FAQ/Getting Started
Getting Started
1.“Generally speaking, what is the easiest flow to follow for compounding rewards?”
The following is NOT FINANCIAL ADVICE. It is for education and entertainment purposes only.
There are countless strategies, and which one you choose depends on your risk tolerance and short, medium and long-term goals. That being said, the "plug-and-play" method is detailed below. Also, take some profits along the way. Don't get too greedy.
If $KITTY is OVER the peg:
Buy $KITTY and pair it with $AVAX to provide liquidity, and stake your $KITTY-$AVAX LP in the farm to earn $CAT rewards.
There are two ways you can do this:
Use auto-compound. You can either use our native auto-compounder from the top menu, or use the YieldWolf auto-compound feature to increase your liquidity pool position. From time to time, take a portion out as profit!
Manually claim rewards form the $KITTY-$AVAX LP pool and stake your $CAT in the Nursery to earn $KITTY. Once you claim $KITTY, you can sell 60% $KITTY for $AVAX, and compound the remaining 40% of $KITTY with $AVAX back into $KITTY-$AVAX LP. Keep 20% of your sales in $AVAX as profit.
If $KITTY is UNDER the peg:
If you are using auto-compound, withdraw your $KITTY-$AVAX LP and break it to have $KITTY and $AVAX back in your wallet. Use the $AVAX you get from breaking the LP to buy more $KITTY, then put the $KITTY in the single stake $KITTY pool for $CAT rewards.
For those who are doing things manually, first withdraw the LP tokens and break them. Then, buy more $KITTY with the $AVAX you got from breaking the LPs. Stake $KITTY in the single stake $KITTY pool to earn $CAT. Now, you have a big fat bag of $KITTY, and you've also helped bring $KITTY back above peg so that the Nursery can resume printing.
Once we go back above peg, claim and withdraw $KITTY from the single stake pool, sell your $CAT rewards for $AVAX and pair the $AVAX with $KITTY. Now, provide liquidity back into $KITTY-$AVAX LP and stake for $CAT rewards. If you still have more $KITTY, stake them back in single stake pool. Repeat this process until you have used up all you $KITTY.
2. "What is 60/40?"
60/40 is the method best suited to provide stability for both the platform and for your underlying investment. By boosting liquidity, the 60/40 strategy reduces price volatility, and helps $KITTY stay above the peg for longer to keep the Nursery printing. This, in turn, attracts new investors and keeps the ecosystem growing. The process is as follows:
When you claim your $KITTY rewards in the Nursery, sell 60% of them for $AVAX.
When you go to provide $KITTY-$AVAX LP, stake the entirety of your remaining $KITTY with the $AVAX you've just purchased.
Keep your 20% of your $KITTY sales as your dry power to buy $KITTY when it goes under peg, or keep it as your profit-taking.
4. "APR is much higher in the Nursery than in the farm for $KITTY-$MATIC LP. Why would I not just invest everything there?"
The farm APR is linear and prints 24/7, regardless of $KITTY's relation to the peg. Nursery, on the other hand, prints only when $KITTY’s TWAP is above 1.01. Therefore, it may not always be that an investor gets a higher return from the Nursery than from the $KITTY-$AVAX pool.
Because $KITTY follows the price of $AVAX, the $KITTY-$AVAX LP is akin to holding $AVAX in your wallet, except with the bonus of a high farming APR on top of it. In other words, if you're bullish on $AVAX’s price action, the $KITTY-$AVAX LP is a way of holding exposure to that single asset while also reaping high APRs.
Terms and Mechanisms
1. "What is an expansionary epoch?"
An expansionary epoch is the amount of $KITTY that is printed by $CAT in order to increase the total circulating supply.
To simplify the explanation with a hypothetical example, let’s say an epoch is 3 days long and there are $100 dollars in the circulating supply.
If the money printer grows the supply by 10% of the existing circulating supply each day, at the end of the 3 days you'd have $100 * 1.1 * 1.1 * 1.1 = $133.
Then, let’s say the emissions decrease to 5% per day.
You’d then have have $133 * 1.05 * 1.05 * 1.05 = $153 at the end of this second epoch.
2. “What is compounding in the context of Kitty Finance?”
Earning a return on gains you've already made from previous periods is what is commonly referred to as "compounding".
For example, consider a 3% daily APR on an initial investment of $100.
After 24 hours it would grow to $103.
After 365 days without compounding: $1195.
After 365 days, compounding once daily: $4,848,272.
Core Values
1. “I'm invested in the project for the long term, and I feel guilty taking profits. Am I still a team player if I move profits somewhere outside of the project?”
Never put all your funds in one basket, even if it's $KITTY. Always take gains along the way. The Kitty Finance team views it as a success if, over time, everyone gets their initial investment back into their wallets and continues investing with the profits that come after that.
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