Kaia Consensus Liquidity: A New Paradigm in Blockchain Liquidity

Liquidity and innovation are the cornerstones of sustainable and robust DeFi ecosystems. To this end, we’re proud to introduce “Kaia Consensus Liquidity”, a groundbreaking DeFi innovation that aims to bolster the Kaia’s economic security while expanding its DeFi ecosystem through deep liquidity. In this article, we’ll delve into the key features, characteristics, and milestones of Kaia Consensus Liquidity (CL).

*Please note: The name “Kaia Consensus Liquidity” and all information provided are preliminary and subject to change as we develop the initiative further. Final specifications, details, and the official name will be shared when we create a governance proposal.

What is Kaia Consensus Liquidity?

Kaia Consensus Liquidity is an innovative solution that enables simultaneous participation in validator staking and DEX liquidity provision on Kaia. With CL, General users will be able to utilize a portion of their staked KAIA towards the creation of a CL liquidity pool by pairing their project’s token with KAIA — subject to governance approval of course.

Enhancing Chain Security and Ecosystem Vitality Simultaneously

In the Kaia ecosystem, validators are required to stake a minimum of 5 million KAIA to bolster chain security. However, at the same time KAIA needs to be available as tradable liquidity to energize the ecosystem and provide diverse utilities.

With CL, general users will be able to continue securing the Kaia ecosystem while also contributing to the vibrancy of Kaia’s DeFi ecosystem through LP provision. In doing so, the general users will be able to continue earning block rewards while also earning swap fees from that LP — eliminating the need to separate DEX liquidity provision and validator staking. On the other side, users will be able to enjoy the benefits of deeper liquidity in Kaia’s DeFi ecosystem. The result? A positive synergy for both the Kaia ecosystem and CL token projects.

Greater Participation, Enhanced Rewards

Kaia Consensus Liquidity promises several benefits for the Kaia ecosystem:

• Amplified rewards: Participating users earn dual rewards through a single KAIA deposit, bypassing the need for separate engagements in DEX liquidity provision and validator staking.
• Boosted chain TVL: Large-scale liquidity creation through KAIA and other token pairs will significantly increase the chain’s Total Value Locked (TVL).
• Ecosystem-enhancing fee burning: A portion of the CL DEX fee revenue from the foundation and CL participants will be burned or re-deposited in liquidity.
• Organic synergy: Partnerships with global token projects participating in CL will foster organic synergy within the Kaia ecosystem, driving expansion and sustainability.

Synergistic Effects with Successful Projects

The success of Kaia Consensus Liquidity hinges on attracting high-quality projects. To this end, the Kaia DLT Foundation will offer various incentives to entice participation from outstanding projects, paving the way for more quality projects to join as CL participants.

• Kaia ecosystem synergy
  The projects and their tokens that are participating in CL (CL tokens) will receive priority consideration for new Kaia mainnet features. Projects participating in CL can collaborate with the foundation on Kaia ecosystem expansion programs, fostering mutual benefits. The foundation aims to onboard projects from diverse sectors like gaming and social media that can enhance Kaia’s ecosystem.
• New utility development
  The foundation is exploring new features to enhance utility for CL tokens. One notable utility enhancement under discussion is the prioritization of CL tokens for review and selection as gas payment options when Gas Abstraction is implemented. More details will be shared in due course.
• Sustainable token economics
  CL tokens can benefit from a portion of CL DEX swap fees (in KAIA and CL tokens) being burned or re-deposited into liquidity as needed. This mechanism helps maintain the continuity of CL token projects’ existing token economies.

Key Features

• Liquidity Pool Creation: Forms liquidity pools with KAIA and the CL tokens approved through Kaia governance.
• Staking and Liquidity Provision: Participants can utilize a portion of their staked KAIA to simultaneously engage in DEX liquidity provision and validator staking.
• Fees and Rewards: In addition to staking rewards, fees generated from DEX swap transactions provide additional revenue opportunities for LP participants.
• Burning Policy: A portion of the fee revenue from the foundation and CL participants is burned or re-deposited into liquidity, effectively increasing the real staking APY.

Project Timeline

The Kaia Consensus Liquidity project aims for the following key milestones:

• The schedule below is subject to change based on circumstances.
• 2024 Q4: CL development (including new features for CL DEX and securing CL token utility) and selection of CL participants
• 2025 H1: Launch of CL DEX (including new features to secure CL token utility)
  - Phase 1: Only the foundation and CL participants can participate as LPs in CL DEX (CL DEX swap trading is available to everyone)
  - Phase 2(*TBC): Anyone can freely participate as an LP in CL DEX

Kaia Consensus Liquidity will open new horizons for liquidity provision in the blockchain ecosystem and offer users greater financial benefits. We look forward to your interest and participation.

FAQ

• Who can participate in CL DEX LP and from when?
  We aim to launch Kaia Consensus Liquidity in the first half of 2025. Initially, the foundation and CL participants will lead as LPs. Later, we plan to gradually expand LP participation opportunities to all users who can provide liquidity for the respective token pairs.
• Who can use CL DEX swap trading and from when?
  CL DEX swap trading will be open to all users without restrictions upon launch.
• How are staking rewards and DEX swap fees received?
  The method of receiving staking rewards remains unchanged. DEX swap fees are automatically distributed according to the LP’s liquidity provision contribution.
• Can it be used in all liquidity pools?
  Pairs are formed with KAIA only for CL tokens approved by Kaia governance and can only be used in those liquidity pools.
• How are CL participants and tokens selected?
  The foundation selects candidate tokens from various industries such as gaming and social media that can provide visible and positive synergy effects to the Kaia ecosystem. They are confirmed as CL tokens upon approval by Kaia governance.
• What is the first CL token and when will it be announced?
  We are currently in productive discussions with participants who can make long-term stable contributions to the Kaia ecosystem. We appreciate your interest and patience.
• What benefits can liquidity providers gain?
  With a single deposit, you can secure both validator staking rewards and additional income from DEX liquidity provision simultaneously.
• What utility will CL tokens have on the Kaia mainnet?
  As CL tokens are Kaia-based tokens, they will be prioritized when introducing new features to the Kaia mainnet, such as being accepted as a payment option for Gas Abstraction.
• Won’t CL decrease KAIA staking APY?
  A portion of the foundation’s fee revenue from CL DEX can be burned or re-deposited into liquidity. While the apparent APY may decrease due to increased staking volume, this decrease is minimal at less than 0.01%. Considering the value appreciation effect due to the burning policy for ecosystem reinvestment, the real staking APY could potentially increase in the long term. Furthermore, partnerships with global token projects participating in CL will have positive impacts on the Kaia ecosystem in various aspects including business, technology, and economics.