Many may know Kine Protocol as a derivatives exchange, but it is more than that. Apart from trading your kUSD in the derivatives exchange, users can deposit it on Uniswap and other decentralized exchanges to be rewarded with KINE tokens through the farming schemes created by KINE protocol. 

Before users could earn KINE solely by staking to add an extra level of security to the protocol, but that is changing as there is an alternative way to earn KINE. Users that didn't get involved in the staking process can also acquire kUSD through the liquidity farming scheme and trade them on the Exchange. There are alternative earning strategies for users. 

Yield farming in Kine Protocol will attract more users and improve its adoption.  

What To Know About Kine Protocol's Yield Farming Process

The process began on March 24, 6:00 UTC, and from that date, users could easily be involved in liquidity mining, and be rewarded with KINE tokens. A liquidity provider on Kine Protocol has to tick some boxes before they are eligible. They have to submit an amount of tokens in equal values for below Uniswap trading pairs:

• ETH/KINE to share 10,000 KINE per week

• ETH/kUSD to share 5,000 KINE per week

• USDT/kUSD to share 5,000 KINE per week.

It is important to note that these values change from time to time. What may be obtainable today may not be what is feasible tomorrow.  

Kine designed its farming pools to allow users to easily deposit or withdraw their LP tokens whenever they want without attracting an unstaking fee. The rewards shared are dependent on how much the user deposited into the pool to improve its liquidity, and can only be claimed seven days after the first deposit was done. Once a claim is done, users have to wait for seven days to elapse before they can take out another claim. This means that there is a 7-day claiming cooldown period after each claim. 

During this cooldown period, deposits or withdrawals can still be done seamlessly, meaning that only the claim process can't be done.  

Yield farming: What Is It?

Before one can enjoy the incredible perks that Kine Protocol's yield farming offers, it is important for them to know what would farming is. It is a process that permits crypto holders to earn rewards from their assets. Instead of leaving their crypto holdings to be idle, earning nothing, they can deposit units of a cryptocurrency into a lending protocol, thereby accessing rewards. This is an awesome way to earn passive returns. 

An easy way to understand this is by using a traditional financial lending organization. Let us say, you want to finance a housing purchase, but you do not have the necessary funds to pay for everything via cash. You head to a mortgage bank, which finances the purchase of the house. This means that you have taken out a loan, and you have to pay both the loan and the interest on it. This is what happens in Yield farming. In this case, the crypto holder is the lender. Yield farming takes the idle cryptos that would have been laying idle in a wallet or exchange and use them to offer liquidity in DeFi protocols such as Uniswap, then get rewards in return.

How Does Yield Farming Work

Before yield farming can function effectively, there is the need for a liquidity pool and a liquidity provider. The liquidity provider is the person that deposits their crypto findings into the smart contract, while the liquidity pool is the smart contract that is filled with the funds. Both interact with each other. Yield farming uses the automated market maker (AMM) model to work effectively. AMM does not use the traditional order book model, where every sell or buy order is stated. 

AMM churns out liquidity pools that utilize smart contacts to work. Usually, the trades work based on some algorithms that have been created earlier. Before AMMs can work, there is the need for liquidity pools. The pools are the underlying aspects of many DeFi platforms. 

How The Yield Farming Returns Are Calculated 

Yield returns are usually calculated based on an annualized model, which means that the returns for a period may be different from what is expected in the next period. Annualized model shows what the possible earnings that could be earned when a user locks up their cryptos for a year. When calculating this, some metrics can be used like annual percentage yield (APY) and annual percentage rate (APR). A disparity between both is that APR doesn't involve compound interest. It is important to note that the calculations are merely estimates. Calculating the exact returns may not be feasible because the market is highly dynamic. What can be gotten today may not be what is obtainable in the next day.