Investing in Kodiak Finance

“Liquidity is all you need”

Liquidity is the most important factor for DeFi applications to succeed. However, recent adverse market conditions have not only pulled liquidity out of the market as a whole, but also fragmented liquidity due to the siloed structure created by L2s building their own specifications.

To solve this problem, Berachain was born as an L1 focused on securing liquidity. Berachain proposes a new consensus mechanism called Proof of Liquidity (PoL). PoL aims to accomplish three things:

1. Systemically build Liquidity
2. Solve stake centralization
3. Align protocols and validators

Since announcing its plans to create a chain, Berachain has been met with skepticism, including “it’s a fake network” and “it’s just a meme.” But after raising $42M in funding from top-tier investors including Polychain and Hack VC in April 2023, and launching its testnet Artio in January 2024, Berachain is preparing for a full-scale launch in Q1 2024.

DEXs have always played a pivotal role in emerging ecosystems. They are often the first platform and liquidity conduit for new applications launching their tokens into the ecosystem. This is especially true for DEXs that have earned the label of “community-native”.

Enter Kodiak

Kodiak offers the following key features

1. Decentralized Exchange (Kodiak DEX): Provides users with a non-custodial, capital-efficient trading and liquidity provision experience through a centralized and full-range AMM.
   
   One of the differences between BEX (a chain-owned DEX) and Kodiak is the support for centralized liquidity functionality. BEX does not support concentrated liquidity because if it did, there would be a risk that certain users could Sybil Farm BGT rewards by providing liquidity to a very narrow range of users. Kodiak, on the other hand, supports concentrated liquidity, which provides users with high capital efficiency.
2. Automated Liquidity Manager (Kodiak Islands): Automated, set-and-forget management that eliminates the need to constantly check to see if an asset’s price is within the price range set when providing liquidity.
   
   One of the side effects of centralized liquidity is the fatigue that comes from liquidity providers having to constantly manage their positions. If the price of the assets in the pool falls outside the range set when providing liquidity, the liquidity provider will not be compensated. To address this, Kodiak provides the ability to automatically adjust liquidity range.
3. Integrated Incentive Layer (Sweetened Islands): Leverages Berachain’s PoL mechanism to provide sustainable incentives for liquidity on the Kodiak Islands
4. No-code Token Deployer Factory (Panda Factory): Supports the deployment and initial liquidity of new, volatile tokens (e.g., memecoin) with undiscovered prices

It’s worth noting that all four main features are focused on liquidity, which is in line with Berachain’s goals.

Road to community-native DEX

Kodiak was developed with modularity in mind, meaning other protocols can build additional products and even entire protocols on top of the Kodiak tech stack! For example, Kodiak liquidity positions can be utilized for options and perpetual derivatives (e.g. Panoptic & Infinity Pools) as well as within money markets as collateral. This composability plays an important role in positioning Kodiak as a foundational building block within the Berachain ecosystem. Kodiak is the only DEX supported by the Build-a-Bera accelerator.

Additionally, Kodiak is positioning itself to be among the first projects eligible for BGT whitelisting and BGT emissions. Initially, only chain-owned applications (BEX, Berps, Bend) will be eligible to receive BGT, but over time, the list of eligible projects will expand as governance is opened up. In the meantime, Kodiak has been working closely with the Berachain Foundation to ensure its Islands positions (automated / managed liquidity positions) all compatible with Proof of Liquidity (PoL).

Nonce Classic decided to invest in Kodiak because we believe that Kodiak will serve as a platform to connect the community with new projects emerging on Berachain, and that the project has the potential to grow with the Berachain ecosystem as it grows.

Kodiak is currently not live. Please be cautious of scams. Their Twitter is the only source of accurate information!

Kodiak Website | Twitter | Medium

About nonce Classic

nonce Classic is a crypto VC borne out of Seoul’s largest Web3 hacker house. Backed by a strong alliance of builders and angels, nonce Classic lays out a bedrock for founders by providing a strong community of like-minded people

Website: https://nonceclassic.org/main
Twitter: https://twitter.com/nonceclassic

Disclaimer: This article is for informational purposes only, not investment advice. Always consult with a professional for investment decisions. Information here, sourced from elsewhere, has not been independently verified by nonce Classic, and its accuracy isn’t guaranteed. The views expressed are the author’s and may not reflect those of others at nonce Classic. Opinions can change without notice.

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