i4i Finance Rebrands as Kokonut Swap
A next-generation AMM DEX powered by Crypto Pool
As i4i Finance’s products are evolving towards a 2nd generation “Crypto Pool” DEX protocol, Kokoafarm Labs has decided to move on from its original brand identity and rebrand itself to “Kokonut Swap.” This rebranding will take us closer to the following three main goals:
- Higher trading efficiency is made available through better swap mechanisms (compared to 1st generation DEXes)
- Diversified KSD utility as a medium of exchange
- Additional revenue sources via Crypto Pool diversification and better governance token holder returns.
This post will provide a detailed elaboration on i4i Finance’s status quo, why rebranding is necessary and what we aim to achieve through it.
Status Quo
Since its launch on Dec 28th, i4i Finance has now become the most widely used StableSwap protocol in Klaytn Network, with a TVL of $40M ~ $60M and a daily trading volume of $3M ~ $5M. Moreover, i4i Finance was the world’s first protocol that successfully imported Crypto Pool Algorithm(Curve’s 2nd generation DEX algorithm) into Solidity, a task that had not been tackled due to the complex mathematical formula which is hard to fully grasp. Crypto Pool launched with an exploratory KLAY-KSD pair which successfully managed huge trading volume compared to the small liquidity, demonstrating the market potential of 2nd generation DEXes.
Why: Clear growth barrier as a StableSwap Protocol
i4i Finance’s stableswap has provided the Klaytn ecosystem with an optimal swap system for stablecoins. However, focusing on Stable Swap was also a growth barrier as a trading platform, combined with limited revenue streams. To compensate for the low swap fees, the protocol had to reward liquidity providers with governance tokens, causing further inflation. For example, Curve Finance, the leading Stable Swap platform in DeFi boasting $100B+ TVL, only has a yearly fee revenue lower than $100M. CRV tokens worth multiple times the fees generated are emitted to liquidity providers to maintain such deep liquidity.
Why Crypto Pool
Crypto Pool is a next-generation DEX algorithm that expanded the Stable Swap formula to more general asset pairs with price volatility. Crypto Pool keeps impermanent loss levels as low as 1st generation AMM DEXes but boosts up capital efficiency by 5~10 times. The following flywheel is thus enabled:
Crypto Pool’s Flywheel
High liquidity efficiency from the advanced swap algorithm → Lower slippage that leads to higher trading volume capacity → Higher trading fee revenues → High APRs provided to liquidity providers with trading fees → Reduced inflation on the governance token → Sustainable liquidity provision
1st generation DEXes had to allocate a large portion of its governance token to secure liquidity among other competitors. Consequently, the governance token’s value plummeted from strong inflation, lowering the yield for liquidity providing also. To prevent such a death spiral, some protocols used some of the trading fee revenues to buy-back their governance token and burn them, but the buyback amounts are no match for the inflationary amounts, so the net cash flow was still negative as a whole.
On the other hand, Crypto Pools utilize an advanced swap algorithm to secure higher trading fee revenue with the same amount of liquidity compared to 1st generation DEXes. Crypto Pools can themselves generate sufficient incentives for the liquidity providers. Thus, inflation of the governance token can be minimized while improving the protocol’s revenue size, making the protocol’s cash flow net positive. As intended, i4i governance rewards have reached the above-50% KSD APY levels(90% on May 1st), contributing to the value accrual of the sEYE token. Expansion of crypto pools will lessen the inflation burden while absorbing the ecosystem’s demand for trading assets. This is a solid strategy for enhancing the protocol’s fundamental value and the governance token values alike.
Why Native Stablecoin
Currently, the Klaytn DeFi ecosystem is centered around oUSDT(formerly kUSDT), a bridged asset from Ethereum. While oUSDT has served as a stimulus for Klaytn DeFi ecosystem growth, it still remains a bridged, non-native asset. In order for the Klaytn DeFi ecosystem to become independent from external vulnerabilities, KSD — Klaytn’s native stablecoin — needs to take the crown as the dominant stablecoin throughout the ecosystem.
A good currency also needs to serve as a good “Medium of Exchange.” For KSD to become one, transaction costs using KSD must also maintain low levels. Towards this goal, Kokonut Swap aims to provide deep liquidity to KSD-centric Crypto Pools(especially KLAY-KSD), so that KSD becomes the most cost-efficient medium of exchange among all Assets-Stablecoin Pairs. For example, BTC-USD pair swaps would be made much cheaper by using KSD instead of USDT or DAI.
Conclusion
Kokoafarm Labs believes that Crypto Pool carries an immense potential to advance Klaytn DeFi Ecosystem to the next level. In that sense, i4i Finance, utilizing Crypto Pools, will expand its platform value as a general DEX platform. This is why Kokoafarm Labs decided on this rebranding: saying farewell to the former identity as a Stable Swap platform and welcoming the 2nd generation DEX platform.
Upcoming rebranding as Kokonut Swap will allow higher liquidity efficiency and better swap rates compared to 1st generation DEX liquidity pools, thus lowering the ecosystem’s overall transaction cost (and stimulating more transactions). Moreover, KSD will be adopted throughout the ecosystem as a cheap medium of exchange. Such expansion alleviates Klaytn’s bridge dependency, fostering an independent ecosystem of its own. KSD will also become the stablecoin with highest utility within Klaytn ecosystem. This rebranding will shift the focus from Stable Swap to a more generalized Crypto Pools, improving on the revenue generation and accruing more value to the governance token holders(with less inflation required to keep the liquidity).
With the new rebranding, pairs that currently hold high trading volumes in the ecosystem will also be added(Cryptoassets-KSD pairs and Cryptoassets-KLAY pairs). Specific opening plans and incentive programs will be announced in the near future. Stay tuned.
Kokoafarm Labs will continue its dedication to Klaytn DeFi growth and revenue expansion of the protocol.
Website: https://kokonutswap.finance
Telegram (KR): https://t.me/KokonutSwap_kr
Telegram (Global): https://t.me/KokonutSwap_global
Twitter: https://twitter.com/kokonutswap
Medium: https://medium.com/i4i-finance
