FAQ
Single Asset Vaults
Where does the yield come from?
Yield in Single Asset Vaults (SAVs) is generated in two ways:
Borrowing Interest: Active farmers borrow assets from SAVs to open leveraged LP positions. They pay interest on these borrowed funds, which goes to the SAV depositors.
Sui Foundation Incentives: Additional yield comes from liquidity incentives funded by the Sui Foundation, boosting returns beyond what borrowers pay.
You can see the breakdown of APY components by hovering over the tooltip in the app. Thanks to this dual-source model, both passive and active users enjoy some of the highest APYs on Sui.
You said there are no withdrawal limits, so why can’t I access my full deposit right away?
Kai Finance maintains a 15% withdrawal buffer in Single Asset Vaults. When utilization nears 85%, LP borrowing is temporarily paused to reserve liquidity for withdrawals. If utilization reaches 100%, withdrawals may be temporarily unavailable. During these periods, interest rates rise to encourage borrower repayment and attract new deposits, helping restore liquidity and re-enable withdrawals.
Why do I see a slightly smaller amount on withdrawal?
If you notice a difference in the dollar amount shown in the UI after a deposit or withdrawal, it’s likely due to minor differences in price estimation sources. Transaction values always use the actual values.
Is the performance fee already included in the APY?
Yes, the APY you see is what you get. The performance fee is already deducted. This ensures that the displayed APY reflects your actual yield after fees, providing full transparency.
Why are SAV interest rates different from LP interest rates?
SAV interest rates differ from LP rates because the SAV APY consists of two components: the interest rates paid by borrowers and Sui Foundation liquidity incentives.
Why did I receive less APY than displayed?
The APY shown represents the current rate, which fluctuates based on market conditions. If you tracked a lower return (for example, 17% when 20% was displayed), it's because the rate varied during your deposit period. The displayed APY is always the current rate, not a historical average.
What should I do with the yTokens (like ySUI or yUSDC) in my wallet? Can I sell them?
No, do not sell or swap yield-bearing tokens like ySUI or yUSDC. These tokens represent your claim on your original deposit plus any yield earned in Kai’s vaults. If you sell them on a DEX, you risk losing your entire position for a fraction of its value. Some malicious actors may create fake markets to exploit this. To redeem your assets and rewards, always use Kai Finance’s official interface. Your yTokens are only valuable when redeemed through the vault, not on external markets.
My withdrawal transaction failed. What should I do?
This usually means our RPC (the node handling your Sui transactions) is temporarily down. Wait a moment and try again, it typically resolves quickly.
Liquidity Provider Vaults
Is up to 11x leverage really safe?
Kai Finance employs multiple levels of security to ensure leveraged positions are safe to use:
Collateral and Margin Requirements: Each position is backed by strict collateral and margin level checks. Leveraged positions are only allowed when they meet or exceed predefined safety levels.
Predictable Margin Function: Our system’s margin level behaves predictably within chosen price intervals, ensuring that positions remain secure as long as prices stay within these ranges.
Deleveraging Mechanism: If a position approaches unsafe levels, our deleveraging feature automatically reduces the position’s size to maintain stability without triggering a liquidation.
Safe Liquidation Protocol: In cases where liquidation is necessary, our process aims to recover debt fully and fairly. Liquidators are incentivized to maintain healthy positions, reducing risks for everyone involved.
Oracle Price Protection: With real-time price data from the Pyth Network, Kai Finance protects against price manipulation, preventing forced liquidations due to sudden or artificial price shifts.
For the full technical breakdown, refer to our Whitepaper, where you can explore the math and safety protocols behind our leverage system in detail.
How can I tell if my leveraged LP position is profitable?
Profitability occurs when trading fees in the liquidity pool exceed your borrowing costs. A positive APR indicates that your position is generating profit. Currently, however, the PnL and APR metrics are sensitive to fee fluctuations and may sometimes show negative values. For a more accurate check, take note of your initial deposit amounts and compare them to the position’s Equity. If your Equity minus initial deposits is positive, then your position is in profit.
Since trading fees are collected periodically, waiting a few hours after opening the position can give a clearer view of profitability as fees accumulate.
Are rewards auto compounded? Why is there a manual claim option for pending rewards?
Yes, rewards are auto compounded every two hours. If you do nothing, your rewards will continue to compound automatically. Manual claiming is just an additional feature.
Previously, there were cases where closing a position left some unclaimed rewards if the auto-compound had not triggered. To fix this, we now auto-claim rewards, ensuring that when you close, you receive everything owed to you.
However, you now have more flexibility:
You can manually compound at any time if you prefer.
If you want to claim rewards without compounding them, you can do that too.
You can even auto-convert claimed fees and rewards into a specific token of your choice.
My withdrawal transaction failed. What should I do?
Start by switching the aggregator, they are known to be unstable at times. If that doesn't help, try unchecking the "Convert rewards to" option, especially if you're withdrawing a small amount. If the issue persists, it may be due to a temporary RPC outage. In that case, just wait a bit and try again.
What are the liquidation margins for LP Vaults?
Kai Finance uses different liquidation thresholds depending on the pool type:
1.06 for stable pairs
1.31 for volatile pairs
If a position’s margin level falls below these values, it becomes eligible for liquidation.
General
How does the protocol generate revenue? Is it only from SAVs?
Yes, Kai Finance earns revenue solely from performance fees on Single Asset Vaults. There are no additional protocol fees on LP positions or borrowing.
Did you raise any funds or external investments?
No, Kai Finance is fully self-funded. We operate with minimal overhead, relying only on server costs and our own time. We don’t need external capital to build or sustain the project, and we have no plans to raise investments in the near future.
Do you have plans to launch a token?
We’ll start considering it once we reach $100M in TVL. If we do launch, it won’t be just another cash grab, any token would need to bring real utility and long-term value to the protocol.
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