Leverage LSTs

What are LSTs

LSTs (Liquid Staking Tokens) refer to tokens that represent the staked amount of a currency on a Proof-of-stake blockchain, and in Solana’s case, SOL LSTs represent the amount of staked SOL users have staked and its accumulated rewards. There are a lot of different SOL LSTs in the market, including JitoSOL from Jito, JupSOL from Jupiter, INF from Sanctum etc, cultivating the decentralization staking of SOL.

Lending Pools - SOL

Vaultka’s lending pools offer and maintain higher-than-market yields for lenders, leveraging its unique reward split mechanism to balance the interests of both borrowers and lenders. For the first $5 million of SOL deposits, lenders get a guaranteed 6.5% APR on their deposits, ensuring lenders profitabliity.

Lenders enjoy a liquidation-free, high-yield, hourly auto-compounding structure, retaining exposure to the price movements of underlying assets and capturing capital gains alongside yield benefits. For more details on Vaultka’s lending mechanism, visit the Lending page.

Leverage LST with SOL Borrowings

Vaultka Junior’s expansion will also cover Solana LST tokens, starting with JitoSOL from JITO and JupSOL from Jupiter. Users will be using SOL as collaterals to borrow more SOL and swap in more LSTs. This low risk leverage play will allow users to leverage up to 10x on their holdings, and get amplified SOL staking rewards.

Mechanism

1. Users first deposit SOL to open position in Vaultka’s Leverage LST Vault

2. Vaultka will then match user’s deposit asset and its requested leverage size to borrow from Vaultka’s lending pool

3. The total assets will be then used to swap as the selected LST through Jupiter Swap

4. When positions are closed, rewards will

   • A maturity date will be assigned to the position for 70days. Positions not closed in 70 days will be forced to close

Reward Split Mechanism v.s. Interest Rate

Vaultka’s reward split mechanism creates a more favorable environment for LP yield farmers and lenders. Unlike the traditional interest rate model, where borrowers pay interest regardless of their profit or loss, Vaultka’s reward split mechanism allows borrowers to split a portion of their reward only when they are profitable. This system lets LP farmers enjoy the real yield farmed by Perp DEX LPs without worrying about short-term price movements, as splits are included only when profits are made. Find more details in the Fundamentals section.

There are periods where borrow APY spike over ~7.5% (the average yield of JitoSOL), causing users to pay more interest more than they receive when they loop their positions.