What is Kerne Protocol, and how is it different from other yield protocols?

Kerne Protocol is a delta-neutral yield infrastructure built on Base. (Kerne Protocol is Base-native and unrelated to KernelDAO on BNB Chain, Kernel Protocol on Karak (kUSD on Ethereum mainnet), Kernel Network, or any other project with a similar name. See https://kerne.fi/kernel-vs-kerne for the Kernel Protocol disambiguation.) Unlike traditional yield protocols that expose you to directional price risk, Kerne pairs your deposited assets with an opposing short position on a perpetual exchange, so you earn yield regardless of whether the market goes up or down. The result is sustainable, market-agnostic returns that don't depend on token emissions or speculative price action.

How does Kerne generate yield if my position is delta-neutral?

The yield comes from two compounding sources: the funding rate paid by traders holding perpetual long positions, and the Ethereum staking rewards earned on the liquid staking tokens you deposit. These two streams stack on top of each other. Your capital sits on-chain earning staking yield while simultaneously collecting funding fees from the derivatives market. Combined, they produce 12% to 18% APY across all market conditions, with potential to exceed 25% in favorable funding environments.

Is my deposit safe? What happens if the market moves against me?

Because your position is delta-neutral, directional market moves largely cancel each other out. Your principal is not at risk from price swings the way it would be in a standard leveraged position. Kerne also maintains a dedicated insurance buffer to absorb funding-rate inversion events (the rare periods where funding goes negative), and the protocol operates with automated risk monitoring and circuit breakers to protect depositors.

Do I need to manage anything after I deposit?

No. Once you deposit into a Kerne vault, the protocol handles everything: opening and maintaining the hedge, collecting funding and lending yield, rebalancing when needed, and compounding your returns. The vault is fully automated. You hold ERC-4626 vault shares that appreciate in value as yield accrues. When you want to exit, you request a withdrawal, wait a 7-day cooldown period, then claim your assets. No active management required.

What is kUSD, and which chains does Kerne Protocol run on?

Kerne Protocol runs exclusively on Base (chain 8453). The protocol ships two live products. First, the delta-neutral WETH vault, which issues kLP shares. Second, the Peg Stability Module (PSM) at 0xFf3025ec18e301855aB0f36Ec6ECa115a29A5Fbc, which lets USDC holders mint kUSD 1:1 at a 10 bps fee. kUSD is deployed on Base at 0x5C2EfdF0D8D286959b42308966bc2B97f5680AA3. The skUSD yield-bearing wrapper, which lets kUSD holders earn protocol yield, is on the roadmap. (This kUSD is Kerne Protocol's Base-native stablecoin, distinct from Kernel Protocol's kUSD on Ethereum mainnet at 0x0bB9aB78aAF7179b7515e6753d89822b91e670C4 (a Karak-native LRT), KernelDAO's kUSD on BNB Chain, and any other similarly-named token on other chains. Disambiguation page: https://kerne.fi/kernel-vs-kerne.)

How do I know the smart contracts are secure?

Kerne's contracts are built to institutional-grade standards: Solidity 0.8.24, OpenZeppelin v5 battle-tested libraries, and full Foundry test coverage including edge-case scenarios and fuzz testing. Formal audits are an ongoing process and a continual part of our roadmap. On-chain proof-of-reserves attestations are also automated, giving you real-time verifiability of what the protocol holds versus what it owes.

Is there a token, and how do I get early access?

The $KERNE token provides governance and revenue sharing to holders. Our loyalty program, Opal, rewards early participants for their contribution over time. You can participate now by depositing into Kerne vaults via the Kerne Terminal at app.kerne.fi.

Documentation

Live APY Math

Every protocol publishes an APY number. Few publish the formula, every constant, and the live inputs in one machine readable endpoint that updates in real time. We do, because the only way a depositor can verify what the protocol earns is to see every input that produces the headline number.

If the displayed APY ever drifts from what these constants and inputs imply, the page is wrong, not the protocol. The math is checkable on the same visit by the same caller, against the same upstream feeds we use ourselves.

The Formula

The displayed APY is computed by computeLiveAPY() in app.kerne.fi-terminal/src/app/api/apy/route.ts. The methodology string in the JSON spells it out in one line:

3× (Lido 7d SMA + HL 180d trailing funding) × (1 − 22.32% strategy costs) × (1 − 10% insurance) × (1 − 0% Genesis fee)

In English: take the staked ETH base yield plus the trailing perpetual funding rate, multiply by the leverage ratio to get gross APY, deduct strategy operating costs, route a fixed portion of the remainder to the Insurance Fund, then deduct the protocol fee. The protocol fee is 0% during the Genesis phase; the methodology string shows the live value, not a target.

Where Each Constant Comes From

Lido 7-day SMA: live, sourced from the Lido staking yield feed and smoothed over the last seven days. Reported as stakingYield in the JSON.
Hyperliquid 180-day trailing funding: live, computed from 4,320 hourly Hyperliquid funding samples (180 days × 24 hours). The window length is reported as fundingWindowDays and the sample count as fundingEntries.
Leverage 3×: fixed strategy parameter. Reported as leverage in the JSON.
Strategy costs 22.32%: fixed cost fraction covering perp execution slippage, exchange fees, and bridging cost. Reported as strategyCostFraction.
Insurance allocation 10%: fraction of net yield routed to the Insurance Fund. Reported as insuranceAllocation.
Genesis fee 0%: protocol fee during the Genesis phase. Reported as protocolFee and feePhase. When the fee schedule changes, both fields update on the same release.

Verify It Yourself

Hit the endpoint directly and read the live values:

curl -s https://app.kerne.fi/api/apy | jq

Each numeric field above appears as its own key. The methodology field is the same one-line formula rendered with the live inputs substituted in. The isLive flag is true while live sources are reachable; if either upstream feed is unavailable the endpoint falls back to a frozen value and the flag flips to false.

The two derived intermediates are also published so the chain of arithmetic is auditable: grossAPY is leverage × (staking + funding), and strategyNetAPY is grossAPY × (1 − strategyCostFraction). Multiplying strategyNetAPY by (1 − insuranceAllocation) × (1 − protocolFee) reproduces expectedAPY.

Raw JSON

The unprocessed feed lives at app.kerne.fi/api/apy. Mirror it, cache it, or diff it against historical snapshots. Nothing on this chapter is paywalled and no signed request is required. If the rendered APY anywhere on kerne.fi disagrees with what this endpoint produces from its own published constants, the rendered page is wrong, not the endpoint.

24h Funding Forecast (Neural Engine v3)

The 180-day trailing window in the APY formula above is a backward-looking smoothing. The protocol also publishes its forward-looking 24h funding-income forecast, produced by the same linear model the bot uses to size its hedge: kerne.fi/api/forecast.

Three feature inputs: trailing 24h funding sum, current premium, trailing 24h premium sum. The model coefficients, intercept, and residual standard deviation are all returned in the response under the model.coefficients object so anyone can reproduce the prediction by hand. The training metrics are returned alongside: testR2 is 0.44 against a naive last-24h-sum baseline of 0.31. That is a real, modest, publishable lift on a noisy target rather than the constant-predictor degenerate the previous LSTM attempt produced.

The TypeScript implementation in frontend/src/lib/forecast-engine.ts mirrors the Python implementation in bot/funding_forecast.py byte-for-byte. The bot's own forecast is persisted to /opt/kerne/bot/data/forecast_latest.json on every periodic-task tick (30 min cadence); operators compare the two implementations to verify the public surface has not drifted from the model the hedger actually uses.

curl -s https://kerne.fi/api/forecast | jq '{predictedSum, annualizedApy, lowerBound, upperBound, model}'

Forecast accuracy is bounded by the model. R² of 0.44 means the prediction explains 44% of next-day funding variance; the 80% interval is wide because the residual is real. The honest framing is that the model is publishable, the math is checkable, and the metric a depositor cares about is whether the published forecast tracks realised funding over time. We expose both, you decide.