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Overview

A lending market is the top-level organizational unit in Kamino Lending. Each market has its own configuration, reserves, and administrative controls. This guide covers market initialization, configuration updates, and ownership management.

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Initializing a Lending Market

Use the init_lending_market instruction to create a new lending market.

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Instruction Parameters

pub fn init_lending_market(
    ctx: Context<InitLendingMarket>,
    quote_currency: [u8; 32],
) -> Result<()>
Parameters:
  • quote_currency: 32-byte UTF-8 string identifying the quote currency (e.g., “USD”)

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Accounts Required

pub struct InitLendingMarket<'info> {
    #[account(mut)]
    pub lending_market_owner: Signer<'info>,
    
    #[account(zero)]
    pub lending_market: AccountLoader<'info, LendingMarket>,
    
    pub lending_market_authority: AccountInfo<'info>,
    pub system_program: Program<'info, System>,
    pub rent: Sysvar<'info, Rent>,
}
See handler_init_lending_market.rs:8 for implementation.

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Initial Configuration

When initialized, a market is created with default values:
  • Version: Current program version
  • Emergency Mode: Disabled (0)
  • Liquidation Close Factor: 20% (configurable)
  • Max Liquidatable Value: 500,000 USD (configurable)
  • Global Borrow Limit: Unlimited by default
  • Referral Fee: 0 bps (disabled)
See state/lending_market.rs:216-262 for all default values.

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Updating Market Configuration

Use the update_lending_market instruction to modify market parameters.

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Update Modes

The UpdateLendingMarketMode enum defines all configurable parameters. Key modes include: 
pub enum UpdateLendingMarketMode {
    UpdateOwner = 0,
    UpdateEmergencyMode = 1,
    UpdateLiquidationCloseFactor = 2,
    UpdateLiquidationMaxValue = 3,
    UpdateGlobalAllowedBorrow = 5,
    UpdateMinFullLiquidationThreshold = 7,
    UpdateEmergencyCouncil = 6,
    UpdateInsolvencyRiskLtv = 8,
    UpdateElevationGroup = 9,
    UpdateReferralFeeBps = 10,
    UpdatePriceRefreshTriggerToMaxAgePct = 12,
    UpdateAutodeleverageEnabled = 13,
    UpdateBorrowingDisabled = 14,
    UpdateMinNetValueObligationPostAction = 15,
    UpdateName = 19,
    UpdateInitialDepositAmount = 21,
    UpdateImmutableFlag = 23,
    // ... and more
}
See state/mod.rs:217-253 for the complete list.

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Common Configuration Updates

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Emergency Mode

Disable all borrowing and enable liquidations: 
await program.methods
  .updateLendingMarket(
    UpdateLendingMarketMode.UpdateEmergencyMode,
    encodeValue({ Bool: true })
  )
  .accounts({ signer: marketOwner.publicKey })
  .rpc();
Emergency mode can be activated by either:
  • Market owner
  • Emergency council (to enable only)
See handler_update_lending_market.rs:308-314 for authorization logic.

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Global Borrow Limits

Set maximum total borrowed value across all reserves: 
await program.methods
  .updateLendingMarket(
    UpdateLendingMarketMode.UpdateGlobalAllowedBorrow,
    encodeValue({ U64: 10_000_000 }) // $10M USD
  )
  .rpc();
See handler_update_lending_market.rs:57-59.

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Liquidation Parameters

Close Factor - Maximum portion of debt that can be liquidated at once: 
await program.methods
  .updateLendingMarket(
    UpdateLendingMarketMode.UpdateLiquidationCloseFactor,
    encodeValue({ U8: 50 }) // 50%
  )
  .rpc();
Valid range: 5-100%. See handler_update_lending_market.rs:47-50. Max Liquidatable Value - Maximum USD value that can be liquidated in one transaction: 
await program.methods
  .updateLendingMarket(
    UpdateLendingMarketMode.UpdateLiquidationMaxValue,
    encodeValue({ U64: 1_000_000 }) // $1M
  )
  .rpc();
Must be non-zero. See handler_update_lending_market.rs:52-56. Insolvency Risk LTV - LTV threshold for close-to-insolvency positions: 
await program.methods
  .updateLendingMarket(
    UpdateLendingMarketMode.UpdateInsolvencyRiskLtv,
    encodeValue({ U8: 95 }) // 95%
  )
  .rpc();
Valid range: 5-100%. See handler_update_lending_market.rs:71-75.

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Elevation Groups

Elevation groups enable isolated lending markets with specific debt assets: 
const elevationGroup = {
  id: 1,
  ltv_pct: 75,
  liquidation_threshold_pct: 80,
  max_liquidation_bonus_bps: 500, // 5%
  debt_reserve: usdcReserve.publicKey,
  max_reserves_as_collateral: 5,
  allow_new_loans: 1,
};

await program.methods
  .updateLendingMarket(
    UpdateLendingMarketMode.UpdateElevationGroup,
    encodeElevationGroup(elevationGroup)
  )
  .rpc();
Validation rules (see handler_update_lending_market.rs:237-276):
  • ID must be 1-32
  • LTV < liquidation threshold < 100%
  • Max liquidation bonus ≤ 10,000 bps
  • Must specify debt reserve and max collateral count
  • Liquidation threshold + (threshold × bonus) ≤ 100%

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Referral Fees

Enable protocol-wide referral fee sharing: 
await program.methods
  .updateLendingMarket(
    UpdateLendingMarketMode.UpdateReferralFeeBps,
    encodeValue({ U16: 2000 }) // 20% of protocol fees
  )
  .rpc();
Changing referral fees may cause unrefreshed obligations to lose accumulated referral fees. Refresh all obligations before updating.
See handler_update_lending_market.rs:86-93.

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Managing Market Ownership

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Ownership Model

Kamino Lending uses a two-step ownership transfer:
  1. Current owner updates lending_market_owner_cached to the new owner address
  2. New owner calls update_lending_market_owner to accept ownership
This prevents accidental transfers to invalid addresses.

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Transfer Process

Step 1: Propose new owner 
await program.methods
  .updateLendingMarket(
    UpdateLendingMarketMode.UpdateOwner,
    encodeValue({ Pubkey: newOwner.publicKey })
  )
  .accounts({ signer: currentOwner.publicKey })
  .rpc();
Step 2: Accept ownership 
await program.methods
  .updateLendingMarketOwner()
  .accounts({
    lendingMarketOwnerCached: newOwner.publicKey,
    lendingMarket: market.publicKey,
  })
  .signers([newOwner])
  .rpc();
See handler_update_lending_market_owner.rs:5-16.

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Market Owner Responsibilities

The market owner has full control over:
  • Adding and configuring reserves
  • Updating market-wide parameters
  • Setting emergency mode
  • Transferring ownership
  • Making the market immutable

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Emergency Council

The emergency council can only:
  • Enable emergency mode (cannot disable)
  • No other permissions
This provides a safety mechanism independent of the market owner.

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Immutable Markets

Set the immutable flag to prevent most configuration changes: 
await program.methods
  .updateLendingMarket(
    UpdateLendingMarketMode.UpdateImmutableFlag,
    encodeValue({ Bool: true })
  )
  .rpc();
This action is irreversible! Once set, the market configuration cannot be changed except by global admin for specific parameters.
Immutable markets prevent (see handler_update_lending_market.rs:33-36):
  • Most update_lending_market operations
  • Most update_reserve_config operations
  • Ownership transfers
Exceptions:
  • Global admin can still update certain parameters
  • Emergency council can still enable emergency mode

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Best Practices

  1. Test on Devnet: Always test configuration changes on devnet before applying to mainnet
  2. Gradual Limits: Start with conservative limits and adjust based on usage
  3. Monitor Closely: Watch for limit hits and utilization after changes
  4. Document Changes: Keep a record of all configuration updates
  5. Use Multisig: Consider using a multisig wallet as market owner for production
  6. Emergency Council: Set a separate emergency council for additional security
  7. Immutability: Only set immutable flag after thorough testing and when configuration is final

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