kTokens

When users deposit assets into Kinetic, they receive lending receipt tokens known as kTokens (e.g., kFLR, kXRP, kUSD). The initial exchange rate for these tokens is set at 0.020000. This rate represents the starting value of the deposited assets in terms of kTokens.

As interest accrues over time, the exchange rate of kTokens increases. The calculation for this increase is based on the interest generated by the lent-out assets. Specifically, the interest paid by borrowers is proportionally distributed to the kTokens, causing their value to rise.

This means that the more interest accumulated, the higher the value of each kToken. Users must keep these kTokens in their wallets to withdraw the corresponding deposited assets. The kTokens essentially act as a receipt and a dynamic representation of the user's share in the lending pool, reflecting both the principal amount and the earned interest.