Parcl x Kamino: Diversification is Key

Published on
August 16, 2023

Diversification is Key: How Parcl’s Access to Real-Estate Markets Expands Opportunities in Solana DeFi

Building a robust on-chain portfolio is crucial to achieving sustainable gains in the ever-changing markets. It has been argued that a diversified on-chain strategy, combining various decentralized finance (DeFi) yield strategies, can help mitigate the uncertainties associated with participating in a notoriously volatile crypto market.

Thanks to innovative platforms made only possible by Solana, experienced DeFi users can diversify their portfolio strategies beyond simply trading and holding tokens—even into real estate. This article will focus on opportunities to participate in the real-estate market on-chain, and it will introduce several additional ways DeFi users can diversify their portfolios.

Parcl Opens Doors to the Real-Estate Market On-Chain

Real estate stands out as one of the most reliable asset classes in traditional markets, and now this market can be harnessed by users on Solana. Through the Parcl dApp, users can short or long as little as one dollar in different city indexes across the world according to their view of the market.

DeFi users can leverage Parcl to diversify their positions in real estate. By adding another vertical to DeFi, Parcl enables users to hedge their portfolio’s exposure by diversifying to include the real estate market.

For users who have confidence in their outlook of the market or those seeking high volatility trades, Parcl allows up to 10x leverage. Users can also provide liquidity on Parcl, which offers consistent APY and non-inflationary rewards denominated in stablecoins.

In the coming years, the trend of holding real-world assets on-chain will continue to grow. Having exposure to assets such as real estate and other commodities will ensure preparedness for various market conditions.

Participate in Market Making with Kamino Finance

Similar to how Parcl makes it possible for users to access real-estate markets easily, Kamino Finance, another project on Solana, opens users’ access to market making. Once the sole purview of some of the world’s largest financial institutions, nowadays any user can participate in market-making through DeFi, decentralized exchanges (DEXs), and Kamino.

The way it works is that DeFi DEXs rely on users to provide tokens in liquidity pools that other traders will use to facilitate swaps. In exchange for supplying liquidity pools, liquidity providers earn fees whenever traders execute trades using their tokens. Kamino ensures users’ deposits stay within range to earn fees.

Kamino optimizes the process of providing concentrated liquidity, and its the execution model that attracts the most volume on DEXs today. Although these concentrated liquidity pools attract high amounts of volume and subsequent fees, providing liquidity without assistance can be incredibly challenging. Kamino makes market-making as user-friendly as possible, creating yet another source of yield in DeFi.

Earn SOL Yield and Participate in DeFi with Liquid Staking Tokens

Solana is a Proof-of-Stake (PoS) network that rewards validators for staking SOL and honestly finalizing transactions on the network. Users can stake their SOL with a Solana validator to earn around 6-7% APY, rewarded in additional SOL, or anyone can operate a validator of their own, which takes some technical expertise.

However, there’s another option beyond searching for a trustworthy validator or figuring out how to bring Solana updates online. Users can deposit their SOL with projects like Marinade Finance, Lido Finance, or MonkeDAO for liquid staking tokens, which are tokens that reflect the value of their underlying SOL in addition to the rewards earned from staking.

Each liquid staking token protocol uses its own algorithm to choose deserving validators to stake with, which helps increase the decentralization of Solana. A kind of marvel in composable DeFi, liquid staking tokens can be used as collateral for borrowing or deposited as liquidity on protocols like Kamino to earn additional yield from trades on top of staking yield.

Diversify DeFi Portfolios with Access to Real World Assets

Most DeFi strategies are limited to the on-chain economy provided by crypto tokens from multitudes of projects. A commonly “diversified” portfolio in this closed system would include percentages of BTC, alternative Layer 1 tokens, and tokens from undervalued projects looking to moon—but these positions can be diversified further with DeFi.

With the addition of real-world assets (RWAs) on-chain and access to real-estate markets through platforms like Parcl, users can diversify their crypto positions to include an entirely different sector, separate from crypto but powered by crypto. It will be interesting to see how the future of off-chain markets brought onto the blockchains will continue to grow and offer new opportunities for diversification.

Parcl Team
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