Chapter 2: The Roadmap
Kinetic will put your money in motion and make it work harder than ever! V1 of Kinetic will lay the groundwork for building products on top of self-repaying loans.
As announced in our recent Twitter Space AMA, we are targeting a launch in Q1. We are currently in the final steps of testing and hence figured the timing is right to give an overview of protocol mechanics as well as several events at launch and beyond.
In this article we intend to outline the launch sequence consisting of Nucleus, Entropy & Discharge. Further we will summarise the functionality that users can expect at launch. Finally, we will shine some light on features that we will focus on immediately post-launch.
Take-Off in Q1
Kinetic is going to have a two phased launch to the protocol and token. There is going to be a lockdrop and a liquidity bootstrap pool event followed by the airdrop.
Nucleus
Nucleus is the first phase of our token distribution event, it is our lockdrop. A lockdrop is a token distribution event where a user locks up a token for a certain period of time in exchange for the issued (native) token.
There are two functions of our lockdrop. Firstly, it will create and seed a $kUST/$UST stable swap pool. Secondly, it will seed the Phaser.
Users will be able to deposit $UST into the lockdrop. After the deposit phase has concluded, the locked $UST will be deposited into Kinetic to borrow $kUST worth 50% of the locked amount. The protocol will then close the position by paying off the loan with the deposited $UST. This will leave the lockdrop contract with a balance of 50% $UST and 50% $kUST. These tokens will now be deposited into a stable swap pool to create initial liquidity for the $kUST/$UST pair. The 50% UST that the protocol used to pay off the debt while closing the position will be used to seed the Phaser .
After the lock period is over, users will be able to withdraw their $UST and $kUST from the stable swap pool. The entire time these tokens are locked, they will be staked in the LP (Liquidity Pool) staking contract and accrue rewards.
Recently Astroport conducted a lockdrop in which users locked LP tokens representing an AMM pool share (more information can be found here). As described above, for Kinetic we will be doing things slightly differently. Stay tuned for another chapter of this series with more details on the lockdrop.
Entropy
Entropy is the second phase of the token distribution event, it will be Kinetic’s Liquidity Bootstrap Pool (LBP) event for the $KNTC token. In this phase we will start an LBP for the $KNTC/$UST pair in which all the value created will be held by the treasury. More information on LBPs can be found here.
Update: Based on community feedback we have decided to go with a different type of launch format for our second launch phase Entropy. It will be more similar to the Prism Forge launch, where the price is the same for every user, and only depends on the amount of tokens & the user deposits.
Discharge
Discharge is our airdrop, it will commence after the Entropy phase has concluded. We’ve recently laid out our Airdrop for Terra, Anchor & Alchemix communities in our previous blogpost Chapter 1: The Airdrop. If you want to find out if you are eligible for the airdrop, you can read up on it here. Discharge will happen after the Nucleus and Entropy events have concluded. Eligible users will be able to claim their tokens on the Kinetic Web App.
Features on Launch
The focus at launch of Kinetic will be protocol safety. We are undergoing audits and will closely monitor protocol & user dynamics in the early days of the protocol. The audits are being conducted by Oak Security, covering the core contracts of Kinetic.
Prioritising protocol health & safety means that we may not have all features at launch but we want to build a sustainable foundation, including the protocols we rely on. Initially, users will be able to deposit $UST and $aUST into the vault and take out $kUST loans against it.
UST deposit
On launch the first available vault will be the $UST/$kUST vault. It is the intended main vault of Kinetic, allowing users to deposit $UST and enabling them to borrow up to 50% worth of the deposited collateral (denominated in $kUST). The collateral is deposited into Anchor Protocol earning approx. 19,5% yield on the $UST, while other yield strategies will be deployed for other assets.
aUST Deposit
In addition to depositing $UST, users can also deposit $aUST into the vault. This allows Anchor Protocol users to borrow against their idle $aUST through a self-repaying loan on Kinetic.
Initial Debt Cap
In order to ensure protocol and peg stability in early protocol days, there will be an initial protocol debt cap. By capping the total borrowable $kUST amount at launch, we aim to have a close eye on protocol mechanics and user behaviour. The $kUST debt cap is aimed to be increased via governance as soon as it is appropriate. We are going to announce the initial debt cap before we launch the web app.
Coordinator
The Coordinator mechanism enables Kinetic to stay sufficiently funded without being over-funded. We have looked at other protocols and noticed that the collected fees are fed into parts of the protocol that don’t get used efficiently. With this knowledge we set out to think about how to ensure we are not sending funds to a place where they will not be used. We came to the conclusion of having a “switch” in the protocol, that would distribute funds to different pots, until a certain criteria is met.
Let’s take a community fund for example: In many cases the funds in a community pool don’t get used very often, but the community pool still grows in size. For this reason, the Coordinator would be instantiated with the community pool having a max amount of tokens. Once this threshold is met, these funds would be redirected to $KNTC stakers.
Staking
We aim to decentralise the protocol from the get-go and therefore Kinetic will launch with auto-compounding governance staking. Users will be able to stake $KNTC tokens in return for $xKNTC tokens. The yield for staking comes from two different buckets. The first is protocol fees — from the start, upwards of 50% of the protocol fees will go to $KNTC stakers. This share of the protocol fees will increase over time as the community pool and developer fund becomes fully funded. The second source is staking incentives via token emissions.
Once the protocol has stabilised after the initial launch period we plan on rolling out more features, some of which are outlined below.
V2 Features
And we won’t stop at launch. We have a lot planned for Kinetic but in this blog post we will only lay out a few immediate features with the highest priorities. We aim to focus both on adding more yield strategies and more usability to Kinetic.
CDP Streaming
Collateralised Debt Position streaming (CDP streaming) is a feature our core developers can barely wait to implement. It allows the user to stream $kUST from the CDP to another account or allow another account to withdraw from the CDP of the users account. There are countless features this enables, one of the most exciting being card payments directly from CDPs. Employees could be paid directly from CDPs. Friends or family members could withdraw from your CDP without ever being allowed to touch your collateral. The possibilities are unlimited.
Adding other Yield Strategies
While our core functionality & focus at launch revolves around $UST, $aUST & $kUST, we plan to support borrowing against other assets in the future. Theoretically any yield bearing asset could be integrated, but $LUNA/$kLUNA is surely one of the most obvious ones.
Which strategies will be implemented is ultimately up to the protocol governance, but we are going to shift focus to this immediately after the initial launch of Kinetic.
Depositing Yield bearing Assets to accelerate Repayment rate
Another feature with high priority on our roadmap is enabling faster loan repayment by depositing additional yield bearing assets (e.g. PRISMs $yLUNA). Kinetic will utilise the accruing yield for repayment of the outstanding $kUST (or later other k-Asset) position. This will allow users to pay off their CDP faster than ever.
Insurance Contract
As the protocol grows we would like to help provide insurance in the event of a fault happening. The insurance contract will be funded by protocol fees in $UST. There will be an insurance cap however. Like previously outlined, at Kinetic we don’t want to send unneeded funds to places where they are not being used. For this reason we will work on formulating a way for the coordinator to fund the insurance contract based on the total TVL in vaults.
What’s Next?
We are currently in the final stages of internal front-end testing and will finalise testing with some external testers. All contracts are deployed on the testnet and we are highly anticipating our launch this quarter.
Stay tuned for Chapter 3: Lockdrop by following us on Twitter and joining our Telegram Announcement Channel.
Website: kinetic.money
Twitter: Kinetic Money
Telegram: Kinetic Announcement Channel
