KLP Leverage - TEQUILA

KLP Leverage has features of:

  1. Multiplied rewards from KLP in terms of ETH real yield

  2. Dynamic reward split mechanism that users pay the leverage cost only when they gain

Approach

KLP itself can be minted with multiple assets, including volatile assets like BTC, ETH, etc. Hence, the price of KLP itself will be volatile due to its basket-of-asset nature.

In the KLP Leverage Vault, users deposit USDC.e and leveraging will be achieved through borrowing extra funding from USDC.e Lending Pool at the cost of reward splitting.

In Tequila, leveraging is achieved through borrowing extra funding from USDC.e Lending pool at the cost of reward splitting.

Workflow

Step 1: Users input the deposit amount and choose the desired leverage level (up to 10x).

Step 2: The additional capital required for the leverage strategy is borrowed from the USDC.e lending pool.

Step 3: The borrowed USDC.e is combined with the deposited USDC.e in the KLP Leverage strategy to mint the corresponding KLP tokens on KTX.

Step 4: The "Debt-to-Value (DTV) Monitor" and "Liquidation Monitor" continuously monitor the health of the strategy.

Step 5: When the leveraged positions are closed, the rewards are split to the Redistributor, which is a protocol-owned middleman contract that facilitates the distribution of rewards to USDC.e Lending Pool. See here for more details.

Features

Reward Split based on UR

The Reward Split Ratio will be based on the utilization ratio of the lending vault:

  • From 0-90%: The split ratio will be 30%

  • From 90-95%: The split ratio will increase linearly from 30% to 70%

Harvestable Reward

  • For Leverage users, KLP ETH rewards are harvested by the protocol whenever a user opens/closes a position, or every 24 hours. Rewards can be claimed from the Vaultka page

  • The user’s harvestable reward will already be deducted from the reward split for lenders

  • For Lenders, rewards are distributed whenever it is harvested

Flexible Leverage

Users can employ flexible leverage (up to 10x) based on the amount they deposit in the Tequila vault. The β€œManager” will check the availability of the lending vault and match the leverage amount to mint KLP.

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