[EN] Next week’s update notice

Synthetics & Price Stabilization Algorithm Improvement Update

In addition to the previously announced synthetics service improvements, updates on algorithm improvements for price stabilization, such as changes to the bKAI algorithm and sKAI compensation logic, will be carried out next week.

[Summary]

  • Add bKAI deposit and remove sKAI distribution rate change logic for reduced round.
  • Add reward (sKAI) paid when depositing sKAI and change distribution logic.
  • Applying Stabilizing and Funding Rate to solve the synthetics premium issue
  • Added two new synthetic ticker and delisted two ticker
  • Add Stake Profit, KAI+bKAI to Boost target and change distribution ratio parameters

bKAI algorithm improvement

In other algorithm stable coin projects, the circulation of stablecoins can rapidly increase with the Bond Token charge premium when contracting →expansion conversion, but this has a problem of causing it to enter the contracting state again due to a rapid oversupply.

To solve this, the logic of temporary sKAI distribution rate change was applied without paying a separate premium when claiming bKAI, but the effect decreased after the 1st and 2nd reduction rounds and the price stabilization time was short because a separate lock policy was not applied.

New bKAI Algorithm

In order to reduce the difficulty of participation and ensure a period for maintaining price stabilization, we have made new improvements except for the bKAI issuance/circulation policy as follows.

  • When the reduction round begins, you can purchase bKAI up to 3% of the KAI circulation, and the bKAI circulation cannot exceed 35% of the KAI circulation.
  • There is no temporary change in the sKAI distribution rate of the reduced round.
  • To secure bKAI liquidity, set bKAI+KAI as a boost target. (default distribution rate 0%)
  • The bKAI deposit will be added the same as the sKAI deposit.
  • You can received rewards from round + 2 (of the round where you deposit, additional deposits, receive rewards), and withdraw from round +4
  • When expanding, 10% of the deposit reward will be distributed according to the equity ratio.
  • In case of reduction, 40% of the deposit reward will be distributed according to the equity ratio.

※ Detailed examples of expansion/reduction compensation ratios can be found in ‘SKAI Deposit Compensation Logic Change’.
※ The distribution ratio of expansion/reduction may change depending on the circulation and deposit amount.

sKAI will not be distributed to the KLAYswap bKAI+KAI pair from the next round at the time of the update.

Add sKAI Deposit Dompensation and Change Distribution Logic

The sKAI liquidity pool and the sKAI single deposit are separated, and currently, only KAI (in case of extended round) and vKAI are paid as compensation when depositing sKAI.

Stake Profile is added to the boost target so that sKAI can be distributed even in a single sKAI deposit, and the default distribution rate is 8%.

After the update, the existing compensation and StackProfit of the sKAI deposit are shared with the bKAI deposit, and the compensation distribution ratio of the sKAI/bKAI deposit is 90%/10% for expansion and 60%/40% for reduction.
※The distribution ratio may change depending on the distribution volume, deposit amount, etc.

Expansion/Contraction Reward Quantity and APR Example

※The amount of sKAI compensation in the example is collectively distributed every 8 hours, so it is applied as 3218.617 * 22% / 3 * 90% (or 10%).

The percentage distribution of sKAI/bKAI Stake rewards according to the expansion/contraction round will be applied from the round following the update, and the sKAI reward according to the boost result will be distributed from 16:00 the day after the update.

Synthetic Service Improvements

Stabilizing function and Funding Rate are added to improve the high premium maintenance of existing synthetics services.

Funding Rate

The funding ratio is determined on an hourly basis depending on the premium of the synthetics.
(Funding rate = premium * 4, minimum 1%, maximum 50%.)

The funding rate according to the premium changes every hour, and the sKAI reward according to the previous funding rate is also distributed.

Funding Rate Reward Quantity and APR Example

※The amount of sKAI reward in the example is collectively distributed every hour, so it is applied as 3218.617 * 2% / 24 *80% (or 20%).

Stabilizing

Supply to the market and curb premiums so that the price of ksAsset can track the price of real underlying assets.

Within the stabilization participant’s LTV, ksAsset are minted at Oracle prices, sold directly to the market, and stabilizing LP (sLP) is provided to certify participation in stabilization. While holding the sLP, sKAI will be paid every hour.

When repaying ksAsset, it is capped from sLP, and the proceeds from the sale are returned by the ratio of the amount of repayment.
Example) In the case of 6 ksETH participating in stabilization among 10 ksETH of ksETH issuance, if 5 ksETH is repaid, the issuance will be 5 ksETH, 1 ksETH for stabilization participation and 4 ksETH for general issuance. 833.3333333 KAI out of 1,000 KAI for stabilization participation will be returned.

Investing

This is Kai Protocol’s synthetics investment method to obtain the same financial effect and additional profit (sKAI) without directly investing in the real underlying asset.

After depositing in the corresponding ksAsset pair of KLAYswap, the acquired LP must be deposited in Investing. During the LP deposit period, investment returns (sKAI) are paid every hour, and there is no separate lock-up period. Only investment income can be received separately, and the amount of LP deposited and profit (sKAI) will be returned when LP is withdrawn.

Mint

The existing synthetic issuance function is maintained. After issuance, liquidity supply/sell/exchange can be freely used. However, since stabilization participation is not possible after Mint, you need to carefully choose how to participate in the investment.

- Participation in Investing/Stabilizing is possible from 08:00 the day after the update, and participation profits are distributed from 09:00.
- sKAI distribution through the existing KLAYswap airdrop will be maintained until 8:00 the day after the update.

Addition of synthetic asset stocks and delisting

Newly added tickers

ksTESLA and ksAPPLE will be added as new ksAssets. Participation in issuance and stabilization is only possible during Nasdaq operating hours, including pre-markets. The newly added stocks will be pre-IPO for about 24 hours due to fixed Oracle prices at the time of the update.

Delisted tickers

ksDUNAMU, ksYANOLJA, a 24-hour unlisted stock, will be delisted to add stocks with real underlying asset exchange operating hours due to no active transactions compared to maintenance costs, which are being spent on low price volatility.

The price may be unstable before and after the update, so please pay attention to the investment.

The delisting process

  • Change status to Close so that it cannot be minted
  • Excluded from the boost list.
  • Maintaining the repayment function.
  • Excluded from the liquidation target ticker.
  • Unexposed on the website after repayment is completed

It is applied at the time of the update, and sKAI distribution through KLAYswap airdrop is maintained until 08:00 the next day.

Boost basic distribution rate change.

With the addition of the boost target for Stack Profile and bKAI+KAI, the basic distribution rate will be changed as follows.

Change the boost base rate

After the update, the sum of the base distribution ratio may be displayed as 46% until a new synthetics ticker is added.

The update progress time will be announced on 10/18 (Mon).

Thank you

- Kai Protocol : https://kaiprotocol.fi
- Official Telegram : https://t.me/kaiprotocol
- Official Telegram announcement : https://t.me/kaiprotocol_channel
- Medium: http://kaiprotocol.medium.com
- Twitter : https://twitter.com/Kai_Protocol
- Kai Protocol DOCs : http://docs.kaiprotocol.fi

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