How Kensetsu Protocol Leverages MakerDAO’s Stability Strategies
Comparing MakerDAO and Kensetsu: stability strategies, multi-token systems, and real-world asset pegging in SORA’s DeFi landscape.
Introduction
In the rapidly evolving world of decentralised finance (DeFi), new protocols emerge regularly, each aiming to improve upon the foundations laid by their predecessors. The Kensetsu protocol, a recent initiative on SORA proposed by Shibarimoto, seeks to capitalise on concepts from Ethereum’s established MakerDAO platform, further enhancing SORA’s DeFi landscape. Lend us an ear as we explore the similarities and differences.
- MakerDAO
The MakerDAO is an open-source project governed by a Decentralised Autonomous Organization on Ethereum, created in 2014. It is one of Ethereum’s largest decentralised apps (Dapps). It’s primarily recognised for creating DAI, the first decentralised stablecoin pegged to the value of the US dollar. The MakerDAO protocol operates on a dual-token system involving DAI and MKR tokens, allowing financial policies to be governed via a “token-lock voting” using the MKR token.
- Kensetsu
The Kensetsu Protocol is designed as a comprehensive DeFi solution native to the SORA network, enabling active participation and interaction within the ecosystem. Utilising SORA technology, Kensetsu offers a stable and efficient framework that facilitates the seamless borrowing of pegged assets. The Kensetsu protocol operates a multi-token system that currently includes KUSD, a USD-pegged stablecoin, and soon will include KAU, a gold-pegged stablecoin; KEN, a token that rewards liquidity provision emulates the role of MRK; and XOR, the native SORA token is used for transaction fees, governance, liquidity provision and more.
Similarities Between Kensetsu Protocol and MakerDAO
Both protocols leverage blockchain technology to provide a secure form of real-world asset pegging through decentralisation. They also use smart contracts to automate operations and enforce agreements without intermediaries. Governance in both systems is community-driven, relying on token holders to make key decisions regarding protocol updates and policy changes, such as adding new tokens.
The Kensetsu Protocol distinguishes itself through several key features. Unlike MakerDAO, which uses Ethereum as its primary blockchain, Kensetsu is built on SORA, a fast and cheap transaction fee network built using the Polkadot SDK. SORA allows for a more efficient network through upgradability, governance, and interoperability.
Kensetsu is governed using XOR, allowing users direct influence over the protocol’s updates, policy changes and direction. Additionally, Kensetsu offers a vault that accommodates user needs and risk tolerances. On MakerDAO, this vault involves paying fees for the borrowed asset and is subject to potential liquidation.
Out With The Old, In With The New
Kensetsu leverages both native and foreign assets as collateral and supports multiple pegged assets, currently including KUSD (USD Dollar) and KAU (XAU Gold). Since these (Kensetsu) assets are partially collateralized with XOR and TBCD, they represent the first pegged assets partially backed by labour. As the SORA tokens are issued exclusively in exchange for goods and services.
In contrast, MakerDAO uses BTC and ETH as collateral assets, focusing only on security-driven monetary policies rather than economic growth.
Backing KUSD and KAU with labour connects their value to real-world economic activities, creating a tangible link between digital and physical economies.
Kensetsu can also provide flexibility in using the asset feeds available on the BAND protocol, dependent on approval through on-chain governance, to add a variety of algorithmic tokens pegged to the prices of fiat currencies and RWA. Furthermore, Kensetsu introduces KEN, a liquidity rewards token designed to incentivize participation in specific pools utilised by the protocol.
Implications of These Similarities and Differences
The shared focus on decentralisation and community governance enhances user confidence and participation in both protocols. However, Kensetsu’s emphasis on upgradability and efficiency will position it as a more adaptable solution in a multi-chain future, potentially offering broader applications than MakerDAO’s Ethereum-based protocol.
Future Outlook
As the DeFi sector matures, the evolution of protocols like Kensetsu will likely influence financial stability and new developments, further enhancing the decentralised ecosystem. The ongoing growth of these platforms will also test their governance models in the face of increasing regulatory scrutiny.
Conclusion
Both the Kensetsu Protocol and MakerDAO provide crucial insights into the evolving landscape of DeFi, highlighting the desire and necessity for a protocol offering decentralised over-collateralized assets. Ultimately, with its innovative features and broader asset collateral options, the Kensetsu protocol emerges as a potentially more versatile and forward-thinking solution in decentralised finance.
About SORA
SORA is an innovative, adaptive, non-debt-based monetary framework that facilitates economic stability, particularly for financially vulnerable countries. As a groundbreaking platform, SORA exemplifies the potential of blockchain technology in fostering a more inclusive and stable global financial system. Its integration in projects like the Bokolo Cash CBDC signifies a new era in digital currency, aligning technological advancements to achieve broader economic stability and resilience. Through its unique approach and capabilities, SORA plays a pivotal role in the evolution of global finance, particularly by supporting economies that need innovative and sustainable financial solutions the most.
