The Dual Yield Engine
Kerne generates yield from two independent sources that operate simultaneously. This dual source architecture is the core advantage over protocols that rely on only one yield stream.
The First Yield Source: Staking Rewards
When you deposit liquid staking tokens into KerneVault, those tokens continue earning Ethereum proof of stake validator rewards from the moment of deposit. This yield comes from Ethereum's consensus layer: validators are paid to secure the network, and that reward flows to liquid staking token holders.
This yield stream is highly reliable. It does not depend on market conditions, trader behavior, or exchange activity. It is a direct consequence of Ethereum's economic model. Even if every other component of the strategy were to pause, staking yield would continue accruing.
Some liquid staking tokens also earn additional rewards from restaking, the process of securing additional services built on top of Ethereum's security layer. This can push yields somewhat higher than standard staking yields.
The Second Yield Source: Perpetual Funding Rates
Perpetual futures contracts use a mechanism called the funding rate to keep the perpetual price anchored to the actual spot price of ETH. When the perpetual market is predominantly long (when more traders are betting ETH goes up using leverage), long positions pay a fee to short positions at regular intervals. The frequency varies by venue, ranging from every hour to every eight hours depending on the exchange.
Crypto markets structurally skew long. Retail traders, leveraged speculators, and options hedgers all tend to hold more long perpetual exposure than short. This structural bias means short holders consistently earn funding payments during normal and bullish market conditions.
Historically, ETH perpetual funding rates have averaged a meaningful positive APR annualized during bullish periods. In bull markets with high leverage demand, rates have been substantially higher for extended periods. During bear markets, funding rates can turn negative for days or weeks before reverting.
Combined Yield
These two yield sources are largely uncorrelated. Staking rewards are driven by Ethereum's protocol economics. Funding rates are driven by market sentiment and leverage demand. In periods where one is lower, the other often compensates.
The combined strategy's live modeled rate currently sits in the low teens while perpetual funding is positive, normalizing toward the high single digits across a full funding cycle, computed live from the Lido staking rate and the Hyperliquid 180-day trailing funding rate. The rate is variable: in periods of strong perpetual funding it rises, and in neutral or bear conditions the staking yield provides a baseline while funding income compresses. APY depends on prevailing market conditions, and we do not guarantee any specific return. You can reproduce today's number at kerne.fi/api/apy.