# Peg Stability & Pricing Mechanisms

For ksETH, krETH, kUSD, and in the future, kpETH, peg stability is supported by:

* Protocol-owned liquidity held by the Kernel Protocol treasury
* Points and token incentives for liquidity provision by third-parties, using bribe markets and other incentives platforms
* Open redemptions after week 2: from week 3 onwards, ksETH, krETH and kUSD holders will be able to redeem their holdings 1:1 for underlying assets restaked on the protocol.
* Additionally, Kernel Protocol uses software that any deviations from peg made by underlying collateral assets. Assets are removed if they go over a certain threshold.&#x20;
* Finally, Kernel Protocol can dynamically adjust mint ratios to ensure that more than 1 unit of any underlying asset is required to mint 1 unit of a Kernel LRT when the underlying asset goes below peg (and vice versa).&#x20;
* Open redemptions will also enable arbitrage opportunities and create volume to contribute to peg stability.

Upon its release, the pricing of kINDX will require a more complex pricing solution to recognize the greater diversity of underlying assets and their values. Because of this, kINDX will need to be priced according to the volatility of each underlying asset, weighted by their share of the portfolio, which would require a custom oracle solution. To achieve this, Kernel Protocol will deploy an aggregated feed from various oracles and CEX APIs, which provide a close approximation to the on-chain value of the basket when we take the weighted average of the pulled prices.&#x20;

It is expected that kINDX will deviate from the value of the underlying assets, both to the upside and downside. In any circumstance where kINDX depegs to the upside, Kernel Protocol will mint kINDX tokens and sell them, restoring fair value. The profit generated by this arbitrage will be deposited to Karak, increasing the total yield accrued by kINDX. In any circumstance where kINDX depegs to the downside, assets previously deposited by the protocol into Karak can be used to rebuy the asset. Removing any surplus tokens minted from the Uniswap v3 CLP or the Curve pool and burning them means that arbitrage profits result in overcollateralization for KINDX.

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