson →.
Three layers
Layer A — Lending (Kamino) SOL
- 80 SOL collateral
- $3,400 USDC loan (50% LTVLTVLoan-to-Value — the ratio of debt to collateral value. LTV 30% is considered safe. LTV 83%+ triggers liquidation.Read the lesson →)
- 5% supply APYAPYAnnual Percentage Yield — the annual interest rate WITH compounding. Always higher than the equivalent APR.Read the lesson → on SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → · 5% borrow APRAPRAnnual Percentage Rate — the annual interest rate WITHOUT compounding. 10% APR = +10% per year.Read the lesson → on USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson →
Layer B — LP ladder — staggered liquidity positions (Orca) SOL
3 narrow $5-wide ranges:
- $75–$80 (lower, 100% USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson → at a $85 price)
- $80–$85 (active, mixed)
- $85–$90 (upper, 100% SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson →)
~$867 of capital in each — fees are generated only in the active tier (the tier matching the current price range).
Layer C — Options hedge / protection (Deribit)
PUT spread:
- Long $90 PUT (protection)
- Short $70 PUT (lowers the cost)
- 120 days to expiry, 10 contracts × 10 SOL = 100 SOL of protection (1 DeribitDeribitA crypto options exchange. In our strategy this is where we buy put protection and sell covered calls.Read the lesson → SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → contract = 10 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson →, a USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson →-settled linear option)
Contract size — a common mistake
A DeribitDeribitA crypto options exchange. In our strategy this is where we buy put protection and sell covered calls.Read the lesson → SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → option contract covers 10 SOL, not 1 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → (verified 2026-09-05 via the DeribitDeribitA crypto options exchange. In our strategy this is where we buy put protection and sell covered calls.Read the lesson → Public API: contract_size = 10, and the minimum trade is 10 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → as well). Entering 100 contracts would give you 1,000 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → of protection against 80 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → of collateral — a hedge ten times too large, and ten times the premium. Always check the contract size on DeribitDeribitA crypto options exchange. In our strategy this is where we buy put protection and sell covered calls.Read the lesson → before confirming an order; it differs by asset.
Capital allocation
Why 3 tiers, not 1 wide LP?
| Option | Problem |
|---|---|
| Wide LPLPLiquidity Provider — deposits tokens into a pool and earns a share of trading fees.Read the lesson → $70–$90 | Capital is spread thin — fees only accrue at the active tick, the rest just pays interest |
| Narrow LPLPLiquidity Provider — deposits tokens into a pool and earns a share of trading fees.Read the lesson → $80–$85 | Any move → 100% SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → or 100% USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson →, fees stop |
| 3 tiers of $5 | The active tier works like a narrow LP, the side tiers act like pre-positioned limit orders |
If the price moves $5, you already have a structure ready — you just close one tier and open the next. No panic, no slippage (price movement during execution) spikes.
Advantages and constraints
Advantages
- Self-funding — LPLPLiquidity Provider — deposits tokens into a pool and earns a share of trading fees.Read the lesson → USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson → fees cover the options' theta
- Natural SOL accumulation through the range mechanics
- Disciplined risk — the options hedge stays on even if the price drops to $70
- Clear triggers — decisions without emotion
- Not a passive strategy → you set aside ~1 hr/week for monitoring, and that's enough to keep the system running smoothly
- Sensitive to LP APR and Kamino rate changes → you watch both numbers and rotate capital when they shift
- Requires knowing how to manage LP, options, and lending → you've already covered all three in Modules 3-5, now you combine them
Every risk has a fix. You don't fear it — you learn to manage it.
Next steps
In the next section we'll dig into the math: how LTVLTVLoan-to-Value — the ratio of debt to collateral value. LTV 30% is considered safe. LTV 83%+ triggers liquidation.Read the lesson → is calculated, when rebalance triggers fire, and how the USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson → flow covers the options' cost.
A three-layer system only becomes clear once you see it with your own numbers. This task needs just a sheet of paper and ~15 minutes — no trades.
This is a paper planning task — don't open any real positions. Module 7 is for advanced users who've already mastered Modules 3-5.
This is learning, not investing — use only small amounts you treat as tuition.
You just sketched a full system architecture with your own numbers — most people never think about three connected layers, and you already see them in one diagram.