How LKAT Works?
Flow of KAT rewards → LKAT minting
Users deposit LP tokens into incentivized pools on SushiSwap (Katana).
Merkl, the reward engine, tracks on-chain LP positions and calculates earned KAT rewards based on pool participation.
Instead of claiming locked KAT directly, users assign Levrex’s Minter contract as their claim recipient and operator via the Merkl smart contract by clicking on Set Claim Recipient on the Levrex frontend.
Users then click on Mint LKAT. This process: - Redirects the locked KAT to Levrex’s vault. - Issues the user an equivalent amount of LKAT immediately.
This mechanism wraps locked KAT into a liquid, usable asset without disrupting the underlying reward distribution schedule.
Role of SushiSwap and Merkl
SushiSwap serves as the primary source of LP-based yield for users in the Katana ecosystem.
Merkl is responsible for:
Tracking reward allocations across LP pools
Maintaining Merkle trees that validate user reward entitlements
Enabling permissioned claims via smart contracts
Merkl is what makes the reward flow verifiable and trustless, while Levrex handles the wrapping and minting logic for LKAT.
LKAT auto-compounding and usability across DeFi
Once minted, LKAT can be:
Staked in Levrex to earn additional protocol rewards
Looped into Levrex’s leverage system for compounding gains
Added to DEX LPs (e.g., LKAT/ETH) to earn swap fees + incentives
Held as a yield-generating asset until KAT unlocks
Every LKAT token enters Levrex’s compounding engine by default, enabling higher APYs without user-side management. This makes LKAT not just a liquid wrapper, but a capital productivity tool.
Redemption after KAT unlock
When the original locked KAT rewards mature and unlock:
Levrex will enable a 1:1 redemption mechanism, allowing users to exchange LKAT for unlocked KAT.
The system ensures that LKAT holders can redeem their tokens only when their underlying KAT rewards have fully vested, maintaining parity and trust in the LKAT/KAT peg.
Protocols and integrators can optionally support redemption functionality or track vesting progress for deeper integrations.
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