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 71%+ 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 71%+ 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 71%+ 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:
| 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 71%+ 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 liquidation LTVLTVLoan-to-Value β the ratio of debt to collateral value. LTV 30% is considered safe. LTV 71%+ triggers liquidation.Read the lesson β β 83%
- Your target = 50%
- Buffer to liquidation: ~40%
That means SOLSOLSolana's native token. Used to pay gas and as collateral.Read the lesson β would need to drop ~40% from your entry point before you'd see liquidation risk. Plus the PUT spread protects down to $70 β liquidation risk is close to zero.
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% yield on the base position
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 do you do when rates change?
| Scenario | LP APR | Borrow | Net USDC | SOL/yr |
|---|---|---|---|---|
| Conservative | 25% | 5% | -$283 | +6 |
| Base | 40% | 5% | -$88 | +10 |
| Bull | 60% | 5% | +$172 | +14 |
| Stress | 20% | 10% | -$518 | +5 |
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.