Cryptocurrency exchanges are major catalysts when it comes to adoption, especially when looking at mainstream institutions still being hesitant toward dealing with virtual currencies and assets due to regulatory uncertainty. It is therefore important for this industry to have strong, reliable exchanges, and while centralized and pseudo decentralized exchange models have been the standard in the space for almost a decade, better solutions are coming to the market, providing a truly decentralized model, while the entire experience feels indistinguishable from its centralized counterparties.
Kira is a next-generation, hyper-scaled decentralized exchange (DEX) engineered for cross-chain transfers and frictionless trading. On the one hand, Kira aims to deliver all the liquidity, performance and trading sophistication of a centralised exchange but without the custody, downtime and fraud risk that plague our industry. On the other hand, Kira offers stronger security guarantees than state-of-the-art DEXs, but with a powerful governance model that builds trust and engagement whilst actively resisting corruption.
All of our competitors (both centralised and otherwise) have user interfaces that represent, at best, performance bottlenecks, and at worst, catastrophic single points of failure. Users of centralised exchanges (CEXs) frequently discover that UIs can become unresponsive or altogether inaccessible during times of peak trading activity; inflicting frustration, monetary loss and opportunity cost. Users of today’s DEXs experience similar issues, but can be further inconvenienced should the exchange’s privately owned network layer (and their single identifiable operator) become the target of regulatory pressure; for example, one of the most popular DEXs was recently coerced into foisting KYC onto its users for compliance purposes.
Kira, however, on the other hand, offers a completely decentralised trading experience. Because the KiraEx trading UI is delivered trustlessly over the blockchain itself, Kira (like Bitcoin) puts itself beyond jurisdiction and enables peer-to-peer exchange with full anonymity. No KYC is ever required and users retain full and exclusive custody of their funds.
Today’s DEXs inherit scalability limitations from their parent blockchains, and the resulting poor transaction throughput and slow finality leads to wide spreads, shallow order books and increased operational risk for market makers. Kira, on the other hand, employs a hub-and-spoke architecture such that each order book can potentially be served by a dedicated Tendermint blockchain. Furthermore, each of these shards employs a small, but highly trusted, validator set that is elected by governance; this approach, called Multi-Bonded Proof of Authority (MBPoA) enables Kira to deliver transaction speeds competitive with centralised exchanges but with better availability guarantees.
Like we mentioned before, both centralized and decentralized exchanges often rely on server-side solutions. This hinders a user’s ability to access their funds or trading tools during times of stress, attacks or maintenance, as well as providing malicious actors with a number of ways to threaten the user.
We’ve decided to take a whole different approach to how the user interacts with the Internet of Blockchains by allowing direct access to the interconnected markets straight from the client-side. What does this mean for the end-user? Well, it means that the platform can be reached at any time, and there is no frontend downtime due to its maintenance or any other factors. Better yet, it provides users with the security measures that centralized exchanges simply cannot provide due to their nature. With Kira, you will have the option to sign for and propagate transactions manually using your hardware wallet and our web client hosted within the security of your own browser application.
Since the ‘back’ and ‘front-end’ of the Kira Exchange is not hosted on any centralized server (or us), it’s actually hosted (public/private full nodes) by the network operators (back-end) and through our static web application (front-end). Think of this as a client-side wallet as opposed to an online wallet. This means that Kira will always keep users anonymous and no KYC is ever required and that Kira doesn’t hold custody of your wallet or coins, therefore immensely reducing risk of losing any money through hacks. There is no centralized power or admin, like on a server-based centralized exchange, meaning you’re not relying on anyone to access your funds, and no down-time during ‘high-stress’ periods.
The key difference between Kira’s ‘web-page’ is that it is static, as opposed to dynamic, meaning your browser communicates directly with the blockchain application (our exchange), without any server being in the middle. It also means that the user has the option to locally store our ‘client’ on their PC and easily launch it if needed.
In order to ensure long-term decentralization, Kira makes use of MBPoS.
Multi Bonded Proof of Stake is a proprietary consensus mechanism which allows delegators to stake more than one asset at a time.
We believe that all of today’s proof of stake blockchains exhibit a fundamental design weakness that, over the long term, will cause them to drift toward insecurity and instability. Observing how the current crop of PoS blockchains are behaving in the wild, it is clear that there’s a tendency for the network’s staking token to gradually accumulate in the hands of fewer and fewer participants; ultimately resulting in the centralisation of power, the potential for cartel-like behaviour and the emergence of soft-spots in network topologies.
One of the key innovations that Kira offers is Multi Bonded Proof of Stake (MBPoS), which is a novel consensus mechanism that allows delegators to stake many different forms of assets, including tokens from around the internet of blockchains (incl. Bitcoin, Ethereum and Cosmos / Polkadot chains). In this way, the Kira network is secured by the underlying value of multiple cryptocurrencies each with different token distributions and varying centralisation risk. In addition, assets are routinely rotated in and out of our whitelisted asset pool, continually altering the centralisation profile of the Kira network, and presenting a complex moving target for would-be attackers.
As for liquidity, Kira allows staked assets to be transferable (in the form of slashable shares), allowing speculators to purchase and trade shares of these stakes, and also allowing delegators to trade their own stake without having to wait for the tokens to be unbound. A dynamic inflation mechanism exists to create a continuous incentive to stake while growing amount of bonded assets increases use of the exchange, which, through increased revenues from exchange fees provides even more incentives to stake and trade bonded stakes. This, in turn, creates what we call a ‘self-fueling perpetual liquidity pool’.
Stake & Earn
Although Kira Settlement Layer (aka Hub) is secured by its native stake-able asset called Kira Exchange Token (KEX), users can also earn passive income from block rewards, network and exchange fees by staking their BTC, ETH, ATOM, DOT, IRIS, SENT and other tokens (including their staking derivatives which will allow to benefit from rewards on multiple chains at the same time) whilst still being able to trade assets at stake.
All foreign tokens delegated to the Kira validators, not only increase our network security but also liquidity. As always, this mechanism will be managed by the governance that controls interest rates (rewards for staking foreign assets) and this way induces a flow of tokens into the Kira network.
Your token, on Kira, no hassle.
At Kira, we believe in the promise of unstoppable markets, but more critically, we understand that the future of the proof-of-stake hinges on uncensorable market access. In all centralised exchanges (and a concerning majority of DEXs) there is a gatekeeper who decides which assets are listed and which aren’t. Kira takes entirely the opposite approach; by offering a simple and permissionless process, new tokens can be listed in a matter of minutes. We call it ‘Permissionless Instant Token Listing’.
It works like so:
- In order to list a new token, there has to be a minimum amount of whitelisted tokens locked, in order to enable the trading of the new asset.
- The amount which has to be locked is defined by the governance.
- Users are able to collectively lock assets, meaning that it isn’t up to only one person whether a token is traded or not.
- If the amount of locked assets is not met, or if the assets are unlocked, the trading of that token will be stopped within a predefined time period.
In this way, tokens are included by default but can be removed at a later date by community action, thus decentralising decision making in the listing process.
We are also aware that there are many tokens out there which are manipulated, fraudulent, etc… This is why we make use of ‘exchange zones’. These are zones dedicated to trading known vs. unknown assets. If Kira Governance recognizes the token, it will be traded in a high-liquidity, trusted exchange zone, and the Kira Governance will also use it as part of the multi-staking MBPoS mechanism, meaning it’ll be whitelisted as a fee-token as well. However, if it is a new token which is not yet recognized, it will be placed in a separate, dedicated zone, where only unknown and not trusted tokens can be traded allowing users for a clear distinction between known and highly speculative assets without restricting access to any market. Finally, governance will hold power to suspend trading of any asset in case of emergencies or non-compliance with the SLA which is part of the Code of Conduct that all actors in the network have to comply with. The Token Lock Mechanism is used in a similar way as bonding, tokens are placed at stake to vouch for the legitimacy of the market same as delegations vouch for the validators being honest.
The Community Pool
To maintain, efficient long term operations it’s not enough to only decentralize the network itself. The development effort and many other off-chain processes have to be continuously supported and incentivised without any single authority or even trusted party in charge.
The Community Pool is used by Kira as a form of the on-chain contracting system, resembling the logic of real-world contracts between an employer and their employees. The contracting mechanism is funded through block rewards and slashing penalties, which guarantees its continuous operations. This enables the network to hire and incentivise off-chain actors to support, improve, audit and in the future employ and fully take over management of the Core Development Team consisting of public as well as anonymous actors who earned their trust.
As with all platforms and models where there exists governance, there must also exist a set of rules to keep things from going out of control.
Kira offers a progressive roadmap that sets out the evolution of the project’s governance, from its technocratic roots, toward a state called ‘enlightened democracy’ where decision making collapses into a bicameral legislature where the network’s validators and a panel of chain-conscious ‘counsellors’ share decision making power via written code of conduct.
The first iteration of Kira’s governance system is a ‘Technocracy’. This is a governance model which dictates that voting power shall not be proportional to your wealth but rather distributed equally among the most trusted and valuable operators in the network (who follow the ethics detailed within the Code of Conduct). Stakes can still be bonded to validators in exchange for a proportional amount of rewards for the delegators, however, voting power and chance to propose new blocks is equal amongst the entire governance set. Adding on to that, Kira will further be protected by a Code of Conduct, as the on-chain rules may not be enough since no network can ever comprehend the ‘complexity’ of the real world. Every network at its core is always operated by a set of operators/validators who can collude and not comply with ethics, performing an attack regardless if there are a lot of assets at stake or not — they can do it due to bribery, threats or just on a whim. The Code of Conduct aims to prevent all that and introduces off-chain rules to protect Kira’s integrity as an exchange… Read more about the Code of Conduct on Page 12 of the Tokenomics Paper.
Lastly, enlightened democracy is the model that will succeed technocracy. The main difference is that during the technocracy era, only validators can vote on governance proposals in order to maintain and improve the network. Over time, however, these validators will begin choosing new governance members called ‘Counselors’. These new governance members are to provide valuable technical and non-technical input regarding network operations, however, they may not propose new blocks since they are not validators. Once the number of counsellors exceeds the number of validators, the governance has officially evolved from a technocracy into an enlightened democracy, where non-purely technical but chain-conscious actors have full governance power over the network.
Kira Exchange aims to become the first true decentralized exchange, fully owned, governed, managed, protected and operated by the community. Kira Exchange does not rely on a centralized server for back and front-end hosting and as such, the network will always be easily accessible for the end-users.
The rules that govern Kira are not centrally decided upon, as we allow the community to stake and validate, and thus govern. The community does not have to wait for us to implement any token for trading, due to our permissionless instant listing model. Kira’s developers, as well as other open-source, third-party developers, are constantly incentivized to improve, audit the code and evolve the network thanks to the governance-controlled community pool and the on-chain contracting system.
We truly believe that Kira’s approach to an exchange, decentralized in nature and governed by a real enlightened democracy, is the only way to approach exchanges within the cryptocurrency community.