Reference

Risks

Borrowing against tokenized stocks is useful and it is risky. These are the risks, in plain words. None of this is financial advice.

Liquidation

If your collateral falls far enough in value, part of it is sold to repay your loan, and you lose the liquidation bonus. This is the most likely way to lose money with a loan. See Liquidation.

Price gaps outside market hours

xStocks trade on-chain 24/7; the shares they track do not. After a weekend, a holiday or overnight news, the underlying price can open far from where it closed, and on-chain prices catch up at once. A gap can take a loan from healthy to liquidatable without passing through the levels in between.

Oracle risk

Your loan is valued with oracle prices. If an oracle is wrong, stale or delayed — especially around market opens — a loan may be valued incorrectly, in either direction.

Smart contract risk

Loans run on Kamino Lend’s on-chain program; swaps run through Jupiter. Both have been audited (Kamino’s audits), and audits reduce risk without removing it. A bug could cause a loss of funds.

Issuer risk

xStocks are certificates issued by a third party and backed by shares it holds, according to the issuer. If the issuer failed to honour them, or the backing were impaired, xStocks could lose value regardless of the stock price.

Stablecoin risk

You borrow USDC. If USDC lost its dollar peg, the value of your debt and of anything you bought with it would change.

Rate and parameter changes

Interest rates are variable. Kamino can also change an asset’s max LTV, liquidation LTV or other parameters, which can change how much you can borrow and where your loan is liquidated.

Liquidity

The pool’s USDC is shared. When most of it is borrowed, you may not be able to borrow more until lenders add funds. Repaying and withdrawing your own collateral are not limited this way.

Legal and tax

Tokenized stocks are not available to US persons or residents of restricted jurisdictions. Rules on borrowing, tokenized securities and their tax treatment differ by country and change. You are responsible for the rules that apply to you.