Synthetics
About Kai Synthetics
Kai Synthetics is Kai Protocol's DeFi service powered by smart contracts on the Klaytn network that enable the creation of synthetic assets called ksAssets (hereafter synthetic assets).
Because Kai Synthetics' synthetic assets track only the price of the real underlying asset, even if you don't invest or hold the real underlying asset on the real exchange, you can have the same financial effect, and you can also get additional profits such as transaction fees and sKAI compensation.
You can deposit KAI as collateral on the Kai Protocol website and participate in short (short selling) or issue synthetic assets. Alternatively, you can participate directly in long (buy) with the KAI you have in your wallet.
In order to ensure that synthetic asset transactions in KLAYswap are guaranteed, Kai Protocol ensures that there is always sufficient collateral for synthetic assets in the protocol.
How to Collateral & Withdraw
Collateral
If KAI is deposited as collateral (collateral ratio 150%), synthetic assets can be issued within the collateral ratio.
Example) When the KAI price is $1, the maximum amount that can be mint is $666.67 when depositing 1,000 KAI collateral.
Synthetic assets can be issued within the Mint Limit compared to collateral. If the mint limit exceeds 100%, it will be reported as liquidation, so you must maintain adequate collateral.
Withdraw
KAI deposited as collateral can be withdrawn at any time. If there are synthetic assets that require redemption, you can withdraw them within the mint limit.
If the issuance limit is exceeded 100%, it will be reported as a liquidation target, so it is necessary to maintain adequate collateral.
How to Long (Buy)
Longs (buys) can make a profit when the price of the underlying asset rises.
When the underlying asset exchange price (hereinafter referred to as the oracle price) rises, the premium is lowered by the difference with the market transaction price (hereinafter referred to as the market price) on KLAYswap.
At this time, the market price rises in line with the oracle price as participants participate in the long (buy) in order to obtain a high reward according to the market logic that the market price will also rise and the funding rate.
Therefore, it is an investment position to buy synthetic assets at a low price and sell them at a high price.
Convenient Buy
You can easily buy and stake with the KAI you have in your wallet.
[Convenient Buy Flow]
Participant Action: Enter the amount of investment with the KAI you have in your wallet and click the long (buy) button.
Contract action
Check the KAI+ksAsset exchange rate
Check the expected price impact and slippage
Participant action: Sign the wallet after clicking the long (buy) button
Contract action
Exchange part of the investment quantity KAI for ksAsset for optimal LP composition
※ Slippage is allowed up to 0.5%, and if it exceeds, the transaction is canceled.
Obtain KSLP by depositing KAI and ksAsset pairs Deposit KSLP in the long (buy) contract
Manual Buy
In KLAYswap, deposits can be made with KSLPs obtained after a single liquidity supply or a pair liquidity supply.
This can be used as a way to prevent the premium from increasing with automatic buying. If synthetic assets are issued at oracle prices within the issuance limit and liquidity is provided in pairs with KAI held by KLAYswap, it may not affect the market price.
[Manual Buy Flow]
Participant Action
mint of ksAsset of Oracle price with KAI collateral
Go to KLAYswap and proceed with pair deposit
Enter the amount of KSLP on the Kai Protocol website and click the button
Contract Action: Check shares of, current APR, estimated APR
Participant Action: Sign the wallet after clicking the KSLP Stake button
Contract Action: Stake KSLP in Long (Buy) Contract
How to Short (Short Selling)
A short (short selling) can make a profit when the price of the underlying asset decreases.
If the market price is higher than the Oracle price, the premium will be higher. At this time, you can issue synthetic assets at the oracle price within the issuance limit and sell them directly at the market price to make a profit.
The profit from selling is locked up until the time of redemption of the synthetic asset, but the market price is lowered in line with the Oracle price as participants participate in the short (short selling) in order to obtain a high reward according to the funding rate.
When you repay a purchase at a lower market price, the repay fee is based on the Oracle price, so if the Oracle price is lowered together, you can maximize your profits.
[Short (Short Selling) Flow]
Participant action
Sufficient KAI collateralized deposit
Select ticker with a high estimated apr for short(short selling)
Click the button after entering the short (short selling) quantity
Contract action
Check KAI+ksAsset exchange rate
Check expected price impact and slippage
Check expected premium change, expected lock-up selling profit
Participant action : Click the Short (Short Sell) button and sign the wallet
Contract action
Short selling quantity ksAsset is swapped with KAI
※ Slippage is allowed up to 0.5%, and if it exceeds, the transaction will be canceled
Mint of sLP as much as the short selling quantity
Deposit sLP in a short (short selling) contract
Lock up the short selling profit KAI
How to Mint
After depositing the KAI collateral, synthetic ksAssets can be minted at the Oracle price within the mint limit.
You can participate in long manual buys or sell directly on KLAYswap to earn a premium. Since it is separate from the short (short selling) contract, the quantity directly issued and sold is not recognized as a short (short selling).
How to Sell
Synthetic ksAssets participating in long (buy) can be sold. If you sell, you can get accumulated rewards (sKAI) together.
Convenient Sell
You can easily sell and get your investment back without using KLAYswap.
[Convenient Sell Flow]
Participant action: Enter the amount of KSLP to be sold and click the button
Contract action
Check KAI+ksAsset exchange rate
Check the expected price impact and slippage
Check the expected selling result
Participant Action: Sign the wallet after clicking the auto-sell button
Contract action
Withdrawal from long (buy) contract as much as sold quantity
Withdraw liquidity from KLAYswap as much as sold
Swap the acquired ksAsset to KAI after withdrawal
※ Sleepage is allowed up to 0.5%, and if it exceeds, the transaction will be cancelled.
Transfer KAI to the participant's wallet and proceed to receive accumulated rewards
Manual Sell
You can receive KSLP and cumulative rewards equal to the amount you entered. Investment recovery through KSLP liquidity withdrawals and swaps must be carried out directly from KLAYswap.
[Manual Sell Flow]
Participant action: Enter the amount of KSLP to be sold and click the button
Contract action: stake percentage, KSLP withdrawal result, cumulative reward check
Participant Action: Sign the wallet after clicking the auto-sell button
Contract Action: Return of KSLP and accumulated rewards
Participant action
Liquidity withdrawal from KLAYswap
Swap ksAsset to KAI
How to Repay
Minted ksAssets is obligated to repay the same assets and quantities. If the minter repays the same quantity of the same synthetics ksAsset at any time, the mint limit will recover by lowering the mint limit used.
Upon repay, the mint limit will be increased by the amount less 1.5% repay fee.
※ Based on Oracle prices at the time of repay.
When repaying synthetics ksAssets, the short (short selling) quantity is repay first, and the short selling profit locked up by the short (short selling) repay quantity is returned to the wallet.
How to Liquidate
When the mint limit used exceeds 100%, it is reported to the protocol as a liquidation subject, and liquidation is carried out sequentially in the order of the excess amount.
Basically, liquidation proceeds in the form of proxy liquidation. It is a ksAsset held by a liquidation participant (or liquidation bot) is repaid by proxy within up to 50% of the composite asset of the liquidation target.
By acquiring 10% of the amount returned by the liquidation participant's proxy redemption and incentives, the amount of KAI deposited as collateral increases, and the liquidation subject will also bear the redemption fee. Ex) Alice is reported to be liquidated for an amount exceeding the issuance limit of $1,000. At this time, Alice's ksAsset A is 100 and Oracle's price is $10. Bob repays Alice's ksAsset A on behalf of 50 ksAsset A held. Bob's $500 proxy repayment return and $50 incentive, $550 KAI, is increased by the amount of collateral deposited. Alice's $557.5, including a redemption fee of $7.5, reduces KAI's collateral deposit.
※ Liquidation beta site: https://liquidate.kaiprotocol.fi/
Last updated