If you're diving into the world of Solana DeFi and looking for ways to maximize your yields without taking on insane risks, you've got to check out this strategy shared by Mert, the CEO of Helius Labs. As someone who's been deep in the crypto space, Mert's approach stands out for its smart layering of yields while keeping things relatively straightforward. Let's break it down step by step, explaining the key terms along the way, so even if you're new to DeFi, you can follow along.

First off, the core idea revolves around using Kamino Finance, a popular DeFi protocol on Solana known for its liquidity and lending features. Kamino makes it easy to earn yields on your assets through automated strategies, and it's especially strong in handling tokenized versions of SOL like hSOL.

The strategy starts with supplying hSOL to Kamino. What's hSOL? It's a staked version of SOL from Helius, which captures not just the base staking rewards but also MEV (Maximum Extractable Value) and transaction fees from the Solana network. By supplying hSOL to Kamino, you're earning around 8% yield on your SOL position. That's your base layer—steady returns from staking without locking up your funds completely.

Next, you borrow USDC against that hSOL collateral. USDC is a stablecoin pegged to the US dollar, issued by Circle, and borrowing it here comes at about a 6% interest rate. Why borrow? Because it lets you leverage your position without selling your SOL. You're essentially using your staked SOL as collateral to get liquid funds, which you can then put to work elsewhere.

Now, swap that borrowed USDC for PYUSD. PYUSD is PayPal's stablecoin, also dollar-pegged, and it's gaining traction in DeFi ecosystems. The swap is straightforward on platforms like Jupiter or directly within Kamino—low fees on Solana make this efficient.

The real magic happens when you supply that PYUSD to Kamino's Sentora pool. Here, you're looking at a whopping 19% APY (Annual Percentage Yield), broken down into 14% from PYUSD incentives and 6% from KMNO Season 4 rewards. KMNO is Kamino's governance token, and these rewards are part of their points system to encourage liquidity provision. After accounting for the borrowing cost, this nets you 13-14% on your stablecoins, all while still earning on your original SOL and racking up those KMNO points for potential future airdrops or benefits.

Mert nails it when he calls this the beauty of capitalism in crypto—stablecoin issuers like PayPal are battling for market share, throwing incentives at users to bootstrap liquidity. It's like getting paid to hold dollars, but supercharged through DeFi mechanics.

Of course, no DeFi play is without risks. Borrowing introduces liquidation risk if SOL's price drops sharply, potentially forcing you to add more collateral or face losses. Yields can fluctuate based on market conditions, and incentives like those from PYUSD or KMNO might taper off as protocols mature. Always monitor your health ratio on Kamino and consider using tools like Solana Explorer for real-time insights.

This setup is a prime example of how Solana's fast, low-cost environment enables creative yield farming that's accessible to everyday users. If you're holding SOL or stables and want to put them to work, strategies like this can boost your portfolio efficiency. For more on Solana DeFi and how it intersects with the meme token scene—where quick flips often need stable bases—keep exploring resources like CoinDesk or dive into community discussions on X.

Whether you're a seasoned trader or just starting, experimenting with these loops on a small scale can teach you a ton about capital efficiency in blockchain. What's your go-to DeFi strategy on Solana? Share in the comments!