Borrow $KNBONE?

Development
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This proposal introduces a new decentralized lending facility on the Shibarium Network, integrated within the K9 Finance bonecrusher dapp. This development will enable users to leverage their ShibaSwap V2 Positions NFTs (specifically from WBONE-DAI, WBONE-USDC, and WBONE-USDT liquidity pairs) as collateral to borrow existing knBONE tokens; the liquid staking derivative of BONE. This initiative aims to unlock liquidity for LP providers without forcing them to unwind their positions, thereby increasing knBONE utility, generating new revenue for the DAO, the treasury and enhancing the overall capital efficiency within the Shibarium DeFi ecosystem, while explicitly preserving knBONE’s status as a pure liquid staking derivative of BONE. Risk management and governance controls will be community-driven through future DAO proposals.

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What are the risks to K9 is NFT values go down, while being held as collateral? I’m not the most informed on LP Leverage moves like this and would like to learn more.

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Thank you for this proposal with a fresh idea I haven’t seen before.

I think it’s worthy to understand in more detail. I suggest you to use our K9 Proposals Bot to flesh out a more structured proposal.

One thing to clarify in there would be where the ‘existing knBONE tokens’ would be coming from.

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Love to see new proposals! I’d be lying if I didn’t say this is way out of my realm of scope (Nfts).

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Thank you for creating this proposal. I personally like NFTs and appreciate this proposal aiming to leverage them. I would like to see more details regarding the who, what, where, why, and how. As someone who is not highly educated on the whole nft culture, my main concern is price stability for k9. Not only with the price of the nft dropping, but also the nft that nobody wants to buy. What would prevent someone from offloading a dead or non-valuable nft? Overall I do like the idea, however atm I do not feel I have enough information to properly cast my vote.

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It sounds very interesting. I would also like to know more details

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I think he doesn’t refer to NFTs in regular sense. When one stakes tokens into LP - they get a ‘receipt NFT’ confirming the ownership of certain amount of LP tokens which they can withdraw at a later date. There is no separate market or trading of these NFTs. Their value is basically the value/price of the LP tokens that are locked at any given time.

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I would love this to happen. Currently there is so little liquidity for stables.

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Hi CalvenJ.SHIB,

Thank you for adding your proposal about borrowing $KnBone against ShibaSwap LP NFT’s, it’s an interesting idea.

To try & help, I ran your initial proposal statement by Agent 9 to gain some feedback.

Below is what Agent 9 responded with.

To help you refine and finalise this proposal according to the K9 Finance guidelines, I have some clarifying questions that will help us build out the “WHAT”, “WHEN”, and “HOW” sections more comprehensively.

  1. Lending Mechanics - How will knBONE be supplied for borrowing?
    • Will the knBONE for lending be sourced directly from the DAO’s treasury, newly minted (if applicable), or primarily provided by other users who deposit knBONE into lending pools?
    • If users are to supply knBONE, what incentives will be offered to them (e.g., a share of interest paid by borrowers, or additional KNINE rewards)?

  2. LP NFT Collateral - Technical Details & Oracle Integration:
    • Given that LP NFTs represent fluctuating underlying assets (WBONE, DAI, USDC, USDT), how will the real-time value of these NFTs be accurately assessed and maintained for Loan-to-Value (LTV) calculations and liquidation thresholds? Will this require integration with external oracle services, and if so, which ones are being considered?
    • What specific LTV ratios are you envisioning initially for these LP collateral types? How will these ratios be determined and adjusted?

  3. Interest Rates & Fees - Structure and Distribution:
    • How will the interest rates for borrowing knBONE be determined (e.g., fixed, variable, algorithmic based on supply/demand like Aave/Compound)?
    • What types of fees (e.g., borrowing fees, liquidation fees) will be applied, and at what percentages?
    • How will the revenue generated from these fees be distributed among the DAO Treasury, knBONE liquidity providers, and potentially KNINE stakers? This should ideally align with the DAO’s existing fee distribution model if possible.

  4. Liquidation Process - Ensuring Stability:
    • In the event of a collateralized LP NFT falling below its liquidation threshold, how will the liquidation process work? Will it involve automated auctions, incentivized liquidators, or direct DAO intervention?
    • What happens to the liquidated LP NFTs? Will they be transferred to the DAO’s treasury, unwound, or re-staked in other K9 Finance products (e.g., Bone Yard Farming)?

  5. Development & Audits - Resources and Timeline:
    • This sounds like a significant technical undertaking. Do you have a preliminary estimate for the development timeline (e.g., initial feasibility, smart contract coding, UI integration, testing)?
    • What kind of development resources would be required (e.g., internal K9 Dev Team bandwidth, or external developers)?
    • What is the estimated budget for developing and auditing these new smart contracts and integrating them into the Bonecrusher dApp? (Please consider that projects over $20,000 are encouraged to find external funding or more affordable pathways).
    • How will security audits be conducted for these new smart contracts?

  6. Legal & Regulatory Considerations:
    • Previous discussions on lending/borrowing proposals (Topic 469, 513) highlighted potential legal and regulatory complexities. Have you considered how this decentralized lending facility will navigate these challenges, particularly concerning compliance in various jurisdictions?

I hope you find this helpful. I think the idea is interesting and like the other members, I’d like to see how this develops & looks if you use Agent 9 to work through the above points.

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I appreciate the acknowledgment & the bot helped a lot, in short the “existing knbone” that would be acquired would be knbone that is unstaked / not farming within bonecrusher and available for trade via Shibaswap v1 and v2 pools.

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NFTs are way cooler tech than just an image or cover design. The idea of comes from being a Aerodrome & Velodrome user. Let’s keep the focus on ShibaSwap usage though. When users deposit tokens into a v2 concentrated pool or in this case a stable pool using WBONE - USDC, WBONE - DAI, or WBONE - USDT they will receive a NFT. The ShibaSwap Postions nft represents your deposit rather than LP tokens. If implemented. Users can stake their nft through bonecrusher to borrow against their provided liquidity. The stable end of the pair is swaped for knbone when user confirms borrowing, while retaining the underlying WBONE within the liquidity pool. This idea would in theory allow TVL to increase while still providing an additional use case for KNBONE. In todays economy many users of DeFi borrow against their assets in order to stay afloat and in position within their portfolios.

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I appreciate your concern for k9 and insuring the stability of bonecrusher, very admirable :saluting_face:.
Who- Shibaswap users who provide WBONE - USDC, WBONE - DAI, WBONE - USDT within a stable v2 pool will be the ones eligible to stake their ShibaSwap Postions nft with bonecrusher in order to borrow against their liquidity.

What- when borrowing, users will acquire KNBONE based on their “collateralized NFT” based on over collateralized metrics similar to Makr DAO minting of DAI.

Where- BONE/WBONE and stablecoins in Shibaswap v2 pools will be the entry point for users. Next step, staking on bonecrusher.

Why- In today’s economy DeFi user need access to capital and may not want to compromise their investment positions. With this implementation users can access capital utilizing KNBONE while still retaining their stable postions within Shibaswap. In addition, this new use case could attract new users to shibarium and bonecrusher.

How- users deposit BONE/WBONE + their choice of stablecoin between DAI, USDC & USDT into a Shibaswap v2 pool then once completed users then stake their deposit interacting with bonecrusher smart contracts. When borrowing, the smart contracts will then utilize the underlying stablecoin to acquire knbone that is openly trading on Shibaswap v1 or v2 pools then deposit the KNBONE acquired to the user borrowing. KNBONE would need to be repaid in order unstake the Shibaswap positions NFT.

To be clear, these NFTs are minted when users interact with Shibaswap v2 pools when adding liquidity. Therefore these NFTs would not be offered for sale nor is “purchasing” them required either. I hope this answers all your questions :folded_hands:t4:

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YOU SEE THE VISION :grin:
Use tech in cool ways and provide access to capital is the goal.
Further discussion in regards to liquidation metrics should be discussed further with K9 builders to provide a safe & seamless experience while still maintaining the infamous TVL status of bonecrusher. In theory, liquidity providers can have access to capital while retaining TVL on shibarium. BONE in KNBONE out, with this implementation BONE + STABLECOIN in and KNBONE out. :saluting_face:

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More use case for stables and stay in alignment with the KNBONE liquid staking derivative notoriety. :right_facing_fist:t4::left_facing_fist:t4:
S/o agent9 & Sarah for the help

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approaching the final boss :sweat_smile:
I appreciate you referring back to Agent9 for clarity on the matter.

  1. When users stake their ShibaSwap v2 “Stable bone” liquidity; ex. WBONE - DAI via ShibaSwap v2 pool, the underlying stablecoin is used to acquire KNBONE trading on ShibaSwap v1 and v2 pools.

  2. Great question and open for further discussion with k9 builders. The stability provided with stables in theory only leaves volatile vulnerabilities towards the prices of BONE/WBONE.

  3. Rewards in esKNINE can be discussed with the DAO as well as 4 & 5 topics. DAO participation would be prioritized to find the best solution.

  4. Further research can be done on the matter.

I appreciate you wanting to discuss further and utilizing Agent9 as well :saluting_face:

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Given that these NFTs do not sale on any launchpads or marketplaces the “value” is embedded within when users interact with Shibaswap v2 pools and in this case users are adding “stable liquidity”. Stable = less risk but realistically there is always a risk. This lays lays within the price fluctuations of BONE/WBONE that will be retained during the borrowing process. Users deposit WBONE - DAI for example and then stake with bonecrusher, smart contracts take the underlying stablecoin to acquire KNBONE from Shibaswap. I hope this helps :saluting_face:

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So I like this idea. It is a way to bring more users to Shibarium and to establish more use cases.

1 Like