Vault Architecture (ERC 4626 Standard)

The KerneVault

The KerneVault is the protocol's collateral vault. It is closed to deposits today; the live route is the PSM and skUSD. It is built on the ERC 4626 tokenized vault standard, the industry standard for yield bearing vaults in DeFi.

Why ERC 4626?

Kerne Vault shares follow the ERC 4626 share interface. Exits use requestWithdrawal and claimWithdrawal instead of withdraw and redeem, so integrations must support that withdrawal flow.

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, audited by Hexens (final report published 31 July 2026); the deployed KerneVault runs bytecode that predates the reviewed commit. 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 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.

Key security features of the vault architecture:

• Role based access control with strictly scoped permissions (distinct roles for strategy management, emergency pausing, and routine operations)
• Multi signature governance requiring consensus for any structural changes
• Administrative actions require 2 of 3 multisig consensus. Since 6 August 2026, admin and manager rights on kUSD and the three PSM modules sit behind a 48 hour timelock, so a change to the mint or redeem path is scheduled in public and lands two days later. The staking vault is administered by the Safe directly, so a change there takes effect once the second signature lands
• Per asset deposit caps for gradual, controlled scaling
• Automated circuit breakers for adverse market conditions
• Dual feed oracle router (Pyth primary, Chainlink anchor) deployed on Base; the live PSM reads its own Chainlink USDC/USD feed
• EIP 2612 permit support for gasless approvals

Fee Schedule (KerneVault WETH vault)

These fees apply to the KerneVault WETH vault above and to nothing else. That vault is whitelist gated and closed to new deposits:

• 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 to $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 the fee list above does not apply 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.