# 3. KTON Basics

## 3.1 What Is KTON?

* **Liquid Staking Token (Jetton):** A transferable representation of staked TON plus accrued rewards.
* **1 $KTON ≠ 1 TON:** The exchange rate grows over time as validator rewards accumulate.
* **ERC-20 Equivalent:** Jettons follow the **TIP-3** standard, the token interface for TON smart contracts.

## 3.2 How It Works

1. **Deposit** TON into the pool via <https://app.kton.io/> or the Telegram Mini App.
2. **Mint** — The pool issues **$KTON** to your wallet proportional to your deposit divided by the current exchange rate.
3. **Earn** — Validators generate rewards, increasing the exchange rate *TON per KTON*.
4. **Redeem or Swap** — Burn $KTON to reclaim TON (with an optional instant-withdrawal fee) or trade on DEXs for immediate liquidity.

## 3.3 Key Metrics

| Metric                       | Description                                             |
| ---------------------------- | ------------------------------------------------------- |
| **Total Value Locked (TVL)** | Total TON controlled by the pool. Visible on DefiLlama. |
| **APY**                      | Annualised yield after fees. Target **8 %** with MEV.   |
| **Exchange Rate**            | TON per KTON. Starts at 1.0 and increases with rewards. |
| **Instant Withdrawal Fee**   | Dynamic fee applied when swapping $KTON→TON instantly.  |

## 3.4 Contract Addresses

| Network     | Contract               | Address                                            |
| ----------- | ---------------------- | -------------------------------------------------- |
| TON Mainnet | **KTON Jetton Minter** | `EQBuIhXNNkWf9AW9miNGNTSO_uFZ23ejfIWrieXge5f733mw` |
| TON Mainnet | **Pool**               | `EQA9HwEZD_tONfVz6lJS0PVKR5viEiEGyj9AuQewGQVnXPg0` |
| TON Mainnet | **Controller**         | `Ef9GOR1wqJFPVpbHOxObSATkdbfTizRTmDi6DdjJFYaRKhoK` |
| TON Mainnet | **Validator**          | `Uf_lhdKTXcTJUnCVWYWXaoziqxkkLl-8PBP0be601QkE9TyT` |

> Always verify addresses on-chain via [TONScan](https://tonscan.org/) before interacting.

## 3.5 Fees

* **Protocol Fee:** A DAO-governed share of validator rewards goes to the treasury.
* **Instant Withdrawal Fee:** Dynamic, governed by liquidity conditions.

## 3.6 Risks

* **Validator Slashing:** Mitigated by diversification and conservative staking thresholds.
* **Smart-Contract Risk:** Minimised through audits and formal verification.
* **Peg Deviation:** Liquidity pools help maintain a tight KTON↔TON peg, but extreme market conditions may widen spread.

Next: **4. Technical Architecture**