1KX Protocol: The New DeFi
A Hybrid Decentralized Finance Protocol on zkSync that offers a Monolithic Decentralized Exchange + Automated Market Maker + Money Market + 0 slippage Perps Trading + Algo-stable Coin.
Centralized finance, commonly referred to as traditional finance (CeFi), frequently has an odd tone. Using your digital asset holdings as security for a loan, just like you would with traditional assets, is possible thanks to centralized finance. On the other hand, decentralized finance enables two or more people or organizations to conduct financial transactions in an immutable, transparent and trustless manner from any location in the world. Every record on a blockchain is immutable. Learn more about CeFi vs. DeFi here.
1KX protocol is a hybrid DeFi protocol that offers a Monolithic Decentralized Exchange + Automated Market Maker + Money Market + 0 slippage Perps Trading + Algo-stable Coin. As a hybrid DeFi protocol, 1KX enables users to take part in a variety of decentralized financial activities, such as perpetual trading, lending, and borrowing using stablecoins and digital assets as well as swapping digital assets.
1KX Protocol as an Algorithmic stablecoin.
The 1KX stablecoin $OSD is the focal point and engine powering the 1KX protocol, in contrast to numerous other stablecoins ($aUsd, $cUSD, $tUSD, $USDN and more) in the market, including the infamous $UST that tanked the cryptocurrency market in May 2022. All digital assets/ tokens deposited in the 1KX protocol are grouped and converted to $OSD, hence creating a single pool for all assets on the 1KX protocol like the Tether $USDT pool or ChainLink $LINK pool. Investors can deposit single assets to the pool, unlike other DeFi protocols. These single token liquidity pools offer a more optimal user experience for all participants, including traders, liquidity providers, and third-party projects, thanks to their higher capital efficiency. According to the 1KX protocol,
1KX solves the capital inefficiencies of liquidity pool pairs(that traditional AMMs such as Uniswap, Sushiswap, etc have) by grouping deposited tokens into a virtual pair with the OSD. This means that liquidity providers only need to deposit one token to the pool instead of two. OSD is backed by all the assets in 1KX pools that have a positive OSD balance and 1KX treasury.
1KX Protocol as an Automated Market Maker/Decentralized Exchange {AMM/DEX}
The 1KX protocol will also work as a decentralized exchange and automated market maker, allowing cryptocurrency and digital asset traders to conduct trades without entrusting the administration of their funds to a third party or custodian. These transactions are facilitated through the use of self-executing agreements written in codes called smart contracts on the zkSync network. 1KX protocol will rely on blockchain-based services that provide information from exchanges and other platforms to set the price of traded assets called blockchain oracles. Instead of matching buy orders and sell orders like centralized exchanges, the 1KX protocol smart contract will use pre-funded pools of assets known as liquidity pools deposited by investors.
The 1KX protocol is still on testnet as the zkSync mainnet goes live in October. Users can test the protocol and support the team in building the first hybrid DeFi protocol in the industry.
1KX Protocol as a Money Market
According to Investopedia,
The money market is trading in very short-term debt investments. At the wholesale level, it involves large-volume trades between institutions and traders. At the retail level, it includes money market mutual funds bought by individual investors and money market accounts opened by bank customers.
Now, instead of talking about institutions and banks when it comes to money markets, we’re talking about decentralized finance. Lending and borrowing are currently significant decentralized finance operations, as you are aware. Without the use of a mediator or custodian, the 1KX protocol will let investors lend and borrow digital assets in the form of tokens or cryptocurrencies. Read about DeFi lending here. 1KX will allow permissionless lending and borrowing directly from supported pools using supported assets as collateral. Here’s a simple analogy:
You have $BTC Bitcoin worth $200,000 and need $USDT Tether worth $180,000.
You simply deposit your Bitcoin on the 1KX protocol and get a loan. Since Bitcoin is a volatile asset, you will have a margin on your position and your margin position will be liquidated when margin rate falls to liquidation threshold. Read the 1KX gitbook to understand more about its liquidation method here.
1KX Protocol as a 0 Slippage Perps Trading Platform
With no slippages, 1KX will let traders open leveraged positions. The long OI/short OI ratio is kept within a reasonable range by the 1KX funding rate so that traders’ PnL are evenly distributed between long and short positions. The maximum leverage for perpetual futures is set at 70x in the 1KX protocol, which employs Oracle Price Feed as a source of mark price. Watch out for the perps trading feature, which is not yet available on the testnet.
1KX Protocol as an Earning Opportunity
First and foremost, the 1KX protocol aims to provide its users 100% of all protocol revenue. The 1KX protocol will reward its users for using the protocol, starting with a 50% to users : 50% to grow the protocol ratio till all revenue goes to users. Isn’t that fantastic?
As a $USDT liquidity pool provider (a user who deposits his $USDT to the $USDT pool on 1KX protocol) here are a few ways you can earn:
- You earn borrower fees from borrowers who use $USDT as their margin.
- You earn swap fees from traders who make swaps on 1KX protocol via the $USDT pool.
- You earn perpetual trading fees from perpetual traders who make perp trades on 1KX protocol using $USDT as margin.
This is same for similar assets you deposit on the protocol like $DAI and $USDC. Keep it in mind that these are just few ways aside your usual trading profits and lending earnings.
Never forget that 1KX protocol is the new DeFi.
JOIN THE 1KX PROTOCOL TESTNET
There will be an airdrop according to the team but this isn’t for airdrop hunters, this is to serve as a guide for builders and creators to join the 1KX protocol testnet. To join the 1KX protocol testnet, read here:
Remember that this protocol is still in development and there will be bugs and hitches. Do well to join the 1KX community and stay up-to-date with developments while giving your feedback and suggestions.
Together we can do more!!!
Website: https://beta.1kx.exchange
Discord: https://t.co/AH3HeMfEWd
Twitter: https://twitter.com/1kxprotocol
Gitbook: https://1kx.gitbook.io
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✌Thanks for reading!!!
