Up to 125x leverage and hybrid vaults: how the decentralised exchange KiloEx works

In August 2023 Binance Labs invested in KiloEx, a decentralised exchange for trading perpetual contracts that won the sixth season of the Most Valuable Builder (MVB) accelerator. The firm highlighted the DEX’s user-friendly interface as well as its efficient risk and capital management.

A year on, KiloEx launched hybrid vaults that let liquidity providers earn returns in USDT. Here is how they work and what distinguishes the exchange.

What sets KiloEx apart

KiloEx offers access to perpetual contracts with leverage of up to 125x on BNB Chain, opBNB, Manta, Taiko and B² Network.

According to DeFi Llama, the project ranks first by TVL on opBNB. The metric rose sharply after the new season of the airdrop programme was announced in June 2024.

Users trade against liquidity pools—vaults for the USDT and USDC stablecoins. When a long or short closes in profit, the KiloEx protocol pays out from these vaults; otherwise, traders’ tokens are sent into them.

The vaults also receive a share of trading fees and funding payments. These funds are distributed proportionally among liquidity providers (stakers) to encourage them to keep assets in the pools.

“Users who place stablecoins in KiloEx vaults usually earn higher returns compared with other DeFi protocols. For example, we offer a 60-day annualised yield of 22% for the opBNB network and 29% for Taiko,” the DEX team claims.

During prolonged bull phases most traders open long positions; in bear markets they go short. In such conditions the vaults must continually pay out profits, which can weigh on stakers’ returns.

To address this, KiloEx launched Vault 2.0, in which funds are split into two parts:

• base — stakers’ tokens and fee income;
• buffer — assets used to settle traders’ P&L and funding payments.

Stakers’ income is determined by the base. As long as the buffer remains profitable, traders’ profits and losses do not affect them.

How hybrid vaults work

In July the KiloEx team unveiled hybrid vaults, built on Vault 2.0, which allow staking of assets beyond stablecoins. They were audited by Scalebit.

“At the start of the year there was a surge of activity in the segment of restaking protocols that provide additional income for LST tokens. Such projects often award points — promising to issue tokens without specifying timing or value. The market is in acute need of a product that delivers real earnings on LSTs,” KiloEx representatives comment.

KiloEx users can deposit Manta (MANTA) and StakeStone ETH (STONE) on Manta Network, STONE and FDUSD on BNB Chain, as well as WBNB and FDUSD on opBNB, to earn USDT.

Half of the assets in hybrid vaults are USDT; the remainder are other tokens. Stakers’ returns depend on the asset’s market price and the loan‑to‑value (LTV) ratio.

Example: a user deposits 1m MANTA into a KiloEx hybrid vault when the token trades at $1, i.e., $1m. If the LTV for the coin is set at 60%, the protocol credits $600,000.

If MANTA falls to $0.60, the value of the deposited assets declines to $600,000. KiloEx will calculate the staker’s earnings based on that amount: the user receives $360,000 (60% of $600,000).

Withdrawing funds from a hybrid vault takes one to three epochs, each lasting three days. After initiating a withdrawal, stakers continue to earn.

Conclusions

KiloEx is a decentralised exchange for trading perpetual contracts with leverage of up to 125x, backed by Binance Labs, Foresight Ventures, Manta Foundation, Poolz Finance, 7UP DAO, GTS Ventures and Crescendo Ventures. As of August 2024, the project ranks first by TVL on opBNB and is in the top 10 on Manta.

According to KiloEx CEO Joey Ni, the project plans to keep developing the venue:

“We have already built an ecosystem on several public blockchains. KiloEx’s next goal is to create a comprehensive platform similar to Binance and OKX.”

Thanks to hybrid Vault 2.0 with its base-and-buffer mechanism, the platform stabilises stablecoin holders’ yields and enables owners of BNB, MANTA and other tokens to earn in USDT.