> For the complete documentation index, see [llms.txt](https://docs.kuma.bond/kuma-protocol/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.kuma.bond/kuma-protocol/kuma-protocol/how-does-it-work.md).

# How does it work ?

The KUMA Protocol accepts to swap [regulated NFTs](/kuma-protocol/kuma-protocol/regulated-nfts.md) (KUMA NFTs) backed by bonds in exchange of [composable interest-bearing tokens](/kuma-protocol/kuma-protocol/composable-interest-bearing-tokens.md) (KIBT) based on the metadata of the NFT. A fixed number of KIBT will be minted with parameterized interest rates. The KIBT interest rate can be updated by having a user exchanging its NFT from the same risk category, or when central bank rates decrease.

The KIBT are [ERC-20](https://eips.ethereum.org/EIPS/eip-20) Interest Bearing Tokens (tokens that pay). They can be used across the broader blockchain ecosystems such as DeFi, GameFi or NFT platforms.

<figure><img src="/files/HRHQgtSPdrcgsizCSAKj" alt=""><figcaption><p>KUMA Protocol Overview</p></figcaption></figure>