> For the complete documentation index, see [llms.txt](https://docs.krillprotocol.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.krillprotocol.com/krill-protocol-docs/overview/the-problem-and-solution.md).

# The Problem & Solution

## The Problem in DeFi Yield

Current DeFi stablecoin yield mechanisms suffer from major structural dilemmas:

1. **High Volatility & Impairment**: High-yield farming strategies often expose user capital to impermanent loss or liquidation risks.
2. **Winner-Takes-All Mechanics**: Gamified yield protocols or traditional lotteries require forfeiting principal or reward small fractions of participants, alienating retail depositors.
3. **Custodial & Regulatory Vulnerabilities**: Centralized yield providers introduce opaque re-hypothecation and insolvency risks.

***

## The Krill Solution: Prize-Linked Savings

Krill Protocol introduces a **Zero-Loss, Yield-Funded Architecture** on Sui Move:

* **100% Principal Protection**: Capital is never pooled into risky trading strategies; it remains collateralized in primary lending markets.
* **Universal Yield Baseline**: Unlike traditional lotteries where losers get $0, Krill guarantees every participant receives at least a 22% baseline yield share.
* **Gamified Upside**: Generated surplus yield is pooled into top tiers (Tiers 1–9) and distributed transparently using on-chain VRF.


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