Tezos-Based Algorithmic Stablecoin Kolibri Goes Full DAO & Introduces kDAO Token
Tezos-Based Algorithmic Stablecoin Kolibri has taken a big step towards full decentralization with the formation of a DAO. This ambitious move towards full decentralized governance includes the release of a governance token called $kDAO.
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kUSD is an algorithmic stablecoin that is backed by XTZ with a minimum dollar value ratio of 2:1.
kUSD can be purchased on Quipuswap and it can be swapped/ traded with any of the available tokens.
You can also choose to mint your own kUSD on kolibri.finance, which means that you will lock an amount of XTZ in a smart contract as collateral and get kUSD in return.
You can redeem your XTZ later once you burn the amount of kUSD that you minted previously. The current supply of kUSD is 1.05 Million. Learn more about Kolibri here.
Kolibri is a set of smart contracts with certain parameters that can be adjusted.
Due to the fact that changes can be made in the protocol, users of kUSD will have to trust the creator of the smart contracts to not change or adjust the characteristics of the protocol without following a pre announced procedure.
Just to mention one of the factors that can be adjusted: the stability fee of kUSD vaults.
To make an application fully trustless and decentralized, you would have to remove the possibility for a central entity to make changes.
Since it is necessary to be able to adjust certain parameters, removing the possibility to make changes or additions entirely, is not an option. The solution is to democratize the decision process.
This is done by creating a DAO, which democratizes the way changes can be made: it decentralizes the application. Once the DAO is fully live, there will be no central entity that can decide on any changes to the protocol.
The application is decentralized, “truly released” on the blockchain and the creators have let go of the controls.
Decision making in a DAO is done through a voting process, in which a token gives you a percentage in the total votes. These tokens are called governance tokens. The governance token for Kolibri is called kDAO.
$kDAO holders can propose and vote on various proposals to govern the Kolibri Protocol. Once a proposal reaches the acquired majority of votes, it automatically gets integrated into the protocol. (Once a vote is concluded, the activation is delayed through a “Time lock”.
This ensures for people who voted against the proposal to consider whether or not they want to exit the Kolibri system. (Which would in essence mean that they would decide to burn their $kUSD if they would disagree with a change in the fees for example.)
– Symbol: kDAO
– Digits: 18
– Address: KT1HASEjnrp915toQ7RSJGW5YYcv5X7hvQbn
– Token ID: None (FA1.2 tokens don’t have IDs)
– Supply Cap (fixed): 1M kDAO
– Airdrop to Ecosystem Users: 15%
– Liquidity Mining Incentives : 30% (Liquidity farms)
– Hover Labs Token Grant: 20%
– Reserved for Community Fund: 35%
kDAO will be airdropped to the following addresses that met the criteria for the ecosystem airdrop, which can be found here.
The full token distribution is a process that is done gradually. Read more about this process in the full Kolibri DAO article by Hover Labs.
Open Source DAO contracts
With the Florence Tezos protocol upgrade live, more complex smart contracts can be deployed on Tezos. Kolibri is the first application to be fully decentralized in a DAO, but more projects are looking to move towards decentralized governance through DAO’s.
Not everyone will have to write their own DAO smart contracts from scratch though. Homebase DAO is one of the highly anticipated tools that provides open-source DAO contracts. But since Homebase DAO has not been completed yet, the DAO contracts that were used for Kolibri DAO are an option for early DAO builders.
You can find the open-source contract here.
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