Math β how much can I borrow, and when to rebalance
LTV β the core formula
LTV = Debt / (SOL amount Γ SOL price)
In this system the target is 50%, with a 45β55% corridor.
Too low LTVLTVLoan-to-Value β the ratio of debt to collateral value. LTV 30% is considered safe. LTV 83%+ triggers liquidation.Read the lesson β β too much capital sits idle (inefficient). Too high LTVLTVLoan-to-Value β the ratio of debt to collateral value. LTV 30% is considered safe. LTV 83%+ triggers liquidation.Read the lesson β β close to the liquidation line.
Once you understand this one formula, you can predict ahead of time where your LTVLTVLoan-to-Value β the ratio of debt to collateral value. LTV 30% is considered safe. LTV 83%+ triggers liquidation.Read the lesson β will land at any SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β price β 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 β of collateral. The example uses SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β = $85 β 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 β price changes, LTVLTVLoan-to-Value β the ratio of debt to collateral value. LTV 30% is considered safe. LTV 83%+ triggers liquidation.Read the lesson β shifts on its own:
| SOL price | LTV | Action |
|---|---|---|
| $70 | 60.7% | β οΈ Too high β repay $600 |
| $78 | 54.5% | π‘ Edge β watch |
| $85 | 50% | β Target |
| $93 | 45.7% | π’ Can borrow $320 |
| $100 | 42.5% | π’ BorrowBorrowTaking a loan in a DeFi protocol against deposited collateral.Read the lesson β $600 |
Natural corridor: SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β $78β$93 β no action needed.
Rebalance rule
Every $5 move in SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β = a $200 adjustment to the debt.
Safety margin
- KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson β SOL liquidation LTVLTVLoan-to-Value β the ratio of debt to collateral value. LTV 30% is considered safe. LTV 83%+ triggers liquidation.Read the lesson β for SOL collateral = 75% (borrowing is capped at 74%) β verified 2026-09-05 via the KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson β 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 β would need to drop ~33% from your entry point to reach the liquidation threshold. For the base example the liquidation price is β $56.7 ($3,400 debt / (80 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β Γ 0.75)).
The PUT spread protects down to $70 β 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 β actually fell to $60.13, and the liquidation point is set by the protocol's oracle, not by the exchange price.
The line depends on the collateral and the market
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 β collateral the threshold is 90%. KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson β 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 β the values change.
How does the money move through the system?
Two streams
LP Pool ($2,600 @ 40% APR / annual return rate β $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 β see below)
Annual result (40% LP APR scenario)
Income:
- LPLPLiquidity Provider β deposits tokens into a pool and earns a share of trading fees.Read the lesson β 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 β, 50% SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β)
- KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson β SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β supply:
4 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β ($340)
Costs:
- OptionsOptionA financial contract that grants the right (but not the obligation) to buy or sell at a set price.Read the lesson β theta: $438
- KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson β 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 β: -$88 (small shortfall)
- SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β: +10 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β accumulation
What this calculation leaves out
This is a gross fee calculation, assuming LPLPLiquidity Provider β deposits tokens into a pool and earns a share of trading fees.Read the lesson β APRAPRAnnual Percentage Rate β the annual interest rate WITHOUT compounding. 10% APR = +10% per year.Read the lesson β holds at 40%. It does not yet subtract:
- impermanent loss β as the price moves, the LPLPLiquidity Provider β deposits tokens into a pool and earns a share of trading fees.Read the lesson β itself converts SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson ββUSDCUSDCA USD stablecoin issued by Circle. Regulated, audited monthly. Our primary stablecoin and loan asset in the Kamino/Aave strategies.Read the lesson β and changes the composition of the position;
- LVR (loss-versus-rebalancing) β the share captured by arbitrageurs, which the IL formula doesn't show and which grows as the range narrows;
- rotation costs β roughly $40β60 per step, 6β8 rotations a year β $240β480.
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 β column uses the same formula throughout: (LPLPLiquidity Provider β deposits tokens into a pool and earns a share of trading fees.Read the lesson β APRAPRAnnual Percentage Rate β the annual interest rate WITHOUT compounding. 10% APR = +10% per year.Read the lesson β Γ $2,600 Γ 50%) / $85 + 4 SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β from KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson β supply.
Control points (each with a clear action):
- LPLPLiquidity Provider β deposits tokens into a pool and earns a share of trading fees.Read the lesson β APRAPRAnnual Percentage Rate β the annual interest rate WITHOUT compounding. 10% APR = +10% per year.Read the lesson β < 25% (2 weeks running) β review the pool
- BorrowBorrowTaking a loan in a DeFi protocol against deposited collateral.Read the lesson β > 8% β reduce leverage (leverage β 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 β < -$400/mo β reduce options size
The bottom line
Self-sustaining system
The system's sweet spot: LP USDC fees β Options theta + Borrow interest
At 40% LPLPLiquidity Provider β deposits tokens into a pool and earns a share of trading fees.Read the lesson β APRAPRAnnual Percentage Rate β the annual interest rate WITHOUT compounding. 10% APR = +10% per year.Read the lesson β: $520 β $438 + $170 = $608 β a small deficit, covered by KaminoKaminoSolana lending protocol. In our strategy: SOL collateral to a USDC loan.Read the lesson β supply.
If LPLPLiquidity Provider β deposits tokens into a pool and earns a share of trading fees.Read the lesson β APRAPRAnnual Percentage Rate β the annual interest rate WITHOUT compounding. 10% APR = +10% per year.Read the lesson β 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 β stream no longer covers the costs β 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 Γ 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 β 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 β use only small amounts you treat as tuition.
You just put the full LTV corridor, rebalance triggers, and liquidation buffer into one table β that's exactly the dashboard most people never build for themselves.