Math — how much can I borrow, and when to rebalance
Sylvia's LTV climbed from 50% to 60.7% without a single action, because SOL fell to $70. One formula, the $5 = $200 rule, the unprotected stretch before liquidation, and where LP income really comes from.
LTV — the core formula
LTV = Debt / (SOL amount × SOL price)
In this system the target is 50%, with a 45–55% corridor.
Too low LTVLTVLoan-to-Value — the ratio of debt to collateral value. LTV 30% is considered safe. LTV 83%+ triggers liquidation.Read the lesson → → too much capital sits idle (inefficient). Too high LTVLTVLoan-to-Value — the ratio of debt to collateral value. LTV 30% is considered safe. LTV 83%+ triggers liquidation.Read the lesson → → close to the liquidation line.
Once you understand this one formula, you can predict ahead of time where your LTVLTVLoan-to-Value — the ratio of debt to collateral value. LTV 30% is considered safe. LTV 83%+ triggers liquidation.Read the lesson → will land at any SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → price — the system stops being a black box.
How much can you borrow at different prices?
With 80 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → of collateral. The example uses SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → = $85 — at the time of writing (2026-09) the market is around $102, so the numbers are illustrative; the mechanism doesn't depend on the price.
| SOL price | Collateral value | Target (50%) |
|---|---|---|
| $70 | $5,600 | $2,800 |
| $80 | $6,400 | $3,200 |
| $85 | $6,800 | $3,400 |
| $90 | $7,200 | $3,600 |
| $100 | $8,000 | $4,000 |
Natural LTV drift
If the debt stays at $3,400 but the SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → price changes, LTVLTVLoan-to-Value — the ratio of debt to collateral value. LTV 30% is considered safe. LTV 83%+ triggers liquidation.Read the lesson → shifts on its own:
| SOL price | LTV | Action |
|---|---|---|
| $70 | 60.7% | ⚠️ Too high — repay $600 |
| $78 | 54.5% | 🟡 Edge — watch |
| $85 | 50% | ✅ Target |
| $93 | 45.7% | 🟢 Can borrow $320 |
| $100 | 42.5% | 🟢 BorrowBorrowTaking a loan in a DeFi protocol against deposited collateral.Read the lesson → $600 |
Natural corridor: SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → $78–$93 — no action needed.
Rebalance rule
Every $5 move in SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → = a $200 adjustment to the debt.
Safety margin
- KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson → SOL liquidation LTVLTVLoan-to-Value — the ratio of debt to collateral value. LTV 30% is considered safe. LTV 83%+ triggers liquidation.Read the lesson → for SOL collateral = 75% (borrowing is capped at 74%) — verified 2026-09-05 via the KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson → Public API
- Your target = 50%
- Buffer to liquidation: ~33%
That means SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → would need to drop ~33% from your entry point to reach the liquidation threshold. For the base example the liquidation price is ≈ $56.7 ($3,400 debt / (80 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → × 0.75)).
The PUT spread protects down to $70 — from $70 down to ~$56.7 there is no added protection. So liquidation risk is reduced, not removed: in June 2026 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → actually fell to $60.13, and the liquidation point is set by the protocol's oracle, not by the exchange price.
75% applies to SOL collateral. For USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson → collateral the threshold is 90%. KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson → Lend V2 has around 40 separate markets with different parameters and different curators, so check liqLTV and maxLTV in the market you're actually using before opening a position — the values change.
How does the money move through the system?
LP Pool ($2,600 @ 40% APR / annual return rate ≈ $1,040/year) splits into two streams:
USDC stream (~$520/year):
- Into options theta: -$438
- Into borrow interest: -$170
- Net: -$88/year (a small deficit)
SOL stream (~6 SOL) + Kamino supply (~4 SOL):
- Net: +10 SOL/year accumulation
- ~12.5% gross fee return on the base position (IL, LVR and rotation costs not yet subtracted — see below)
Annual result (40% LP APR scenario)
Income:
- LPLPLiquidity Provider — deposits tokens into a pool and earns a share of trading fees.Read the lesson → fees: $1,040/yr (50% USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson →, 50% SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson →)
- KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson → SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → supply:
4 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → ($340)
Costs:
- OptionsOptionA financial contract that grants the right (but not the obligation) to buy or sell at a set price.Read the lesson → theta: $438
- KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson → borrow: $170
Net:
- USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson →: -$88 (small shortfall)
- SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson →: +10 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → accumulation
This is a gross fee calculation, assuming LPLPLiquidity Provider — deposits tokens into a pool and earns a share of trading fees.Read the lesson → APRAPRAnnual Percentage Rate — the annual interest rate WITHOUT compounding. 10% APR = +10% per year.Read the lesson → holds at 40%. It does not yet subtract:
- impermanent loss — as the price moves, the LPLPLiquidity Provider — deposits tokens into a pool and earns a share of trading fees.Read the lesson → itself converts SOLSOLSolana's native token. Used to pay gas and as collateral.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 → and changes the composition of the position;
- LVR (loss-versus-rebalancing) — the share captured by arbitrageurs, which the IL formula doesn't show and which grows as the range narrows;
- rotation costs — roughly $40–60 per step, 6–8 rotations a year ≈ $240–480.
Once those lines are subtracted, the real outcome can be several times smaller, or negative. These figures are 2026-09 assumptions and they change; this is not a forecast and not a promise.
What do you do when rates change?
| Scenario | LP APR | Borrow | Net USDC | SOL/yr |
|---|---|---|---|---|
| Conservative | 25% | 5% | -$283 | +8 |
| Base | 40% | 5% | -$88 | +10 |
| Bull | 60% | 5% | +$172 | +13 |
| Stress | 20% | 10% | -$518 | +7 |
The SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → column uses the same formula throughout: (LPLPLiquidity Provider — deposits tokens into a pool and earns a share of trading fees.Read the lesson → APRAPRAnnual Percentage Rate — the annual interest rate WITHOUT compounding. 10% APR = +10% per year.Read the lesson → × $2,600 × 50%) / $85 + 4 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson → from KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson → supply.
Control points (each with a clear action):
- LPLPLiquidity Provider — deposits tokens into a pool and earns a share of trading fees.Read the lesson → APRAPRAnnual Percentage Rate — the annual interest rate WITHOUT compounding. 10% APR = +10% per year.Read the lesson → < 25% (2 weeks running) → review the pool
- BorrowBorrowTaking a loan in a DeFi protocol against deposited collateral.Read the lesson → > 8% → reduce leverage (leverage — using borrowed funds to size up a position)
- Net USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson → < -$400/mo → reduce options size
The bottom line
The system's sweet spot: LP USDC fees ≈ Options theta + Borrow interest
At 40% LPLPLiquidity Provider — deposits tokens into a pool and earns a share of trading fees.Read the lesson → APRAPRAnnual Percentage Rate — the annual interest rate WITHOUT compounding. 10% APR = +10% per year.Read the lesson →: $520 ≈ $438 + $170 = $608 → a small deficit, covered by KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson → supply.
If LPLPLiquidity Provider — deposits tokens into a pool and earns a share of trading fees.Read the lesson → APRAPRAnnual Percentage Rate — the annual interest rate WITHOUT compounding. 10% APR = +10% per year.Read the lesson → drops below 25%, the USDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson → stream no longer covers the costs — that's an early signal, not an emergency. You respond ahead of time: shrink the options size or the leverage, and the system rebalances.
The formula LTV = debt / (SOL amount × price) looks simple, but only once you run your own numbers will you know your corridor. All you need is a calculator and ~15 minutes.
Do the math on paper or in a spreadsheet — you don't need to take out a real loan. If the numbers show less than a 30% buffer to liquidation, the plan is too aggressive.
This is learning, not investing — use only small amounts you treat as tuition.
You just put the full LTV corridor, rebalance triggers, and liquidation buffer into one table — that's exactly the dashboard most people never build for themselves.