Chapter 4: Entropy — Launch Event

4 min readMar 20, 2022

Our second launch event is our public token launch “Entropy”, a launch event inspired by PRISM Forge.

We had previously announced an LBP event as our second launch event, however, after reassessing its complexity for users, we decided to pivot to using a simpler launch mechanism where all users will get $KNTC tokens at the same price.

Entropy is a transparent and easy to understand event that still prevents common launch risks such as front-running by bots and network congestion.

A total of 8 million $KNTC tokens will be sold (8% of fully diluted supply) and released to participants that deposit $UST into the Entropy pool. The amount of deposited tokens will determine the price of $KNTC which means the final price will only be known by the end of the event.

Entropy will happen in two stages:

Stage 1: Deposits and Withdrawals (4 Days)

During this period users can deposit as much $UST into the Entropy pool as they would like. As withdrawals are still enabled without any restrictions, depositing in the first stage comes with maximum flexibility: Users can deposit and withdraw any amount at any time before the start of Stage 2.

Stage 2: Withdrawals only (24 hours)

During this stage, participants can no longer deposit funds and only withdraw a maximum of one more time. Any funds that are withdrawn in this stage are irreversible and cannot be re-deposited. As deposits are disabled in Stage 2, the price of $KNTC can only get cheaper as time passes. At the end of the second stage, users will receive $KNTC tokens in proportion to the amount of $UST they have remaining in the pool.

The amount of UST that can be withdrawn in Stage 2 will decrease over time. At the end of every hour the withdrawal allowance will decrease by 1/24th (~4.2%) of the total amount each user has at the start of Stage 2. (Example: during the first hour users can withdraw 100%; 95.8% during the next hour; 91.7% during the next hour and so on until the end of the 24 hour period)

All the $KNTC tokens from this stage will be released immediately after Entropy so there will be no vesting periods.

The initial price per $KNTC can be calculated as follows:

(Total $UST in Entropy Vault) / (8,000,000 $KNTC Tokens)

The amount of $KNTC tokens the participant receives can be calculated as:

(Users $UST in Entropy Vault / Total $UST in Entropy Vault) x (8,000,000 $KNTC)

Significance for the Protocol

Entropy is the second crucial launch event for the Kinetic protocol and part of the funds will be used to bootstrap the $KNTC/$UST pool on Astroport. The remaining funds as well as the resulting LP tokens will be held by the Kinetic treasury.

Guaranteed Vault Access on Day 1 (despite initial debt cap)

Similar to the Lockdrop Event, 50% of the initial debt cap of the Kinetic Vault is reserved for Entropy participants. Participating in Entropy and/or Nucleus (the Lockdrop) will be the only way for users to be guaranteed to be able to borrow $kUST immediately after the launch of Kinetic.

After 4 days, the Vault will open to any users, however, it is not certain that the debt cap won’t be hit at that point (or quickly after).

As the initial debt cap will be a function of the Phaser funds (& therefore the amount raised in the lockdrop), we will announce the cap immediately before the launch of the Kinetic WebApp. The initial protocol debt cap is likely going to be 80% of the funds in the Phaser.

The individual debt cap for each Entropy participant is calculated by:

(Deposited funds of User / Total deposited funds) x (50% of debt cap).

What can I do with my $KNTC tokens after Entropy concludes?

As staking is going to be available from day one, and stakers are eligible to receive at least 37,5% of the Kinetic protocol fee (+ staking incentives), there is a use case for $KNTC from the get-go.

When will Entropy happen?

Barring any extreme market situations, Entropy will go live right after Nucleus (our Lockdrop) is finalized, which is expected to conclude on April 6th.