The Crypto Prime Broker Project 0 integrates the Solana-based liquidity layer, Kamino. The tie-up will allow users to manage risk, collateral and capital efficiency across a range of DeFi applications.
Most notably, users will now be able to borrow against their Kamino and Project 0 deposits using a single credit pool that brings together loan-to-value (LTV), borrowing weights and interest rates across all platforms in one click. This also introduces a unified margin account, opening access to leverage opportunities without the need to manage multiple sets of collateral.
“By enabling cross-margining across multiple locations, users can now manage their entire portfolio under a single margin account, correcting a long-standing inefficiency of DeFi and providing clearer portfolio-wide risk oversight,” Project 0 founder MacBrennan Peet said in a statement.
In other words, Project 0 aims to provide decentralized finance users with greater flexibility by consolidating their deposits, thereby increasing liquidity.
“In the current DeFi market structure, users are required to over-collateralize separately on each platform, which fragments capital and increases the chances of liquidation even when offsetting positions exist elsewhere,” the draft writes.
Flash crash
The move comes just days after the largest liquidation event in crypto history, when, on Friday, nearly $10 billion in open interest was wiped out by a flash price crash and multiple exogenous and endogenous risks for crypto derivatives. To some extent, the event triggered a reassessment of the crypto market structure.
“Project 0, in partnership with Kamino, spent a lot of time modeling situations like the market flash-crash and its impact on solvency, market liquidity and liquidations,” Peet told The Block via email, noting that the models provided the idea that Project 0’s risk parameters could have absorbed the drawdown and protected lenders. “With Project 0 integrating Kamino, no new risks are added to Kamino’s systems. Indeed, Project 0 cannot modify the risk parameters imposed by Kamino. All risk parameters live on Kamino are defined solely by the Kamino team.”
Notably, Kamino and Project 0 seem to have escaped the flash crash without issue. On Friday, Kamino wrote that its users had incurred bad debts worth $0 and that the liquidation engine was “working exactly as expected.” Likewise, Peet noted that Project 0 has processed more than 2,000 liquidations while maintaining solvency. This is because some riskier collateral assets, like memecoin BONK, are seeing double-digit declines.
By integrating Kamino, Project 0 takes over the Kamino risk profile, what it is intended for and how the platform works. However, Kamino does not assume the risk profile of Project 0, a spokesperson said.
“(We) have partial liquidations to ensure that we only liquidate the minimum that brings users back to full health,” Peet said.
The integration will be rolled out to Kamino starting with the top 5,000 Project 0 users, then introduced via a staged public integration over the coming days.
Editor’s note (October 13 — 4:55 p.m. UTC): Specifies that Project 0 integrates Kamino and assumes its risk profile.
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