Kine has shown good development potential and core competitiveness in terms of design model, token economic model and core functions.
Written by: Karen
With the fierce competition in the cryptocurrency derivatives market, the layout of the capital market is also accelerating. Kine, a decentralized derivatives exchange that mainly provides ” unlimited liquidity and unlimited trading varieties “, has completed two rounds of financing of 7 million US dollars before the mainnet launch. The investment lineup includes famous Silicon Valley angel investors Naval Ravikant and Alexander Pack, as well as many large investment institutions in the industry, including OKEx’s Block Dream Fund, Blockchain Capital, and Spartan Group.
The favor of many capitals is inseparable from Kine’s experienced creation team, innovative product model design and advantages. In order to gain a deeper understanding of Kine’s model design and core advantages, we conducted an exclusive interview with Kine founder Wang Lei and two angel investors, and hope to help users truly understand the value of Kine.
What is the excellent derivatives market in the eyes of Kine founder Wang Lei?
Kine founder Wang Lei has more than 15 years of experience in traditional investment banking , and he also served as the head of the Huobi Institutional Business Unit. In Wang Lei’s eyes, sufficiently high capital efficiency, low transaction costs, high performance (supporting high concurrency and high frequency transactions without affecting user experience), and a wealth of tradable underlying assets are an excellent derivatives trading platform that should have both The four core conditions .
Wang Lei said, “In the current derivatives market, the main bottlenecks of CeFi are data transparency, asset security and the possibility of subjective exchanges to do evil. The core pain points in the DeFi market are gas cost, liquidity and transaction delays. And so on. The prerequisite for being able to stand out in any field is to target the pain points and continue to innovate and iterate. After gaining insight into the real needs of users, what Kine has to do is actually to crack and optimize these market pain points one by one to provide a better user experience.”
Specifically, Kine solves security and transparency issues by using on- chain pledges and data on-chain . In addition, prices cannot be manipulated by the platform under the Peer-to-Pool transaction model, and the client’s counterparty is a liquidity pool. Instead of the platform, the mechanism eliminates the motivation and possibility of subjective evil on the platform. On the other hand, it also eliminates the cost of user Gas fees through the off-chain transaction engine, and greatly improves transaction efficiency, thereby bringing comparable or even Beyond the trading experience of centralized exchanges.
Of course, in the increasingly competitive cryptocurrency market, the development of a platform is inseparable from a strong and innovative core team. Wang Lei said, “The Kine team currently has 15 members. Most of the founding teams come from traditional investment banks or technology companies. They have an average of 7 years of R&D or trading experience , and the core team has collaborated for more than 5 years. Our goal is that everything is user-centric. Core, and hope to provide users with more efficient, low-cost and safe products, so as to bring more users into the DeFi world.”
Angel investors Naval Ravikant and Alexander Pack’s understanding of Kine
Being able to win the favor of famous angel investors Naval Ravikant and Alexander Pack at the same time is enough to prove the recognition and support of Kine.
Silicon Valley investor Naval Ravikant is an Indian immigrant and the co-founder and CEO of AngelList, a large equity crowdfunding platform. His investments include social media giant Twitter, ride-hailing giant Uber, and Clubhouse, which has recently swept the world. In the field of cryptocurrency, Naval Ravikant also co-founded MetaStable Capital, a cryptocurrency fund, which has received investment from well-known venture capital companies a16z, Sequoia Capital, and Union Square Ventures. In addition, Naval Ravikant has also invested in projects such as the blockchain interoperability layer Axelar, another derivatives platform dYdX, the prediction market Polymarket, and the decentralized code collaboration protocol Radicle. This investment in Kine proves its contribution to the derivatives field. Of firm confidence.
In the opinion of Silicon Valley angel investor Naval Ravikant, “I believe that derivatives trading is the next big application of DeFi, which may be larger than the sum of all other applications. In traditional finance, the volume of derivatives trading is one larger than the volume of spot trading. Order of magnitude. Most importantly, platforms like Kine allow people to trade crypto-backed derivatives of almost any financial product, not just cryptocurrencies.”
Alexander Pack was the founding partner of Dragonfly Capital and also worked for AngelList. Alexander Pack said, “The reason why there is no spot trading on DeFi for derivatives trading is developing rapidly because there is no professional-grade infrastructure like the Kine protocol, and I am very happy to support Kine.” It can be seen that Alexander Pack is very optimistic about Kine. .
Kine design logic: on-chain pledge + off-chain transaction, adopting Peer-to-Pool model
As mentioned earlier, Kine adopts on-chain pledge and off-chain transactions, and draws on the Peer-to-Pool liquidity pool transaction model promoted by Synthetix to provide users with unlimited liquidity, and supports single mainstream asset pledge and impermanence. Functions or features such as loss hedging, zero gas trading and zero slippage.
Regarding impermanent loss hedging , Kine refers to Synthetix and adds a debt pool tool to the pledge interface. Simply put, the price of debt will drop after the transaction user suffers a loss, which will bring impermanent profits to the pledge user, and vice versa. Loss, however, pledged users can receive commission dividends and token rewards while taking the risk of impermanence.
Specifically, for users, taking the beta version as an example, one or more mainstream currencies including ETH, WBTC, USDT, and USDC can be pledged to mint synthetic assets kUSD. In this way, users can not only use The form of KINE obtains pledge rewards, and can also conduct transactions through off-chain matching in the trading platform, and can obtain commissions, which can be described as multi-tasking.
Kine’s core advantages: unlimited liquidity / trading varieties + pledge reward + commission dividend
In addition to the team from first-line investment banks, hedge funds, and top crypto exchanges, Kine also has obvious core competitiveness in terms of liquidity, trading varieties, token design, and partnerships in terms of products.
Unlimited liquidity
Since Kine draws on Synthetix’s Peer-to-Pool model, the user’s counterparty is a liquidity pool, which is over-collateralized by mainstream assets, and transactions do not rely on order books .
Support rich trading varieties
Any subject with a reliable price index can become a Kine trading product. Kine users can trade multiple asset classes in one stop, including cryptocurrencies, stock indexes, bulk futures, and innovative derivatives.
Highlights of Token Economic Model
The total issuance of KINE is 100 million, of which up to 50% will be used as ecological incentives and allocated to liquidity partners, 25% will be allocated to seed rounds and private equity round investors, and 5% will be used for public offerings. The remaining 20% of the tokens will be allocated to the team. In other words, half of the total supply of tokens will be distributed to Kine ecological participants, which shows how much Kine attaches importance to ecological development.
In addition, KINE will become one of the multiple pledged assets supported by the platform, and it will also have governance voting rights, participate in the introduction or removal of synthetic assets or pledged assets, as well as the adjustment of core parameters such as fund rate and leverage upper limit.
Fee-sharing mechanism
In addition to the pledge rewards, Kine will also use 50% of the handling fee to repurchase KINE tokens and distribute them to pledge users .
Undoubtedly, in the early stage of the project, pledge rewards and fee dividends can effectively encourage pledge and transaction activities at the same time, so as to attract more users to participate in the ecology and continue to empower KINE, and form a positive cycle ecological mechanism of “staking + transaction + re-staking” .
Synthetic funding fees and cross-handling leverage
In terms of derivatives trading, Kine introduced leveraged trading and synthetic funding fees, which significantly optimized the risk-return ratio of the liquidity pool and improved the efficiency of asset use. Kine’s synthetic capital costs are derived from the soft anchoring mechanism of perpetual contracts , which can effectively balance the long and short positions of various assets and provide protection for the sustainable growth of the system.
On the other hand, Kine supports full position leverage, allowing users to hold multiple varieties of long and short leveraged positions, which can greatly improve the efficiency of asset use and platform fee income. In addition, Kine’s liquidation line can be kept below 0.5% no matter how many times the leverage is. Wang Lei explained that when designing products and thinking about problems, the team tries to start from the experience of traders to protect the interests of users.
What are the advantages and disadvantages compared to competing products?
So, what are the obvious advantages compared to the centralized derivatives platform and Synthetix, Hegic, dYdX decentralized derivatives platform Kine? Wang Lei concluded:
- Kine can accept a wider variety of pledged assets , and almost all mainstream crypto assets can be used for pledge, making the Kine user group larger;
- Support higher leverage and higher frequency derivatives trading;
- Adopted the capital cost and automatic lightening of positions (ADL) mechanism to effectively reduce the platform’s net position and reduce the risk of impermanence for pledged users.
- Developed a high-performance language machine to realize real-time quotation , in order to solve the user loss caused by the transaction runaway.
However, Wang Lei said, “The Peer-to-Pool transaction model requires a certain amount of liquidity pool to start. This may not be realistic before 2020, but this is not a problem in the current DeFi environment.”
On the other hand, Kine will release the Layer 2 roadmap in the second quarter. The main considerations include support for high-calculation contracts, a considerable amount of mainstream pledged assets, and support for high-performance price oracles, as well as support for traditional and innovative assets. Transaction services.
summary
In the end, Wang Lei said when sharing the opportunities and challenges of Kine, “DeFi is developing extremely rapidly. It is necessary to maintain strong learning and innovation capabilities to stay at the forefront of DeFi, which happens to be part of the Kine team that is very good at.”
At present, the field of cryptocurrency derivatives, especially the decentralized market, is still in the early stages of development and may enter a preliminary reshuffle period. As a rookie in the field of cryptocurrency derivatives, Kine has shown good development potential and core competitiveness in terms of design model, token economic model and core functions. With the gradual expansion of the derivatives market, Kine may achieve overtaking in corners.
