Overview
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Kelly USD (KUSD) is a fractional-algorithmic stablecoin partially backed by USDC (a stablecoin) and DOPX (a utility token). The token is partially backed by USDC that represents its value and is also backed by DOPX which increases its utility. The ratio between the stablecoin and the utility token is dynamic and adjusts according to the market. This ratio is called the Collateral Ratio.
This fractional-algorithmic token combines both advantages of asset-backed stablecoins and algorithmic stablecoins together. Unlike fiat currency, KUSD has its value backed by the collateral while maximizing its capital efficiency that reduces the required collateral as much as possible.
This is where algorithmic stablecoin is good at - creating value without having to have backed assets.
To keep the KUSD price at $1 (1 US Dollar), we present several mechanisms to help keep the price on the peg. Anyone can make a profit when the price is off the peg by minting and redemption. As the ratio changes, anyone is also incentivized to keep the backed assets correlated to the Collateral Ratio with buybacks and re-collateralization.
The KUSD token will be utilized in a lot of ways. Initially, KUSD can be used for stablecoin farming like other stablecoins. Soon, KUSD will be used as the main currency on Twindex.com, where synthetic assets are traded. Increasing the adoption of KUSD will also help with the price of DOPX tokens, as discussed in the DOPX token.
To upgrade from the current “DOLLY” token, we also make adjustments that allow the stablecoin collateral part to be utilized and to create revenue for the platform by investing a certain amount of the collateralized stablecoins to trustworthy stablecoin investment platforms such as Venus Protocol.
By investing in third-party platforms, there is a risk of attacks on the platform we invested in. At times, there might be high demand for redeeming KUSD tokens. The investment might be withdrawn to make collateral ready.
Apart from that, some amount of KUSD mint and redeem fees will be stored in the reserve to make sure that there will be a sufficient amount to redeem.
In addition, we also have the circuit-breaking trigger that we could use upon careful discretion at an appropriate time to prevent a bank run, which would harm the entire ecosystem