KALATA
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Product Overview
Role Overview
Participant:
A trader who uses BUSD to buy or sell kAssets in KalaSwap. kAssets will support other trading pairs, as well as trades between kAssets.
Minter:
Users who mint new kAssets through collateralized debt positions (CDP) are called minters. CDP currently supports BUSD as collateral and will be supporting different types of coins. Under the CDP mechanism, the Collateral Ratio must be maintained at above the minimum level. This condition needs to be satisfied to withdraw collateral. Minters can adjust the Collateral Ratio in a CDP through destroying synthetic assets or adding more collateral.
Liquidity Provider:
Liquidity Provider adds the same value of kAsset and BUSD into KalaSwap to enhance the liquidity of kAsset. During the process, the liquidity provider will gain proof of providing liquidity by getting LP tokens. LP tokens represent a liquidity provider’s share of the liquidity pool, and the liquidity provider is rewarded from the transaction fees generated in the pool (0.3% per transaction). Withdrawing liquidity can be done by withdrawing shares of corresponding kAssets and BUSD in the liquidity pool.
Staker:
A staker can stake LP tokens or platform tokens to earn staking rewards as well as KALA token rewards. Stakers who stake LP tokens will earn KALA token’s inflation rewards; stakers who stake KALA will earn rewards from the CDP transaction fees.
Tokens:
Stablecoin BUSD BSC20 Token
Synthetic Assets kAssets BEP20 Token
Liquidity Provider Token LP Token BEP20 TokenKalata Protocol Token KALA BEP20 Token

kAssets:

kAssets are blockchain tokens, and are using on-chain trading to realize real-world asset trading.
kAssets implements overcollateralization to synthesize assets, only representing price changes of corresponding real-world assets.

Characteristics

Name and Symbol: describing and representing the corresponding base assets
Liquidation discount rate: referring to discount of purchasing the collateral of the CDP that are being liquidated
(Note: when oracle price data fails, Kalata will temporarily disable CDP operations, including minting, depositing, withdrawing until the oracle resumes normal functionality)
Oracle:Oracle serves to provide the most up-to-date and accurate prices of the base assets. Every kAsset has its own price feed, to ensure consistency between trading prices and the asset it represents.

Creation :

Adding a k-asset into Kalata Protocol with a few steps:
  • Creating kAsset token and corresponding price feed robot
  • Creating kAsset-BUSD trading pair in the KalaSwap
  • Registering new assets
When a kAsset has joined Kalata Protocol and got registered, a user can start to mint through CDP and trade in KalaSwap.

Removal (Delisting) and Migration:

After the base assets experience a stock split, merge or bankruptcy, the oracle will stop the price feed. Kalata Protocol will remove or out-migrate the synthetic asset. During the process:
  • CDP cannot continue minting the corresponding kAsset
  • Liquidation sale is disabled
  • Any existing minted position will be redeemed at a scheduled timeline.
For migrated assets:
  1. 1.
    Creating new substitution kAsset token, KalaSwap trading pair and LP Token contract, and transferring current kAsset values;
  2. 2.
    Oracle prices latest valid price for the kAsset;
  3. 3.
    Setting corresponding Collateral Ratio for the kAsset;
Delisting will not affect trading the kAsset. However, Kalata Protocol will not provide the interface of kAsset delisting. A user can withdraw from any open position from Kalata Protocol.
A user can use new substitution assets to initiate new CDP or participate in providing liquidity. Old kAsset will be retired and marked as delisted, only allowing destroy, close CDP, withdraw collateral or liquidity as well as unstake LP trades on frontend interfaces.

Collateralized Debt Positions:

Using BUSD (more coins will be supported) as the collateral, one can create CDP to mint the new kAsset token. CDP is essentially a short position linking asset price changes. For example, if TSLA rises in stock price, kTSLA holders will have to deposit more collateral to keep the same Collateral Ratio.

Collateral Ratio:

Collateral Ratio (or C-Ratio) represents the ratio of locked collateral value to minted kAsset value. The CDP is required to always maintain a C-ratio above the positions minimum, otherwise the protocol will start the liquidation process for the collateral. With Oracle services, whether a position is below the required threshold in terms of combining kAsset into BUSD values will be determined by the protocol.
Defining the minimum C-ratio of kAssets and collateral’s multipliers as Cmin and
ζ \zeta
. Given a CDP’s current collateral amount Qc, quantity of minted kAssets Qm and their current prices Pc, Pm. At any time, the effective collateral ratio is:
C=PcQcPmQm C=\frac{PcQc}{PmQm}
Satisfying the condition C >=
ζ \zeta
Cmin, otherwise the collateral will be liquidated.

Opening a New Position:

Users are allowed to set the initial C-ratio for their CDPs as long as it reaches or exceeds the required minimum value of any position. Choices of the initial C-ratio r0 and the collateral are used to determine how many synthetic assets are created during the creation of CDP:
Qm=PcQcr0Pm Qm=\frac{PcQc}{r0Pm}
Depositing / Withdrawing Collaterals to Position:
For existing CDP, a user can deposit additional collateral C to increase its effective C-ratio. After the increase, the updated C-ratio becomes C’. Withdrawing collateral is also allowed, while a user can only withdraw up to how much is needed to make sure the kAsset effective C-ratio above the Cmin. The user will receive a protocol fee upon withdrawal.
Qm+Qm=Pc(Qc+Qc)ζCminPmQm+Q'm=\frac{Pc(Qc+Q'c)}{\zeta CminPm}

Minting / Burning Synthetic Assets:

Besides depositing and withdrawing collateral, users can also create and burn kAssets against CDP to adjust the CDP’s effective C-ratio C. If the quantity of newly minted token is Qm, then the minimum amount of collateral required to keep the CDP position above the kAsset’s min C-ratio is:
QcCminPm(Qm+Qm)PcQc\geq\frac{CminPm(Qm​+Q′m)​}{Pc}
Positions may be liquidated when the corresponding C-ratio drops below the threshold.

Closing a Position:

If a user wants to withdraw all collateral from the CDP, he or she must close the position by returning all outstanding balances of minted kAssets which will be burned by the protocol. To close the CDP, a user must have the corresponding amount of kAssets, and then the user can withdraw his or her locked collateral.

Protocol Fee:

Kalata Protocol will charge 1.5% of the minting fee. No matter when a withdrawal from a CDP is made including closing a position and liquidation sale. The fee is calculated from the collateral value at the time of opening a position. Then, the fee will be sent to DAO and converted to KALA through KalaSwap, and used as staking reward distributed to KALA holders.

Margin Call and Auction:

Maintaining a relatively low C-ratio allows a user to mint more kAsset tokens with less collateral. However, the risk is that a CDP can be margin called when it drops below the minimum required C-ratio. If the owner does not quickly take action and deposit more collateral at this time, or burn kAssets to reduce leverage of the position, other users can purchase their CDP’s collateral at discount. The protocol will try to increase the CDP’s C-ratio by burning kAssets recovered from collateral liquidation. If a is the amount of kAssets paid (max. The amount minted by CDP) and b is kAssets’ discount rate of liquidation auction, a buyer will expect to get:
minα1β×PmPcQcmin(\frac{\alpha}{1-\beta}\times\frac{Pm}{Pc},Qc)
While the remaining collateral unsold is returned to the owner of CDP. The auction process continues until either the CDP’s C ratio comes back to minimum required kAsset’s collateral ratio, or the minted kAssets are burned completely, closing the position. Since this process almost gives risk-free profits, participants are incentivized to liquidate the entire margin-called position when possible in order to maximize their gains.

KALA Token

Total Supply: 200,000,000 KALA
Token Distribution:
Liquidity Mining - 40%
Initial Liquidity - 5%
DAO - 3%
Consulting & Marketing - 5%
Founding Team - 7%
Core Contributors - 5%
Coding Contributors - 4%
Early Stage Supporters (seed round) - 5%
Foundation - 11%
Seed Round - 5%
IDO - 1%
Private Investments - 9%

KalaSwap:

KalaSwap is a decentralized exchange based on the BSC blockchain. Kalata Protocol relies on KalaSwap to establish BUST trading pairs for kAssets as well as the KALA Token, which also enables on-chain exchange for the various assets involved in the protocol.

Liquidity Pools:

KalaSwap creates automated markets for kAssets and BUSD (more will be supported). In pools composed of kAssets and BUSD, Users can exchange one asset for the other directly on-chain. The pools maintain balances of both assets, where users can provide liquidity and get rewarding LP Tokens.
Constant Product:
KalaSwap maintains a constant product for the pools.
xy=Zx*y = Z
On each side of the pool, the product of the number of tokens should be constant during the trading workflow (buy / sell). In particular, BUSD is on one side and kAsset tokens are on the other side for Kalata related pools.
Price:
To keep a constant product, KalaSwap will provide prices to make sure the product of ending balances of the pool is as close as possible to the product calculated before the trade. If X is the current balance of the pool’s source asset and Y represents that of the target asset:
xy=k=(X+Ain)(YBout)xy=k=(X+Ain)(Y−Bout)
With the value of
Bout Bout
exchanged by a trader, the asset
AinAin
the trader to offer can be calculated, and vice versa:
Bout=XAinY+Ain Bout=\frac{XAin}{Y+Ain}
KalaSwap can only execute trades with current balances of the pool and the number of incoming tokens. The market price is the number of target tokens of the pool divided by the source asset, which is also called pool ratio. The spread between the executed trade and the expected trade is calculated as:
Spread=max(YAinX+AinYAinX,0)Spread=max(\frac{YAin}{X+Ain}−\frac{YAin}{X},0)
When a pool has large token balances from liquidity providers of both sides, the spread will become smaller and helps the pool to execute a price closer to the specified Y/X.

LP Token:

To compensate liquidity providers, Kalata charges a commission on each trade, and the fee will return the pool serving as a reward for LP token holders.
In KalaSwap, each liquidity pool for kAsset-BUSD has a fixed commission fee of 0.3%, which is levied on the trader as kAsset-BUSD or KALA.

LP Tokens

When Liquidity Providers add liquidity to kAsset-BUSD or KALA-BUSD, they are given the LP Tokens. Every pool has a unique LP Token associated and cannot be combined with LP tokens of other pools. They serve mainly as a unit of account, representing the liquidity provider’s share in the pool in order to reclaim his or her assets when the liquidity is removed.
Even though LP tokens are a yield-generation but independent feature of KalaSwap, they are fundamental to Kalata Protocol’s core infrastructure. Therefore, the protocol gives KALA rewards to the LP token holders which helps maintain liquidity of the markets for kAssets and BUSD on KalaSwap.

Providing Liquidity:

Users provide liquidity by depositing tokens to both sides of a KalaSwap associated pool, which creates the pool’s LP tokens that they can use to withdraw assets from the pool.

Creating a New Pool:

For a new pool with initial quantities of BUSD and kAsset x0, y0, the number of LP tokens is:
LP=x0y0LP=\sqrt{x0y0}

Adding Liquidity to an Existing Pool:

Let quantities of BUSD and kAsset deposited be Ain, Bin, the number in the pool before deposit be X, Y, and the current supply of LP tokens as LPtotal, then the amount of newly minted token is:
LPnew=minAinXLPtotalBinYLPtotalLPnew=min(\frac{Ain}{X}LPtotal,\frac{Bin}{Y}LPtotal)

Removing Liquidity:

Users can burn their LP tokens to recover their deposited liquidity. This will let the pool send back the corresponding amount of BUSD and kAssets, spending on the amount of LP tokens got burned, as set by the below:
Aout=LPburnLPtotalXAout=\frac{LPburn}{LPtotal}X
Bout=LPburnLPtotalYBout=\frac{LPburn}{LPtotal}Y

LP Rewards

LP token holders receive a portion of rewards generated by the transaction fees from the pool, in proportion to the total share to the LP token pool.

Mining Rewards:

Kalata Protocol distributes rewards to each kAsset staking pool based on weights. All kAsset-BUSD staking pools get a weight of 100, with newly whitelisted kAssets getting a weight of 30, while the KALA pool has a weight of 300.