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

Seed TVL & Accounting Policy

Why this policy exists

Most yield protocols quietly inflate their TVL with protocol-owned deposits and call it 'institutional capital'. We do not. This page records the affirmative policy. It is in force, on-chain, and verifiable by anyone.

If you are reading this because the homepage TVL number looks small, that is the point. The number is real, the methodology is published, and any non-zero off-chain bucket is broken out individually on the public Proof of Reserves endpoint.

Affirmative policy

Real collateral only. totalAssets() is the sum of real, verifiable collateral. Every unit is reconcilable to either an on-chain ERC-20 balance, an off-chain hedge-venue balance with a published attestation, or a verified Hyperliquid L1 bridge balance.
Four buckets, individually disclosed. trackedOnChain (real ERC-20 balance held by the vault), offChainAssets (CEX hedge collateral), l1Assets (Hyperliquid L1 bridge balance), and hedgingReserve (on-chain hedge buffer) are each reported as their own line on /api/por and on the Transparency Dashboard. The aggregate is never the only number a reviewer can see.
Public attestation per non-zero off-chain bucket. Each non-zero off-chain bucket is paired with a public attestation that names the venue, the wallet or account address, and the timestamp of the last reconciliation. The bot's PoR pipeline writes netDelta, exchangeEquity, and timestamp fields for this purpose.
Bot-only updates, on-chain rate limited. The STRATEGIST_ROLE that gates updateOffChainAssets, updateL1Assets, and updateHedgingReserve is held by an automated bot under documented operational scope. The update logic is further constrained by offChainUpdateCooldown and maxOffChainChangeRateBps inside KerneVault.sol. Neither guard can be bypassed without a contract upgrade, which itself requires the 2-of-3 Safe.
Honest copy. User-facing copy never describes protocol-owned reserves as user TVL or 'Institutional Partners'. API field naming, dashboard labels, marketing copy, and aggregator submissions use plain accounting words: vault collateral, off-chain hedge collateral, L1 bridge balance, on-chain hedge buffer. If the protocol ever deploys its own capital into the vault, that capital is labeled protocolOwnedReserves and broken out as its own bucket.

How to verify this policy is in force

Anyone, including auditors, allocators, and journalists, can verify the policy is in force at any time using only public RPC endpoints and a curl command. The four bucket reads must sum to totalAssets() on the same block. The composition object on /api/por mirrors the four cast reads.

cast call 0x8005bc7A86AD904C20fd62788ABED7546c1cF2AC "offChainAssets()(uint256)" --rpc-url https://mainnet.base.org
cast call 0x8005bc7A86AD904C20fd62788ABED7546c1cF2AC "l1Assets()(uint256)"        --rpc-url https://mainnet.base.org
cast call 0x8005bc7A86AD904C20fd62788ABED7546c1cF2AC "hedgingReserve()(uint256)"  --rpc-url https://mainnet.base.org
cast call 0x8005bc7A86AD904C20fd62788ABED7546c1cF2AC "totalAssets()(uint256)"     --rpc-url https://mainnet.base.org

curl -s https://kerne.fi/api/por | jq '.reserves.vault.composition'
curl -s https://app.kerne.fi/api/por | jq '.reserves.vault.composition'

Change control

Any future change to this policy requires a pull request that updates the canonical doc, a corresponding PR that updates /api/por on both kerne.fi and app.kerne.fi if the change adds, removes, or renames a bucket, a 2-of-3 Safe acknowledgement transaction emitting an event whose body is the keccak hash of the new policy file (so the version in force at any block is provable), and a public announcement from the canonical @KerneProtocol handle linking to both the PR and the Safe transaction.

Last updated 2026-04-25. Owner: protocol governance, 2-of-3 Safe 0x52d3E450bA6c299B1B07298F1E87DD74732D4877.