In this post, we want to summarise the first rebase and our conclusions.
It should be said that we consider Klondike as a long-term project. Therefore everything that is happening now is extremely important — the calibration of the system will directly affect the stability during scaling. As an example, let’s look at our “primary source” — Basis.Cash and its numerous forks (Mithril etc.): the very first rebases caused a huge increase in the supply and which let to the inability to keep the peg. We decided to move in a fundamentally different way — progressively, gradually, step by step.
And now one of the most important stages is preparing for scaling. So let’s take a quick tour of the first rebase:
1. The price was somewhere around 2.2 by 5:00 pm UTC 2 Feb.
2. Further users began rapidly withdrawing the liquidity from the kBTC <> wBTC pool and sell kBTC.
3. This caused the kBTC price to collapse to 0.992 wBTC per kBTC
4. 20 minutes before the rebase, someone bought kBTC for wBTC and the price became higher than the peg (1.3 wBTC per kBTC)
5. At 9:00 PM the oracle was updated — the price was 1.18
6. 0.92kBTC was minted — 49% went to the Stabilization Fund, 49% to the Boardroom, 2% to the Development Fund
We added a Development Fund in the same way as in Basis Cash. The Development Fund now simply accumulates a 2% of the emission and in the future can be used for various expenses associated with the development of the protocol: hiring developers, paying for audits, for gas etc.
7. The Stabilization Fund, as expected, started selling kBTC for wBTC and gained 0.52wBTC:
https://etherscan.io/tx/0x6692a5f023803740c7b16b11aed77ed8859064d3f3bc9bfaa435eef0ce1401ed
https://etherscan.io/tx/0x8786bf424bf5a1359f3177fb4823242fdea3118993d3bac63a9bbd06cf79a1a3
https://etherscan.io/tx/0x1da263ab98b3b19bda67f65ae9223abad3b7ebfbc2b16f72f36d18ac52fc8d54
8. The price dropped to 1.05 and then the farmers started buying kBTC and raised the price.
The second rebase went quite smooth: the issue was 1.36 kBTC, the stabilization fund sold the received part of the mint and accumulated 1.33 wBTC. Users are convinced that the protocol copes with its task — after the rebase, additional liquidity came to the kBTC <> wBTC pool and the price of kBTC rose at its peak to 1.4 wBTC.
So what conclusions can we make?
First and foremost, we believe that the Stabilization Fund has shown its worth as a means of keeping the peg. Also, now the project accumulates additional funds to maintain the price in the event of peg drop. Currently, the stabilization fund is 3.56 wBTC, which is 33% of the supply (10.51 kBTC). This is much lower than the 150% collateralization in DAI and 86% in Frax. We believe that at this early stage, we should increase the collateralization rate to 50–60% to ensure that kBTC users retain the peg, so we decided to increase the share of the issue, which is now directed to the Stabilization fund from 49% to 68%.
The second important update is that now there is a fairly high emission of KLON in the wBTC / kBTC pools, which is why farmers buy out kBTC from the pool to provide liquidity. This leads to an increase in the price of kBTC (currently the price of kBTC = 1.7 wBTC). To provide the most stable peg, we will reduce the KLON emission in the wBTC/ kBTC pool from today’s 6250/day to 1250 KLON/day. This will still allow to get quite good four-digit APY in the pool, but with less speculation, which is also good for the long-term success of the project.
Algorithmic monetary policy FTW! Let’s make it take the rightful place in the Crypto World!
Keep your eyes on our updates:
Discord: https://discord.gg/tyQHuRyH
Telegram: https://t.me/klondike_discussion
GitHub: https://github.com/klondike-finance
Twitter: https://twitter.com/KlondikeFinance
