F.A.Q.

The simplest way takes advantage of the Kava Rise program which rewards dapps for their TVL on Kava. We have two such dapps: Counterstake bridge and LINE. You would contribute to the TVL of both dapps, thus making every dollar of your capital work twice.

1. Bridge your GBYTEs from Obyte to Kava over Counterstake bridge (if you are already an Obyte user. Otherwise, you can buy GBYTEs on Equilibre DEX on Kava).
2. Use your GBYTE-on-Kava to borrow LINE tokens here.
3. Bridge your LINE tokens (back) to Obyte.
4. Hold your LINE tokens in your Obyte wallet. Kava rise rewards dapps for their TVL on the Kava network. We receive these rewards monthly and distribute 90% of them to users who bridged their tokens from Kava to Obyte (which you did). You’ll receive your share of rewards monthly to your Obyte wallet, you don’t have to do anything else. Track your rewards at kava.obyte.org.
5. When you want to get your collateral back, bridge your LINE tokens back to Kava, get your GBYTEs back by repaying the loan on this website (you’ll need to buy some additional LINE tokens from the market to pay for the fees and the accrued interest), and bridge the received GBYTEs back to Obyte. If the LINE price has grown since you opened the loan, you can sell your LINE tokens on the market instead of repaying the loan. In this case, you would get more GBYTEs than originally invested.

The income you receive depends on the amount of Kava Rise rewards and the price of the LINE token. Kava pays 1 million Kava tokens monthly to all participating dapps in proportion to their TVL. This is roughly $1m per month at the current exchange rate. Assuming the APY of Kava Rise is 7% (as it has been lately) and the price of LINE tokens doesn’t change relative to GBYTE, you would get 14% per year.

1. Fees paid for bridging through Counterstake: 1% for each transfer. You need two transfers to open a position, and two to close. You can avoid these fees entirely if you self-claim on Conterstake (transfers would take 3 days instead of near-immediate and you’ll need capital on the destination chain).
2. Origination fee paid for opening a loan: currently 1%. This is a one-time fee.
3. Interest paid for the loan: currently 1% per year.

Since most of the fees are one-time, the strategy is most profitable if you hold LINE tokens for a long time. If you pay all Counterstake fees and assuming 14% rewards, your net income after 1 year would be 8%. After 2 years: 21%.

This is only one strategy that bears the minimum risk (in our opinion). You can also trade LINE like any other token and try to gain from its price movements. Also, you can trade loans, which are put options (represented as NFTs), and try to gain from their price movements or market inefficiencies. We view these strategies as more risky and more advanced.

There are standard risks like smart contract risk (both LINE and Counterstake) and general risks of the underlying network.

The biggest risk, in our opinion, is the risk that LINE price goes down significantly after you borrow. This would reduce the TVL locked in Counterstake and the rewards you receive from Kava Rise.

However your capital remains protected — you can always pay back the loan and get the original collateral back (less fees).

If the LINE price grows however, you would get larger rewards and would be able to earn from the price growth by selling your LINEs.

Kava Rise is an initiative of Kava network to reward dapps that contribute to Kava’s TVL. Kava gives out 1,000,000 KAVA tokens (roughly $1m at the current exchange rate) every month to developers of all participating dapps in proportion to their share of Kava's total TVL as determined by DefiLlama.

Our dapps LINE and Counterstake participate in this program and get a share of these rewards. While the teams of some other participating dapps keep their Kava Rise rewards in their treasuries, we convert them to GBYTE and distribute 90% of the rewards to the users who actually contribute TVL and bridge their tokens to Obyte.

The latest APY of Kava TVL is about 7% but LINE holders have an opportunity to double it by locking both GBYTE in order to borrow LINE tokens here, and then locking LINE tokens in the Counterstake bridge in order to bridge them to Obyte.

It’s price-protected if you borrow it (but not if you buy). When you borrow, you get both LINE tokens and a right to repay the loan and get your collateral back (minus fees) if the token’s price falls.

This loan is like a put option, which is commonly used for hedging long positions. Options are not free, they have to be paid for, even if eventually not used. Likewise, you pay for the hedge by paying the origination fee and interest.

So, when you borrow LINE tokens you get a “package” of both the tokens and the hedge against price drop, and you don’t have to bother about buying the hedge separately (which is not always possible).

If you feel like you don’t need the hedge, you can sell it on the market for profit and hold the token alone.

If you hold LINE tokens and want to hedge against the risk of LINE price falling, you can buy a hedge on the market page. A hedge is a loan opened by someone else who later decided to sell the loan separately from their LINE tokens. The total amount of the loans you buy should match the amount of LINE tokens you hold and wish to hedge.

You need to buy a hedge only if you obtained your LINE tokens by buying them on the market. If you obtained them by opening a loan, you already hold a hedge that matches your LINE position.

For put options, strike price is the price at which you can sell an asset, that is LINE tokens for GBYTE. Every loan here is a put option, and the strike price shows how many GBYTEs you would get per 1 LINE token if you were to repay the loan.

When you open a loan, the initial strike price is the market price of LINE tokens, minus the origination fee.

As interest accrues on your loan, its strike price gradually decreases. This decrease reflects the cost of keeping your hedge open and protecting your LINE position.

It’s unlimited. New LINE tokens are issued (borrowed) by users in exchange for locking their GBYTE as collateral. When they repay the loans, LINE tokens are removed from circulation and destroyed. Because of interest and fees, users have to repay more LINE tokens than they have borrowed, so the supply shrinks even more than it was expanded while borrowing.

Users who repay the loans provide demand for LINE tokens.

To pay fees and interest, they need more tokens than they borrowed. They can get the additional LINE tokens in two ways: either by borrowing more (and paying the origination fee) or by buying them from the market. If the latter option is cheaper, they choose it, and their buying supports the price.

To determine how many LINE tokens you can borrow for your collateral, we use the latest market price of LINE on Equilibre DEX in combination with time-weighted average price (TWAP) over the last day. To prevent price manipulation, we use the higher of the latest market and TWAP prices.

Nothing. Unlike other CDP (collateral debt position) based DeFi apps, such as DAI, you are not liquidated. You can sell your LINE tokens on the market for profit and forget about your loan. Or, you can continue holding your LINE tokens hoping that the price grows even more. If you sold, and then the price of LINE goes below the collateral value, you can buy LINE from the market and repay the loan, again for profit.

Your GBYTE collateral is stored on a smart contract and nobody, even Obyte team, have access to your collateral. Only you can withdraw it by repaying your loan. The smart contract is not upgradeable, so no surprises. The team can only update the origination fee, the interest rate, the oracle used for determining the LINE price, the exchange fee, and the rewards for the incentivized pools.

They are loans. Each loan you open here is a non-fungible token. You can keep the LINE tokens you borrowed and sell the loan to another user, so that that other user will have the right (but not an obligation) to repay the loan and claim its collateral — effectively selling LINE for GBYTE at a set price (known as strike price).

This right to sell LINE for a set price makes it a put option — a well-known trading instrument used to hedge one’s positions. Its holder has something like an insurance against the price falling below some level.

Unlike most other NFTs you hear about, these NFTs are utility NFTs, not collectibles (at least, not supposed to be collectibles). Their price is determined by the market based on their utility as a hedging instrument.