# Island Liquidity Provision

<figure><img src="/files/lMFhTFjeacvhHb54O41E" alt=""><figcaption></figcaption></figure>

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.&#x20;

When liquidity is added to an Island, the protocol responds by minting Kodiak Island shares, which are then allocated to the liquidity provider. On the other hand, the burning of Kodiak Island shares 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 shares represents proportional ownership or shares of the underlying V3 position.

The minted Kodiak Island shares are ERC-20 tokens which can be staked into a Farm or PoL Reward Vaults to earn additional incentives for eligible Islands (Sweetened Islands) or rehypothecated throughout various Berachain DeFi applications.&#x20;


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