Katana reintroduces Krates as part of their questing program, introducing another pathway for yield for users

Krates are back on Katana. If you were around for the pre-deposit campaign you remember them: earn one, open it, get some KAT.

TL;DR - you can earn additional yield in the form of gacha boxes on Katana, and it averages to an extra ~1% on stablecoins and 1.5% on KAT, just for using the same platforms most katana users already use. (This is a longer, detailed post, but you can jump to the math section if your interested in exploring how it works or just ask questions in the comments and I'll try to answer)

So Krates are now part of Katana Quests. Katana quests are a gamified way to earn additional KAT (or USDC for top prizes) by actively participating in defi activities on Katana. Essentially, it's a bonus layer sitting on top of yield you're already earning.

I have been posting posting about and been farming Katana for a while as I find the yields and risk/reward aspect of the opportunities on the chain to be among the best in defi. Krates just make it better.

The setup: XP is earned by doing normal DeFi on Katana, staking KAT for vKAT or avKAT, supplying to vaults, borrowing on morpho, LPing via Charm, and trading. XP accrues daily per dollar deployed. Different XP for different activities.

XP has two uses. In July and every month going forward, unused XP will be used in a raffle. Currently the raffle total prize pool is $15000. The other use is to redeem 350,000 XP for a Krate & open it for an instant reward. Any leftover krate XP gets entered into the raffle & XP resets monthly.

Ok, that's the boring stuff. How does it actually look like when deploying capital, just to calculate some potential increase in returns.

Personally, I only supply to vaults, borrow a little bit, and hold vKAT/avKAT. Here's the baseline math behind $1000 deployed with either USDC/USDT and avKAT. This is the baseline as you can use avKAT as collateral to borrow stables then deploy the stables to loop further, which I do, but that's for another post. This is pure krate return, so you're earning on top of the yield of the vaults.

Supplying USDC on Morpho pays 3 XP per dollar per day, so $1,000 over 30 days is 90,000 XP. Holding avKAT pays 5 XP per dollar per day, so you earn 150,000 XP a month. Next, the Krate costs 350,000 XP & the reward pool this epoch has these published odds:

• Common (69.95%): 277 avKAT and min. 85,000 XP
• Uncommon (25%): 369 avKAT and min. 130,000 XP
• Rare (5%): min. 1,107 avKAT and min. 170,000 XP
• Super Rare (0.05%): 45,421 avKAT or 1,000 in stablecoin

Run the average avKAT across those odds:

• 0.6995 × 277 = 193.8 avKAT
• 0.25 × 369 = 92.3 avKAT
• 0.05 × 1,107 = 55.4 avKAT
• 0.0005 × 45,421 = 22.7 avKAT
• Total: ~364 avKAT per Krate on average.

Since Krates also refund XP, you get about 100,000 back per Krate, or 28.7% of the cost. Loop that refund into more Krates & your XP stretches about 1.4x, so each XP becomes roughly 0.00146 avKAT.

Currently, 1 avKAT = ~1.30 KAT (though this continues to compound every 2 weeks). At KAT ~$0.0045, that's ~$0.0058 per avKAT.

Now the month, per $1,000:

• USDC supply: 90,000 XP -> ~131 avKAT -> ~$0.77. On $1,000 that's about 7.7 bps a month, ~0.9% a year, from the Krate layer alone.
• avKAT: 150,000 XP -> ~219 avKAT -> ~$1.28. About 12.8 bps a month, ~1.5% a year.

So basically, you're earning an extra 1% APY on your stables and 1.5% APY on your KAT for using the same protocols you already were using.

Want more XP on the same capital? Hold avKAT: 31.98% APY & 5 XP per dollar per day, so 5,000 XP/day on $1,000. vKAT shows 47.25% APY at the same 5 XP/$. The KAT LP pools on Charm pay the top rate, 6 XP per dollar per day. Same principle every time: pick the position for its yield, & the XP tags along.

What does the XP turn into? 350,000 XP redeems for one Krate. Every Krate pays out, there are no

I'm not the biggest trader, especially with perps, but traders can feast on this as well. Perp volume pays 1.5 XP per dollar of volume, but if you are leverage trading this creates bonus volume on the same dollar of collateral. A small stack can push a lot of volume, so your dollar goes further on XP than it does sitting in a supply position, at higher risk. If you're a trader, that's the high-octane path.

Though I don't trade, I'm a fan of how Katana aligns with their users. Katana owns its perp venue so the fees are Katana's revenue & they route that revenue back to users as XP & rewards. The more you use their perps, the more they can pay you, because they capture the value instead of leaking it to a third party. The platform earns & it hands a cut back to the people generating the revenue.

So do the math for your own size & risk tolerance. If you're like me & you'd rather earn yield with less drama, sit in Morpho supply or avKAT & let the XP stack on top. If you're a trader, perps stretch your dollar further on XP & feed the venue that funds the whole thing. Either way you're paid twice: the yield on your capital, & the XP that becomes avKAT on top.

Krates are back, & this time your XP has somewhere to go.

Just so everyone is aware, rules state 18+ and questing isn't available in the US and some other jurisdictions (cough cough VPN cough cough).

Will I be the only r/CryptoCurrency user doing this or will I have friends join me?