What is Kinetic Money?
Kinetic money is a new DeFi on the Terra blockchain. Their unique selling point is to let you take an advance on your future yield. Which means instead of waiting for your interest to accumulate day by day, you get it right away. Sounds cool, right?
While Kinetic is a new DeFi on the terra ecosystem, the concept is not new. Alchemix is the same but on Ethereum.
What does it really do?
As we know, UST can earn 19% interest on Anchor.
Instead of waiting for the interest to accumulate over time, you hand your UST over to Kinetic, and they will give you kUST (Kinetic synthesized stablecoin). To be more specific, you are depositing your UST as collateral, while they lend you kUST.
Kinetic will then deposit your UST on Anchor (or elsewhere to earn higher yields), and those yields will auto pay off your debt (the kUST you took)! Note: They do take a 8% protocol fee on the yields.
Kinetic has to generate good yields. Right now they rely only on Anchor, which is likely to deplete in 3 months, and then the APY will fall. If that do happen, your debt with Kinetic will auto repay slower, your deposit will lock longer.
kUST has a 1:1 peg with UST, and they have to make sure it can hold the peg. Even UST has a 1:1 peg with USD (fiat), and they have to do all sorts of things to prevent it from a death spiral. So kUST has another stablecoin unpegging risk.
The Kinetic team is not doxxed. All we know are the 2 founders: him and him. The team has 8 people, including a business development manager, a front-end and Rust developer, a dev-ops person, a designer and a legal officer.
And of course, possible smart contract bugs.
During the lockdrop, they will reward early adopters with KNTC and pre-access to the vault.
The APY from the collateral will also be higher while the debt utilization is not full.
So if you’re interested, you can try them out early.
- AMA with Orbital Command where MoonMan explained why one would put $10k in Kinetic instead with Anchor
- Qi Podcast
- The Mind-Bending Magic of Self-Paying Loans compared to TradFi