Knine combined futures

Development
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K9 Finance DAO Lending, Borrowing, Centralized and Decentralized Futures Programs

  1. Introduction and Objective The K9 Finance DAO ecosystem aims to expand its DeFi capabilities by introducing both decentralized and centralized lending systems alongside a futures trading program. These initiatives will enable K9 token holders to earn passive income, access liquidity, and participate in decentralized futures markets while creating deflationary mechanisms for the K9 token.

  2. Proposal Details

a) Decentralized Lending System with Dividends for Lenders

Mechanism: Lenders deposit K9 tokens into decentralized liquidity pools to earn yield based on interest from borrowers.

Dividends: A portion of the interest collected will be distributed as dividends to lenders, providing a sustainable passive income stream.

Governance: DAO members will vote on key parameters, including interest rates and collateral requirements.

b) Centralized Lending System Using Treasury for Buybacks and Burns

Mechanism: The DAO treasury will issue loans from collected K9 tokens, earning interest from borrowers.

Buyback and Burn: Interest generated will be used to repurchase K9 tokens from the market, which will then be burned to reduce token supply and increase value.

Sustainability: Loan issuance limits and interest rates will be determined through DAO governance to ensure long-term efficacy.

c) Futures Trading and Ratio Calculation

Futures Market: Users can open long or short leveraged positions on K9 tokens.

Funding Rates: Calculated as (Perpetual Price - Spot Price) / Spot Price * Funding Interval.

Leverage Limits: Adjustable from 1x to 20x, with strict margin requirements to manage risk.

Position Ratio Monitoring: Automated tracking of long vs. short positions to prevent manipulation.

  1. Proposal Details

a) WHAT: Solution Overview

The lending and borrowing program will be built on smart contract-based liquidity pools, allowing users to lend and borrow K9 tokens in a secure and decentralized manner.

Key Features:

Lending Pools – Users deposit K9 tokens to earn yield based on supply and demand.

Collateralized Borrowing – Borrowers must provide collateral (ETH, stablecoins, or other assets) to secure loans.

Algorithmic Interest Rates – Interest rates dynamically adjust based on market conditions.

Liquidation Mechanism – Automatic liquidation protects lenders if a borrower’s collateral falls below the required threshold.

Security Measures – Smart contracts will undergo rigorous audits to ensure fund safety.

b) WHO: Stakeholders

Lenders – K9 token holders who wish to earn yield by providing liquidity.

Borrowers – Users needing liquidity without selling their K9 holdings.

K9 Finance DAO Governance – DAO members will vote on key parameters such as loan-to-value (LTV) ratios, interest rates, and supported collateral types.

Smart Contract Developers – Responsible for building and securing the lending and borrowing infrastructure.

Auditing Firms – Conduct security audits before launch to ensure contract safety.

c) WHERE: Implementation Platforms

Ethereum Mainnet or Layer 2 Networks – The program will be deployed on Ethereum and possibly Layer 2 solutions like Arbitrum or Optimism for lower fees.

K9 Finance DAO Governance Portal – Community voting on lending parameters will take place here.

DeFi Aggregators – Integration with DeFi platforms like DEXs and lending dashboards for visibility.

d) HOW: Resources & Execution Plan

Funding – Development, security audits, and initial liquidity incentives will require a budget from the DAO treasury.

Technical Support – Smart contract developers and DeFi security experts will be hired.

Community Involvement – DAO members will help set interest rates, collateral types, and risk parameters.

Marketing & Adoption – A community awareness campaign will drive participation from lenders and borrowers.

TVL: Measure of K9 tokens locked in lending pools.

Buyback Efficiency: Amount of K9 tokens burned via centralized lending profits.

User Adoption: Number of participants in lending and futures markets.

Revenue: Dividends paid to lenders and treasury income from interest.

Conclusion & Next Steps This proposal introduces decentralized and centralized lending systems with unique benefits: dividends for lenders and deflationary tokenomics through buybacks and burns. Additionally, decentralized futures trading will enhance liquidity and price discovery, positioning K9 Finance DAO for sustainable DeFi growth.

4 Likes
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Now you have my attention and I must say it is about time.

Can we have a visual mock up for this proposal by chance with a few examples including accepted tokens?

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USER LONG ENTRY: (example) deposit 2.2 usdt x10 leverage And receive 19.8 usdt (borrowed) A purchase order is executed in case the price of knine drops +9% an automatic sale will be executed and the borrower receives his USDT back.(generating 2 transactions with commissions for each action) (overmargin case) If the position is within the margins, the user can maintain the position with profits for as long as necessary while their borrowing costs increase.

USER SHORT ENTRY: (example) deposit 1M knine x10 leverage and receive 9M knine (borrowed) A sell order of 10 M is executed In case the price of knine increases by +9% a purchase order is executed and the borrower receives his knine back. (overmargin case) If the position is within the margins, the user can maintain the position with profits for as long as necessary while their borrowing costs increase.

The leverage/margin ratio can be variable at the user’s discretion as long as it secures and maintains the lenders’ positions.

This example can be extrapolated to any pair.

(Sorry, I only have an Android smartphone, I can’t do anything better, and I have no design skills)

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I would also like lenders to only be able to be users who have locked tokens for at least 6 months, thus ensuring the lender’s trust in the ecosystem.It would be interesting to create a “liquid” locking token (only suitable for loans) but as interchangeable as knine for the correct execution of the contract.

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This sounds like an interesting proposal, would like to hear more and to see whether this is something that can actually/viably be scoped if there was a majority vote for it.

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Perhaps the most interesting thing for lenders would be to be able to lend their farming and their real yield staking, and I find it to be the most interesting pair. (knine/bone)

I am not an engineer or a developer. I just showed my idea and a product that I would like to see in the ecosystem. I need your help to formulate it in the best way for the round table.

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I don’t much like these kind of proposals. I think this need to be evaluated by the Knine team and then vetted to the round table of dogs as a viable project or not.

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Thank you for submitting your first proposal. You raise some interesting ideas which require further research before being properly considered.

  1. I am not a legal expert but I know that providing borrowing/lending may fall under the regulations of financial companies and potentially licensing etc so requires much deeper research into this area (especially from Panamanian DAO perspective) before it can be fully considered.

Plus holding others funds in custody (borrowers collateral) is also an activity requiring financial certification in many jurisdictions.

There are a lot of legal risks involved which should be identified and weighted first.

  1. I am not sure how much demand for such lending/borrowing of K9 tokens there will be since it will be very niche and limited to single specific token. The revenue from such project might not cover the costs of building the product and maintaining license and regular audit requirements.

It might be worth considering expanding the lending/borrowing to other tokens as well to capture greater market share. But a study of competitors is needed to see how profitable/saturated this market is.

  1. The interest rates should be determined automatically by the contracts based on supply and demand to keep things always in balance. It would be impossible for the DAO to set a fixed interest rate and run with it for prolonged period of time or to have DAO vote on updating them often.

Please do some research in above topic in order to discuss this further.

Blessings.

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I think it would be a good idea to take a look at how other financial firms operate and do something different.

As in you have cash stores for example. They look at how much you make per week and then do a simple multiplication of 1.10 or 1.15 to determine the maximum they are allowed to lend out.

I remember this from a cash store I did business with in the past. You would tell them you made 100 bux and they would lend you up to 115. But you had to pay it back by the time your paycheck came in. Since most people were used to taking out a loan and paying back 115 they thought “rolling over the balance” meant you were just going to pay off the debt by the next paycheck. Nope. Rolling over in their terms means you rolled it into another loan. And the original amount you owed being 115 turns into 165. I remember this myself when I had to borrow 20 dollars from a friend to pay back my payday loan.

So avoid that which I just wrote.

Another example is a loan I shopped around for. It was for a motorcycle. At the finance department (Which means they call up people with capital to lend) they wanted 1,750 down on a 72 month loan paying 400+ (Which brought the total amount to pay back over 26,000) The property I was purchasing was worth only 18,800. That is a lot of interest I found out.) So I ended up going to a(n) FCU. They approved me with 0 down, 60 months at 308. Bring the total amount to pay back at around 21,000 (These aren’t exact numbers.)

The way that modern money mechanics explains how their system works is the following:

You get a loan of 10,000 and you put it into your bank. This “credit” was created by another lender. they can take up to 90% and use it as a “reserve” for new loans. (9,000) If someone takes out a loan from that 9,000 and places it into another bank they can take that 9,000 and put 8,100 into a reserve for loans.

Lets say you keep bouncing back and forth between two banks until the amount they can put into a reserve reaches, oh I don’t know, 100 bux or so. Your payments will be so massive you wont be able to pay them back. Both banks would say they have, and I am ball parking it here: 60,000 or so from you just bouncing back and forth to take out loans. That is if you are able to hide your loans from the reporting agencies. Essentially you could cause an economic problem.

The final financial product we have is credit cards. They work based off of a carried balance calculated by the uh… I forget as I don’t have a lot of time to talk, average balance. Which if you pay off your card at a rate of 1,000 at a time the amount of interest you actually have to pay back will significantly drop as compared to just making the minimum payment. So if you have a card of 10,000 and you pay off 1,000 to make it 9,000 the average drops to around 9,500. if you make another payment the following month in the amount of 1,000 it drops down to 8,750 or so.

but if you only make the minimum payment that means the balance has some capital that is paid into, but the average balance is much higher so they can charge you more on interest. Making the minimum payment is like paying back 5 bux to your capital.

Knowing all of this in the background?

A few ideas spring into mind which is 1: limit the amount that can be borrowed.
2: make sure each payment pays back at least 15 dollars into the capital with a “minimum payment” if there is one.
3. Limit the amount of loans any individual can make.
4. To prevent fraud we need a team of people to review the information given. Which means getting the financial institutions involved and releasing this before they do.
5. An anti abuse function needs to be added to the backend on the tokens borrowed. That way someone can’t use borrowed tokens to keep taking out a loan over and over and over again.

This is something I would put all of my savings into.

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It may be a more optimal proposition when the treasury increases in value thanks to the integration of shibarium and bone. After all, if it is a license for years, It could be profitable in a “short” time, for me it would be studyable at some point when the market is hot and we have high returns on the treasury.

I think that the best and safest option would be to pay an international legal advisor, since the investigation of the damage could be counterproductive in the event of an infringement, since we are not professionals.

There are also financial/legal consultancies, which I think is the best way to structure this idea.

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That’s the point of all forum posts/proposals :wink:

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Now that I have time we can open this discussion up to a broad use scenario.

Loaning out any amount of “capital” in any form involves a risk; at face value a loan of Etherium based Cryptocurrency can only be used for other use cases for Etherium.

A little convoluted but what I am saying is: the most popular use case scenario for loaning out cryptocurrency would be to temporarily inflate the price of a coin.

I will avoid the broad term used going forth as to not incite any unwanted rhetoric. If there are some people passionately involved with a cause please take it elsewhere as this is more of a think tank on this proposal.

As stated before a use case scenario would be to add market capital to a specific coin. I could take out a loan for, I don’t know so let’s say 10,000 Etherium coins. (This is for the maximum effect of what people would currently push for.)

We would need to create a smart contract that would help the lender pay off their “debt” as much as possible with this loan scenario. Especially if the use case is for a coin that has been in existence for at least greater than 6 months. This smart contract, and again I am not familiar with the environment of smart contracts, would have to operate in a manner that would generate as much capital to pay off the loan plus interest. A contract that automatically fulfills the end user’s obligations as much as possible.

We all know this will be abused in this manner frequently. I’m addressing this first.

The second scenario would be a coin launch. We see this all of the time on launch platforms for coins where capital is put into a coin as to boost its opening potential so early investors (which again I will refrain from using the other term widely used in communities.) can cash in on their investment as soon as possible. The smart contract, again I am not well versed in the code of smart contracts, needs to behave in a manner that both keeps the market capital high, but at the same time sells to fulfill the obligations of the individual responsible for repayment of the loan. Effectively making a smart contract that both weighs in the availability, sale, and market fluctuations of the coin it is put into. This would be in an effort to make it easier for the obligated to make a full repayment as much as possible.

We can all see what this could do to the current feelings of coin holders. It can also alter the psychology of early investors.

This can quickly split into 3 different categories of customers for this product. One would be the coin launcher (the creator of the coin), second would be the early investors (or the market capitalists), and third would be almost the same as an early investor but could be marked as a believer. This is just to picture in your minds what this can do. I myself fit into the category of a believer in all of the markets, bonds, and futures I have invested in. So I would be the highest at risk (retail investor.) of failure.

With that in mind I must bring about the abuse scenarios. I mentioned before about how one individual could go between two banks and take out multiple loans, further inflating a currency until there is a default. In the alt coin market we see coins all of the time go bust. Whereas the amount of coins, no matter how many you have, could only amount to far less than what they paid for originally.

We have no means of trading any cryptocurrency for goods and services without converting them into a physical form of money that is already widely accepted.

I think everyone has at least seen the youtube video made by patrick boyle covering the book written by Zeke Faux, that delved into one of the use case scenarios of blockchain technology.

We must have a smart contract written as such to not take into any account the futures being placed into anything other than a coin.

I know I sound like a broken record but I am not well versed in cryptocurrency smart contracts. But I do know there is security risks involved with accepting certain smart contracts.

At the same time if we do pursue this product we also must protect the product from alterations, overflows, exploits, and compromises of the current day activities in the blockchain world. So backend security is a must.

We may have to create our own financial institution to make this happen. This is something I have been thinking about ever since I heard about the K9 Finance DAO. Finance is in the cryptocurrencies name but what is it financing? what financial products does it have? We are one year in and so far its just… sort of a bank at this point in time?

We need to create something that will benefit and maintain this coin and its customers, while balancing the budget so we don’t go under and rely on investments. It has already been one year and so far I have only seen marketing efforts being introduced. This project needs to be explored.

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On the topic of Modern money mechanics:

Instead of utilizing 90% of the total available to use as capital for new loans, I propose we only use 30-50%, or another amount that doesnt exceed 50%. This is to mitigate risk as much as possible while also giving K9 a chance to recoup the loss if there is one. If someone wants to utilize all 50% in one loan then they should have some skin in the game in the form of a deposit not exceeding a certain percentage in the event of a default.

I also say the stakeholders should have a say in the form of a vote for anyone looking to utilize all available capital, or above 60% allotted in one loan.

We should also determine how many loans or amounts per delegation to a specific coin are allowed. I think this much engagement in the community might pique the interests of other speculators seeing how we are more proactive on such a lending product. And how open and transparent we are to it.

With that aside we must also put forth an effort in recovery operations. Which means communication and asset… I guess, recovery efforts. We must have a means of recovery in the event of a default. I also think it should be a bit of a progressive approach in recovery. Instead of taking away property the individual should have a sort of tax for continuing to trade on certain coins in the future. But then again this is just the same thing as the central banking system with accountability and asset forfeiture. But instead this would be more of a tax on being able to continue to make trades on the defi platform instead of taking away property, in an effort to sell in order to pay the remaining debt. The argument immediately comes to mind: they could just make a new wallet to circumvent it. Unless there is a way to track and identify them by a certain wallet transaction that continues to happen regularly we could effectively find the ones who defaulted and impose the tax.

Of course this means making Shib the place to do trades above and beyond uniswap and other DEX’s. This means we may need to be a bit diplomatic and talking with the other trading markets to pay a sort of commission for identifying, and taxing the wallets, and sending us a proceed until it is satisfied.

But again this is just going deeper into this idea. Not all of these are awesome but it is something that I speculate would be something… different.

I am comparing and contrasting this with what we are currently doing with the central banks versus defi.

My whole thing about the banks is how they take away property and sell it to pay for your debt. By taxing their ability to continue making trades at all it would eliminate that fear of destitution while also satisfying the loan originators.

To put it into a picture: Instead of taking away the work truck that is listed on the loan it just adds in a tax. That way they can continue to work and generate an income, and we can still satisfy the loan until it is paid off.

We are still very far away from this idea. I am just throwing it out there.

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I need the DAO’s collaboration to structure a budget so I can vote on it at the roundtable and carry it out. I’m not good at calculating the effective costs of a proposal.

It was a roundtable request, a detailed action plan, and a realistic budget.