teleo-codex/decisions/internet-finance/sanctum-incentivise-inf-sol-liquidity.md

type	entity_type	name	domain	status	parent_entity	platform	proposer	proposal_url	proposal_date	resolution_date	category	summary	tracked_by	created
decision	decision_market	Sanctum: Should Sanctum use up to 2.5M CLOUD to incentivise INF-SOL liquidity via Kamino Vaults?	internet-finance	passed	sanctum	futardio	proPaC9tVZEsmgDtNhx15e7nSpoojtPD3H9h4GqSqB2	https://v1.metadao.fi/sanctum/trade/6mc1Fp6ds8XKA2jMzBDDhVwvY6ZCGg6SNqvHy4E6LS7Q	2025-03-05	2025-03-08	treasury	Deploy up to 2.5M CLOUD tokens to incentivize INF-SOL liquidity via Kamino vaults with 20% initial APY transitioning to 15%	rio	2026-03-11

Sanctum: Should Sanctum use up to 2.5M CLOUD to incentivise INF-SOL liquidity via Kamino Vaults?

Summary

Proposal to deploy up to 2.5M CLOUD tokens as liquidity mining incentives for INF-SOL Kamino vaults, offering 20% APY for the first month then 15% thereafter, to deepen native SOL liquidity for INF. The proposal addresses insufficient liquidity depth for large depositors and positions INF as a liquidity nexus for Solana LSTs.

Market Data

• Outcome: Passed
• Proposer: proPaC9tVZEsmgDtNhx15e7nSpoojtPD3H9h4GqSqB2
• Platform: Futardio (Autocrat v0.3)
• Duration: 2025-03-05 to 2025-03-08
• Target TVL: $2.5M cap
• Expected Duration: 6+ months at target TVL

Mechanism Design

The proposal uses dynamic incentive adjustment where Kamino team controls emission rates to maintain 15% APY target as TVL and CLOUD price fluctuate. This represents a hybrid approach: futarchy determines whether to allocate treasury resources, but operational execution (rate adjustments) is delegated to Kamino rather than governed by additional markets.

Context

• INF outperforms mSOL and jitoSOL historically but lacks liquidity depth
• 95%+ of xSOL-SOL AMM liquidity comes from Kamino managed vaults
• INF-SOL Kamino vault has outperformed 100% INF HODL due to high capital velocity
• Industry standard for LP incentives is 15% combined APY

Significance

Demonstrates futarchy application to treasury-funded growth initiatives where the proposal is economically straightforward (proven incentive model, clear problem, established partner). Low trading volume suggests market viewed this as obviously beneficial rather than requiring price discovery.

Relationship to KB

• sanctum - treasury allocation decision
• MetaDAOs-Autocrat-program-implements-futarchy-through-conditional-token-markets-where-proposals-create-parallel-pass-and-fail-universes-settled-by-time-weighted-average-price-over-a-three-day-window - mechanism used
• MetaDAOs-futarchy-implementation-shows-limited-trading-volume-in-uncontested-decisions - exemplifies pattern

Full Proposal Text

Source: Sanctum governance forum, tabled 2025-03-05

INF has been one of the best SOL-based assets for a long time now. It just slightly underperforms the best available LST on the market but outperforms the two most popular LSTs on Solana, mSOL and jitoSOL.

Despite INF's strong performance, the INF-SOL liquidity isn't deep enough currently. This is a concern for large depositors who wish to exit INF in size. Additionally, If INF is to become the liquidity nexus of Solana for all LSTs, it will require a deep pool of SOL native liquidity. We therefore wish to grow SOL native liquidity by incentivising INF-SOL Kamino vaults.

Why Kamino vaults? More than 95% of existing xSOL-SOL liquidity on AMMs comes from Kamino managed vaults which suggests that users aren't keen to provide liquidity unless their positions are managed by a third-party, and automatically rebalanced.

The INF-SOL Kamino vault strategy has been a great place to park your INF. In fact, the INF-SOL vault has outperformed a 100% INF HODL strategy, most likely because of the very high capital velocity (high trading volume relative to TVL).

The industry standard is to offer LPs a 15% combined (fees + incentives combined) annual yield. To incentivise initial liquidity even more, we propose to offer LPs a 20% yield for the first month, then dropping to 15% henceforth. Depending on TVL increase/decrease and price of CLOUD, the Kamino team will be in charge of guaranteeing a 15% APY on up to $2.5M TVL, or until 2.5M CLOUD is exhausted, whichever comes first.

Assuming the $2.5M TVL cap is reached, incentives should last 6 months at least.