Island Liquidity Provision
Depositing liquidity into Islands
Depositing liquidity into one of Kodiak's Islands represents is the most straightforward method for contributing liquidity on the Kodiak DEX. These Islands are automated liquidity management vaults with predefined rules tailored for V3 liquidity. These rules are designed to establish optimal ranges for a given Island's token pair and systematically rebalance liquidity to ensure that it consistently remains in-range.
When liquidity is added to an Island, the protocol responds by minting Kodiak Island tokens, which are then allocated to the liquidity provider. On the other hand, the burning of Kodiak Island tokens facilitates the redemption of a corresponding portion of the pool's V3 position liquidity, accompanied by the retrieval of earned fees. Essentially, holding Kodiak Island tokens represents proportional ownership or shares of the underlying V3 position.
The minted Kodiak Island tokens are ERC-20 tokens which can be staked (and then also locked) to farm additional incentives for eligible Islands (Sweetened Islands) or rehypothecated throughout various Berachain DeFi applications.
Last updated
