Asset Management(of Collateral) - CDP
Collateral deposited for KCD mint is managed in other DeFi Protocols; Currently, KLEVA and KLAYswap. Profit from Asset Management is utilized as follows :
Offset of Stability Fee : Asset Management Profit generated by user’s collateral is used to reduce Stability Fee to be repaid by the user.
KCD Earn Interest : Excess Asset Management Profit remaining after all Stability Fee has been reduced is distributed to KCD Earn Depositors.
Kurrency Dev Fund : A portion of Asset Management Profit(i.e. KLEVA Staking Reward) is utilized for maintenance of Kurrency.
Collateral type and DeFi Protocol in which each type is managed are as follows :
| Collateral Type | Token Address | Managed in |
|---|---|---|
oWEMIX | KLEVA | |
KLAY (WKLAY) | KLEVA |
KLEVA - Asset Management
KLEVA is one of the biggest DeFi Protocols on Klaytn network. ‘Lenders’ form Lending Pool by depositing their assets, such as KLAY and oWEMIX; ‘Leveraged Yield Farmers’ can borrow such assets to leverage their investment positions in various DEXs.
Among collateral deposited by Kurrency users, oWEMIX, KLAY and more are managed in KLEVA. Potential risks may involve :
Withdrawal may be temporarily suspended if Bad Debt occurs in KLEVA due to sharp price drop. When Withdrawal in KLEVA is suspended, collateral withdrawal in Kurrency may also be temporarily restricted. Note that Bad Debt is not an issue occuring only in KLEVA; Bad Debt is an issue that can occur in any DeFi Protocols with ‘Lending’ service.
Collateral withdrawal may be temporarily suspended if Lenders in KLEVA make large withdrawal. This may also occur if Farmers are borrowing all remaining asset in Lending Pool. Of course, KLEVA has implemented precautionary safety measure in which intest rate fluctuates with Utilization Ratio, which is the ratio of borrowed asset to total deposited. Therefore, in above situation, KLEVA charges higher interest rate to induce Farmers to quickly return their borrowed asset. Once the asset has been returned, assets can be freely withdrawn.
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