Educational Byte: What is the Price-Protected Token LINE?

In a market as volatile as crypto, features such as stability and price protection of some sort could be very welcome for all users. They’re not always available, though, let alone if you’re looking to earn some rewards. Luckily, the token LINE deployed on the Kava network and connected to Obyte is offering this opportunity to everyone.

LINE operates as a price-protected digital asset, designed to safeguard your investment through a unique borrowing system deployed on Kava. Users can acquire LINE tokens by locking up an equivalent value of GBYTE (Obyte native currency) collateral through linetoken.org.

Then, if the price of LINE tokens rises, users can profitably sell them on the same platform and settle their loans. Conversely, if the price decreases, users can repay the loan with their LINE tokens and retrieve their GBYTE collateral, minus fees, ensuring that their principal investment remains almost intact. The price of LINE tokens is determined by market dynamics, and to stabilize it, mechanisms such as interest rate adjustments and origination fees are employed.

Additionally, it’s important to note that LINE token loans have their own market as put options. They’re financial contracts that give the holder the right, but not the obligation, to sell a certain number of tokens at a predetermined price (known as the strike price) within a specified period. In this case, if you borrow LINE tokens with collateral, you get as well your put option in the form of a Non-Fungible Token (NFT) that can be freely traded.

On the other hand, if you buy LINE tokens directly (without collateral) or sell your NFT-loan to make a profit, you’ll lose the feature of price protection.

Kava Rise Program

LINE was designed to work in tandem with the Counterstake Bridge in Obyte and the Kava Rise Program to offer rewards to its users. The Kava Rise Program serves as an initiative by Kava to incentivize decentralized applications (Dapps) operating on its network by rewarding their developers based on their Total Value Locked (TVL) —a measure of the total funds held within a DeFi protocol.

Participating Dapps, including Counterstake and LINE, are eligible to receive a portion of the monthly rewards, amounting to 1,000,000 KAVA tokens (around $1 million), distributed in proportion to the TVL they generate on Kava. This setup creates an incentive structure where Dapps are prized for attracting and retaining users, fostering growth within the Kava ecosystem.

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Obyte is distributing 90% of the rewards acquired from the Kava Rise Program to participating users (50% since June). Anyone can leverage the LINE token by borrowing it against GBYTE collateral and bridging it to the Obyte network through Counterstake. Holding LINE tokens in Obyte wallets automatically qualifies users for a share of the Kava Rise rewards, proportional to twice their LINE balances.

This mechanism not only encourages participation but also provides a means for users to earn rewards while minimizing risk, as the price-protected nature of the LINE token ensures that users can manage potential price fluctuations effectively. Currently, the Annual Percentage Yield (APY) of this method is around 60% (see kava.obyte.org for the actual rate).

How to Use LINE to earn rewards?

Besides trading with the tokens and the NFT-loans (in the “Market” section on the official webpage), you can take advantage of the Kava Rise Program or offer liquidity to its pools on Equilibre DEX. In the first case, you’ll need to use the Counterstake Bridge to move the assets across Kava and Obyte.

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You can follow some simple steps:

• Bridge your GBYTEs from Obyte to Kava using Counterstake.

• Utilize your GBYTE-on-Kava to borrow LINE tokens from linetoken.org.

• Bridge the borrowed LINE tokens back to your Obyte wallet using Counterstake.

• Hold your LINE tokens in your Obyte wallet to automatically qualify for a share of the Kava Rise rewards, distributed monthly based on your LINE token holdings. You'll receive your rewards directly to your Obyte wallet without any additional steps required.

• To reclaim your collateral, bridge your LINE tokens back to Kava, repay the loan on linetoken.org, and bridge the received GBYTEs back to Obyte. Alternatively, if the LINE token price has increased since you opened the loan, you can sell your LINE tokens on the market for a potentially higher return.

  
  

In the second case, by providing liquidity to select pools trading LINE tokens, you can earn rewards in LINE tokens. Simply stake your LP (liquidity provider) tokens on the staking page to start earning rewards.

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Additionally, you have the option to stake your LINE tokens directly to receive a share of rewards. These rewards are sourced from fees collected from borrowers and are distributed to participants based on their contributions to liquidity. The staking section is available on the website.

This way, LINE presents as a potentially profitable investment. Whether earning rewards through the Kava Rise program, leveraging liquidity provision for additional income, or simply holding LINE tokens for potential appreciation, users have diverse avenues to maximize their earnings while contributing to the growth of the LINE ecosystem.

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