Konomi is not competing with existing DeFi, but using division of labor to maximize capital efficiency.
Written by: Zombit
DeFi has achieved great success in 2020. In summary, it is because the assets on Ethereum have been used more efficiently.
However, with the continuous and in-depth development of DeFi, from Compound lending and providing liquidity to obtain income (Yield Farming) to the later Year Finance launching yVault v2, the Lego game of DeFi is getting higher and higher, and the security risks of the interaction between the protocols and The performance of Ethereum limits the “funding efficiency” of users.
Take liquidity mining as an example. The original intention at the beginning was to allow “all users” to mortgage their idle funds in the trading pool to earn handling fees and governance tokens. Later, after a large amount of funds began to enter the market, even the most general Transactions have to cost more than US$10, and the more complex mortgage asset process even requires about US$200. The threshold for retail investors to enter the market is getting higher and higher, and the problem of capital efficiency cannot be solved.
The financial security incidents triggered by the concatenation of the agreements have also become “time bombs.” In order to make funds more efficient, there will be cases where platform assets are mortgaged. For example, after stablecoins are mortgaged on platform A, they can be mortgaged on platform B with the mortgage certificate of platform A to create additional income; however, the interaction of different platforms is also Increased risk. For example, if platform A encounters a hacker attack, it is likely that platform B will also be affected.
Not everyone has noticed that the performance problems of Ethereum itself will limit the growth of DeFi. Konomi Network has launched a “one-stop platform” that integrates trading, lending, and asset management: Konomi.
In order to completely liberate the financial efficiency of DeFi, Konomi is not based on Ethereum, but Polkadot Network.
Konomi explained to Lianwen:
“As the first general-purpose computing platform, Ethereum makes current DeFi applications possible, but it is the bottleneck for the continued development of DeFi. In terms of transaction speed, transaction fees, and scalability of functions, Ethereum currently cannot allow one A true large-scale DeFi application has the same performance as a centralized product.”
Komomi’s overall plan
In order to provide users with an immersive experience, Konomi provides a “one-stop service” from liquidity agreements, lending markets, and ecological asset management. Due to the better scalability of Polkadot, its sharded cross-chain network (parachain) can process many transactions on multiple chains in parallel, which eliminates the bottleneck that occurs on traditional blockchain networks. It is different from the current DeFi application environment of Ethereum.
In product design, Komoni first built the underlying facilities:
- Decentralized liquidity agreement;
- Loan agreement.
Konomi Liquidity Agreement
Konomi draws on the design of standard automated market makers on Ethereum to achieve decentralized instant exchange (transaction).
In Polkadot’s parachain ecology, each chain has its own governance mechanism, tokens, and applications. They perform their own duties, have their own functions and face users. Realizing asset exchange between parachains allows users to seamlessly use applications on each parachain.
By using Konomi’s liquidity protocol, users can even automatically convert assets between different parachain applications after the cross-chain communication and transfer module becomes more complete in the future. Next, Komoni also plans to design a liquidity “aggregation protocol” similar to Yearn.Finance’s yVault v2 to integrate the benefits of different liquidity agreements to allow users to “maximize” the revenue of liquidity mining.
Konomi Loan Agreement
Konomi has built a loan fund pool, allowing users to put idle funds into the fund pool to obtain loan income, and another function is to use mortgageable assets as a margin to lend money.
There are already some “mainstream stablecoin protocols” planned to be deployed on Polkadot, and with the start of activities that lock DOT liquidity such as parachain auctions, it can be expected that lending agreements like Compound and Aave will appear on Polkadot. The mainstream assets on Polkadot can earn much higher interest than traditional finance.
In this process, there will be more decentralized structured financial products to provide users with higher liquidity bet rewards, and Konomi will become the bottom-level lending agreement in the Polkadot ecosystem, just like Compound. The assets provide income and more financial products.
Cross-chain transaction
Konomi will use the cross-chain messaging (XCMP) function to support cross-chain transactions of assets. XCMP needs to open a channel between two parachains for message communication. In the sender parachain, the message will be dispatched and sent to the relay chain, and the message will contain the destination and timestamp so that it can be identified. However, at the other end, the sorter node on the receiving branch will constantly ask the network for new messages, so it will receive this message. If the verification is successfully completed by the verifier on the network, it proposes and compresses the block into a hash, and replaces it with a relay chain, thus completing the message passing between the chains.
With the help of XCMP, users can easily use applications on different Parachains of Polkadot Ecosystem, without the need to trade on centralized exchanges to obtain different types of tokens, which will greatly improve transaction efficiency and reduce users’ transaction process Loss of handling fees in
Konomi token
Konomi will issue native tokens in the network to promote decentralized governance and guide early users. The design of the token economic model is mainly to enable users to actively participate in transactions, provide liquidity and share the growth of network value.
Decentralized governance
The design and implementation of the protocol will be determined by the token holders, and other parameters such as transaction fees, liquidity mining ratios and other parameters are initially set by the protocol itself. Token holders can update parameters and smart contracts according to the voting process. In order to encourage users to participate in this process, voters will live some profit rewards.
User incentives
As a decentralized product, access to liquidity is critical to user experience and platform adoption. Therefore, a large part of Konomi tokens will be reserved to encourage users to add liquidity to the platform and use products. By depositing assets in the agreement, users can automatically match the agreement. When designing user incentives, the agreement also considers the long-term sustainability of tokens. Since the DeFi protocol has launched more liquid mining procedures, users tend to participate in these procedures to earn tokens rather than satisfy their real needs. At the same time, as more tokens are produced, if strong use cases are not designed to create demand for tokens, the network will face continuous sales pressure. Therefore, when designing a liquidity mining plan, priority will be given to long-term supporters and market makers of the agreement.
Pledge and repurchase
In order to reduce the initial circulation and create a positive cycle, the KONO token itself can participate in the pledge, and the pledged fund pool will enjoy a certain percentage of platform fees. However, in the case of a problem with the fund pool of the mortgage loan that cannot be repaid, part of the pledged tokens will also be used as spare funds to compensate users.
In addition, in order to increase the value of the tokens, part of the platform loan and transaction fees will be used as the repurchase function of the platform currency, from reducing the number of circulating tokens, reducing supply, and pushing up the price, thereby creating a higher price and a mortgage The higher the number of forward loops.
Regardless of whether it is for investors or legal entities, the efficiency of capital use is a top-notch issue. Ethereum has proven the potential of DeFi this summer. However, due to its own performance limitations, capital efficiency will eventually encounter a bottleneck. In the future, Konomi will use Polkadot cross-chain technology to import Ethereum funds into Konomi. This is not to compete with existing DeFi, but to use division of labor to maximize the utilization rate of funds, thereby realizing DeFi’s true vision .
