Vault Architecture (ERC-4626 Standard)

The KerneVault

The KerneVault is the primary deposit and withdrawal interface for the protocol. It is built on the ERC-4626 tokenized vault standard, the industry standard for yield bearing vaults in DeFi.

Why ERC-4626?

ERC-4626 is a widely adopted standard that defines how vaults accept deposits, track shares, and process withdrawals. Because Kerne uses this standard, Kerne Vault shares are automatically compatible with a broad range of DeFi protocols, aggregators, and tools. Any application that supports ERC-4626 vaults can integrate with Kerne without custom development.

This matters because it means Kerne Vault shares plug into the existing DeFi ecosystem from day one. Lending protocols, yield aggregators, portfolio trackers, and other tools that support ERC-4626 will recognize and work with Kerne Vault shares automatically.

Non Custodial by Design

The vault is non-custodial at the smart contract level. On-chain collateral is held by smart contracts on Base, which have had one external audit (Hexens, final report published July 31, 2026), though the deployed vault runs earlier bytecode than the reviewed commit. However, because the delta neutral strategy requires hedging on external venues, a portion of vault assets is deployed off-chain to hedging venues such as Hyperliquid. The smart contract tracks these off-chain assets transparently via the offChainAssets and l1Assets variables, and the Transparency dashboard shows the full breakdown of on-chain versus off-chain asset locations.

You retain the cryptographic right to initiate withdrawals at any time via the requestWithdrawal function. Withdrawals have a 7 day cooldown period to allow the hedging engine to close corresponding positions in an orderly manner. The protocol can pause all operations in an emergency, but cannot selectively target individual users. Only the multi signature admin can trigger a pause, and it applies to the entire vault.

Technical Details

All smart contracts are written in Solidity 0.8.24 and built using OpenZeppelin v5.0, the industry standard open source library for smart contract security primitives. Contracts are deployed and verified on BaseScan, meaning the source code is viewable by anyone at any time.

Fee Schedule (KerneVault WETH vault)

These are the fees charged by the KerneVault WETH vault described above, and by nothing else. That vault is whitelist-gated and its share supply is zero, so no depositor has ever paid any of them:

• Deposit Fee: 0.05% (5 basis points), deducted from the deposit amount before vault shares are minted
• Withdrawal Fee: 0%
• Performance Fee (Genesis Phase, under $100k of that vault's TVL): 0%
• Performance Fee (Growth Phase, $100k–$1M): 5%
• Performance Fee (Maturity Phase, over $1M): 10%

Performance fees are taken from gross yield only, not from principal. Withdrawals from this vault require a 7 day cooldown period: you call requestWithdrawal, wait 7 days, then call claimWithdrawal to receive your assets. Direct ERC‑4626 withdraw and redeem functions are disabled to allow orderly hedge unwinding.

The live path is priced differently and you should not read the table above as applying to it. Minting kUSD costs the PSM swap fee, which steps down with size: 0.10% base, 0.08% from $50,000, 0.07% from $250,000 and 0.05% from $1,000,000 or more per swap. Staking kUSD into skUSD costs nothing at all. skUSD's deployed source contains no deposit fee, no performance fee, no withdrawal fee and no cooldown function, and it has no setter that could add one; calling cooldownDuration on it reverts. The binding version of all of this is section 7 of the terms.