# Introduction

The best swaps for Klaytn, in a nutshell.

## What is Kokonut Swap?

Kokonut Swap is a next-generation AMM DEX protocol for the Klaytn ecosystem, through which users - or other protocols - can exchange stablecoins with low slippage.

## Why do we need a stableswap?

CP-AMM(Constant-product Automated Market Maker) protocols such as KlaySwap are useful for general-purpose liquidity providing and trading. However, when it comes to exchanging assets whose exchange rate is mostly stable - for example, USDT-DAI, KLAY-AKLAY -, their market-making algorithm becomes very inefficient. With CP-AMM Protocols, market takers always suffer from high slippage losses even if there’s a lot of liquidity provided to the pool.

## What’s the problem with CP-AMM?

Providing liquidity to CP-AMM is like spreading an infinite number of limit orders on an order book from price 0 to infinity. The thing is, the swap ratio between stablecoins usually stays around 1:1. The rates rarely deviate 20\~30% from the equilibrium.

This means that most of the liquidity allocated to price ranges, for example, under 0.8 or over 1.2, is seldomly used because the price rarely gets there. Because of this, the ‘effective’ liquidity that traders utilize is actually very low, even with the high volume of total liquidity provided to the pool.

## What’s the alternative?

A hybrid algorithm that utilizes both CP-AMM and CS-AMM can be a good solution. The most well-known example is Curve Finance.

![](https://3792619796-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FwdgLWm2wlJO3nDeSRU2L%2Fuploads%2Fl1i2SRHXMjjepdJSa0gP%2FUntitled.png?alt=media\&token=25e17a2c-56c1-4226-b989-ecf86c51621b)

The chart above is from Curve’s whitepaper. It describes how the stableswap invariant works. The inclination of the tangent line of a point on the curve represents the spot price at the point. When x increases, y decreases - and vice versa.

![](https://3792619796-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FwdgLWm2wlJO3nDeSRU2L%2Fuploads%2F6jE7lHfJVb31FkfT5uql%2FUntitled%20\(1\).png?alt=media\&token=2acb5874-8a52-44be-9a29-250fd24f420c)

This figure - also from Curve’s whitepaper - describes the price movement of a stableswap from its equilibrium of (5,5). Even when almost 50% of Y token liquidity is taken from the pool, the pool still offers a decent swap ratio with low slippage.

## Benefits of Kokonut Swap

Kokonut Swap offers low-slippage swaps between assets with stable swap rates - such as exchanges between USDC and USDT. Since a stableswap’s price adjustment mechanism, compared to that of CP-AMM, depends lesser on the arbitragers, the extra margin benefits the liquidity providers and traders.


# Understanding Stable Swap

### What is CP-AMM and is there any room for improvement?

CP-AMM is the most widely used algorithm around DEXes, designed to move along the curve of `xy = k` (x, y: balance of each token in the liquidity pool, k: constant) when swapping between two tokens.

Without loss of generality, we can set asset y as stablecoin, which makes calculation of asset x’s price much easier:

`p = - (dy / dx) = (y / x)`

We can clearly see that the price of asset x is determined solely by the proportion between asset x and y in the liquidity pool.

Calculating the total value of asset x in dollars would get us:

`px = y`

This implies that total value of asset x is equivalent to the total value of asset y(regardless of their prices). This allows for CP-AMM to provide uniform liquidity across all price levels.

In this sense, CP-AMM can also be viewed as an order book trading system that contains nearly uniform amount of bid/ask orders for every price point(from 0 to infinity). This form of liquidity would be suitable for swaps between assets with high price volatility, but extremely inefficient for swaps between stablecoins. This is because whereas stablecoins are mostly likely stable around one dollar(with few exceptional cases☹️), CP-AMM wastes most of its liquidity on prices beyond the 1:1 price range. Moreover, the trader needs to take on higher slippage costs than is actually needed.

### A Deep-dive into Stableswap Formula

Stableswap was first introduced by Michael Egorov, founder of Curve Finance through the whitepaper released in November 2019, tackling the exact problems of CP-AMM explained above. The basic idea is to provide concentrated liquidity around the 1:1 price range for higher capital efficiency and lower slippage cost. This requires a different swap curve from that of CP-AMM’s.

First, let’s imagine a liquidity pool that always swaps at a constant, one-dollar rate. The curve’s formula would be as follows:

`x + y = D (x, y: number of each token in the liquidity pool, D: constant)`

We can see from the formula that the price of asset x is always $1 (`p = -(dy/dx) = 1`).

As the sum of x and y is kept constant, we call this form of the curve a CS-AMM(Constant-sum Automated Market Maker).

CS-AMM guarantees a fixed rate of 1:1, but is problematic for pragmatic reasons. Stablecoins do have rare cases of price volatility and when that happens, the relatively safe stablecoins will all be withdrawn, making the pool useless with only the volatile stablecoins left.

With this in mind, Stableswap was designed to follow the CS-AMM curve around 1:1 price range, but asymptotically approaches the CP-AMM curve beyond that range.

Below formula is derived by multiplying `χD`to the CS-AMM formula and then adding CP-AMM formula(χ here implies how much we are closer to the CS-AMM formula, and D exists to match the dimension with CP-AMM formula):

`χ D (x + y) + xy = χ D² + (D/2)²`

If χ equals 0, our formula would be identical to the CP-AMM curve, and if χ diverges to infinity, our formula would be identical to the CS-AMM curve. Therefore, we need large χ around the equilibrium point and near-zero χ as we move away from the equilibrium.

To achieve these characteristics, Stableswap defines χ as following:

`χ = Axy / (D/2)²`

A is a constant for each liquidity pool, where larger A suggests getting closer to the CS-AMM curve around the equilibrium point. At the equilibrium of `x = y = D/2`, χ is at its maximum(=A), while χ approaches 0 when getting farther away from the equilibrium. Defining χ this way allows the curve to behave much like CS-AMM around the equilibrium, and much like CP-AMM away from it.

Substituting χ, we get the Stableswap formula:

`4A(x+y) + D = 4AD + D³/(4xy)`

Comparing the Stableswap curve with that of CP-AMM:

![](https://cdn-images-1.medium.com/max/1600/1*v5HsKXbl6qMCvDFSCHLYwQ.png)

Stableswap provides a flat region around the equilibrium, but also the shape of a CP-AMM beyond a certain region.

The below graph is a depth chart of asset x assuming asset y is a stablecoin for simplicity(We also assume the equilibrium price of asset x to be $1). “Depth” here represents the amount you can buy or sell(in USD) from $1 to a particular price point. It’s identical in meaning with the “depth chart” used in general order-book trading systems.

![](https://cdn-images-1.medium.com/max/1600/1*shyjzRBN4exvo-y8V_om5A.png)

As evident in the above chart of A=50, Stableswap provides eminently higher depth around the center compared to CP-AMM. Numerically, Stableswap provides **46 times bigger liquidity** at 1%-depth — the depth for 1% price change. Using 2,000 for A in fact guarantees **168 times bigger liquidity** at 1% depth. (For a pair of non-volatile stablecoins, A is usually set to a number bigger than 2,000.)

Following is the graph of `dy / d(ln p)` along with p. This quantity represents the thickness of bid/ask orders in a typical order-book trading system.

![](https://cdn-images-1.medium.com/max/1600/1*wGO-U8bMUNbvRJw0BBeDFQ.png)

As can be seen from the above graph, Stableswap provides much thicker liquidity around the center, but much thinner ones beyond a certain point, compared to CP-AMM. Thicker liquidity is formed around -21% \~ +27% range centered around the equilibrium price with A=50. Changing A to 2000, the thicker liquidity is concentrated around the -6.3% \~ +6.7% range. Stablecoins rarely lose the dollar-peg beyond these ranges, we can safely conclude that Stableswap always provides much thicker liquidity than CP-AMMs.

### Conclusion

We have demonstrated how Stableswap concentrates most of the liquidity around the 1:1 exchange rate region. Through such mechanism, Stableswap solved many of the problems intrinsic to CP-AMM stablecoin swaps. CP-AMM would typically cause high slippage cost even with small swap volume; whereas Stableswap can handle much bigger volumes even with smaller slippage costs. This would attract more users since they all want lower slippage costs, and liquidity providers will receive higher yields also.

Curve Finance is now the biggest DEX around stablecoins, owing much of it to the Stableswap algorithm.

Moreover, Stableswap can be generalized beyond stablecoins, such as 1:n pegged asset pairs or “wide-sense” 1:1 asset pairs such as KLAY-AKLAY pair, where exchange rates are safely bounded around the 1:1 region.


# Understanding Crypto Pools

### What is Crypto Pool?

Curve’s StableSwap concentrates most of the liquidity in the pool around the 1:1 exchange rate, providing much higher liquidity than CP-AMM(Constant-product Automated Market Maker) in stablecoin swaps. (More on this in our [previous post](https://docs.i4i.finance/understanding-stable-swap).)

### **What if, we could apply this idea to asset pairs other than stablecoins?**

Even volatile asset pairs do have periods with a steady price level. If we could provide concentrated liquidity during these periods, the swaps would be much more liquidity-efficient. Curve Finance’s Crypto Pool(a.k.a Curve v2) started with this idea and developed an algorithm that provides much more efficient liquidity for asset pairs other than stablecoins.

However, applying the StableSwap curve directly to other asset pairs will definitely pose some problems. StableSwap curve provides concentrated liquidity around the 1:1 exchange rate, but very weak liquidity beyond that range; so if the price fluctuates dramatically, it provides much lower liquidity than CP-AMM does. Moreover, liquidity providers would have to take on bigger impermanent losses, since the asset with higher value would also decrease dramatically. For these reasons, Crypto Pool proposes a different curve from that of StableSwap.

Crypto Pool needs to be constructed in a way that dynamically reacts to the market price, unlike StableSwap which focuses only around the 1:1 price. In this sense, Crypto Pool would need concentrated liquidity near-equilibrium price, but when the market price starts to deviate its curve should quickly resemble that of the CP-AMM. Its implementation as a formula will be elaborated in the next section.

Furthermore, we need an algorithm capable of dynamically shifting its “internal” equilibrium price to provide concentrated liquidity suited to real-time market conditions. Crypto Pool calls this process of adjusting the equilibrium price accordingly “repegging.” However, if repegging is conducted every time, it will create more losses for liquidity providers. So we need a special strategy to prevent such loss, which will be dealt with in the following section.

### Crypto Pool Formula

Let’s call the balance of each asset in the pool **`x`**` ``= (x₁, x₂)`.

The Crypto Pool contract internally keeps track of the equilibrium price **`p`**` ``= (p₁, p₂)` and is designed to provide concentrated liquidity around this price point.

First, let’s define **`x’`**` ``= (p₁x₁, p₂x₂)` using **`x`** and **`p`**, because we need to derive a general form of equation regardless of **`p`**.

Now, the Crpyto Pool’s curve can be defined in a more general form: `I(`**`x’`**`, D) = 0`. `D` is the total value of the liquidity pool also defined as the sum of **`x'`** at the equilibrium (Equilibrium point is **`x’_eq`**` ``= (D/2, D/2)`)

Now Crypto Pool curve’s equation (For convenience, we will use **`x`** instead of **`x'`** from now on):

`KD(x₁ + x₂) + x₁ x₂ = KD² + (D/2)²`

`K` is the same quantity represented by `χ` from StableSwap formula([Previous Post](https://medium.com/i4i-finance/understanding-curve-stableswap-en-f188b34c1511)) which represents similarity to CS-AMM. `K` equals to 0 gives us CP-AMM and `K` diverging to infinity gives us CS-AMM. Remember, our curve needs to behave like StableSwap near the equilibrium point, but approach CP-AMM faster than StableSwap when moving away from it, meaning a faster reduction of `K`. Therefore we define `K` as :

`K₀ = 4 x₁ x₂ / D²`

`K = AK₀ {γ² / (γ + 1 - K₀)²}`

`K₀` is basically `χ` from StableSwap(excluding the `A`), value of which is 1 when on the equilibrium point, but reduces to 0 farther away from the equilibrium. Each pool has its coefficient `A` just like in StableSwap, where bigger `A` implies similarity to the CS-AMM curve around the equilibrium point. `γ` is also different by the pool, where lower `γ` implies faster decay of `K`(=faster approach to CP-AMM curve) when moving away from the equilibrium point.

The below graph shows the relationship between `K₀` and `K` for several `γ`’s(Note that we get the StableSwap formula when substituting `K = AK₀`).

![](https://cdn-images-1.medium.com/max/1600/1*i30TgP6jANUKWzfDErBuNw.png)

Crypto Pool is similar to StableSwap near the equilibrium point(`K₀ = 1`), but as we get away from the equilibrium(`K₀ → 0`), `K` decays at a faster rate than StableSwap does. This means Crypto Pool approaches CP-AMM at a much faster rate than StableSwap does when the price shifts away from the equilibrium price. Here `γ` controls the rate at which `K` is decaying(=rate at which Crypto Pool curve is approaching CP-AMM curve). Usually, we use `γ` of extremely small scale—below 0.0001.

The below graph compares the curves of Crypto Pool, CP-AMM, and StableSwap.

![](https://cdn-images-1.medium.com/max/1600/1*Uqy7ZMUlOa0XWKx8mgRoeQ.png)

Crypto Pool provides a flat region only near the equilibrium point of (1,1), but quickly follows the shape of CP-AMM outside the equilibrium. Crypto Pool can be applied to asset groups with price volatility because it barely suffers from large impermanent loss of liquidity shortage, similar to StableSwap.

The below graph is the depth chart of asset x(assuming that asset y is a stablecoin and that equilibrium price is $1). “Depth” here represents the amount you can buy or sell(in USD) from $1 to a particular price point. It’s identical in meaning with the “depth chart” used in general order-book-based trading systems.

![](https://cdn-images-1.medium.com/max/1600/1*fVhvnJWtbuzNB82dL74QZw.png)

In Crypto Pool’s depth chart, more depth is guaranteed near the equilibrium than CP-AMM while also following the shape of CP-AMM depth outside the equilibrium. For 1% depth — the depth for 1% price change — comparison, Crypto Pool provides 19 times higher liquidity than CP-AMM and 5.3 times for 5% depth.

Following is the graph of `dy / d(ln p)` along p. This quantity represents the thickness of bid/ask orders in a typical order-book trading system.

![](https://cdn-images-1.medium.com/max/1600/1*CwCIH7sSnC8FIPAKVssnyA.png)

Crypto Pool provides much more concentrated liquidity near the center compared to CP-AMM but maintains similar liquidity to CP-AMM level outside the equilibrium. Thicker liquidity is formed around -11% \~ +11% range centered around the equilibrium price.

### Repegging Algorithm

We have until now seen that Crypto Pool successfully concentrates liquidity around the equilibrium. However, one last problem remains: when the market price is way off the equilibrium price of the algorithm, Crypto Pool provides lower liquidity than CP-AMM. Thus, we need to repeg the equilibrium price with a certain strategy to concentrate liquidity at the right price at the right time.

The equilibrium price is basically determined through an internal oracle price using EMA(Exponential Moving Average). But too much repegging could cause additional loss for liquidity providers.

CP-AMM’s curve remains the same regardless of price movement, thus loss on the liquidity provider’s side can be recovered once the price recovers — thus called ”impermanent” loss. On the contrary, Crypto Pool is vulnerable to permanent loss(which cannot be recovered even if the price does) due to changes in the curve itself when repegging the equilibrium price.

To fully grasp what this means, let’s first imagine order-book-based market making. The market maker currently placed a $0.99 bid order and $1 ask order. Suddenly someone makes a huge buy and shifts the market price up to $1.2. The market maker — in order to market make — now places new $1.2 bid and $1.21 ask orders, canceling the previous ones. Once more, someone makes a huge sell and shifts the market price back to $1. Ultimately, the loss occurred on the market maker’s side for selling the asset at $1 and buying it again at $1.2. Had the market maker not instantly reacted to the spike in market price, this loss could’ve been prevented.

This example assumes only one of each bid and ask order, but the same logic applies with multiple orders across various prices. Crypto Pool can be thought of as market-making where orders are scattered across every price point, with some more orders specifically concentrated around the equilibrium price. If Crypto Pool does not conduct any repegging — if it maintains the same liquidity — spike in the market price wouldn’t have caused any losses for liquidity providers. But if Crypto Pool conducts repegging like the market maker above, the loss can occur because it sells at the lower price and rebuys at the higher price. So we can know that if Crypto Pool conducts repegging every time, a permanent loss can occur to liquidity providers.

To prevent such permanent loss for liquidity providers, Crypto Pool adjusts the equilibrium price only when specific conditions are met.

Before diving in, we need to quantify the potential loss(or gain) caused by repegging. To construct it, the Crypto Pool algorithm uses the invariant from the CP-AMM curve(`D` from `xy = D²`) at an equilibrium point. The result is as below:

`X_cp = {(D²/(4p₁p₂)}^(1/2)`

Crypto Pool’s contract internally keeps track of two variables: `xcp_profit` and `virtual_price`. `xcp_profit` represents the growth rate of `xcp` attributable to the accumulated fees and `virtual_price` represents the growth rate of `xcp` that additionally reflects repegging loss(or gains) on top of `xcp_profit`. In other words, `virtual_price` implies each token’s share value within the liquidity pool and `xcp_profit` implies each token’s share value is only added by pool’s fees.

Repegging only occurs when the following condition is expected to be satisfied: `(virtual_price - 1) > (1/2) * (xcp_profit - 1)`. With this condition, Crypto Pool sets the lower bound over liquidity provider’s loss to half of the accumulated fee revenue.

Moreover, since the invariant from CP-AMM is used to quantify liquidity pool value, Crypto Pool’s liquidity provider has a limited range of possible loss similar to that of CP-AMM’s. Finally, Crypto Pool’s initial goals have been achieved: reducing the risk level similar to CP-AMM while also providing concentrated liquidity around the market price, both of which will ultimately attract higher revenue.

### Conclusion

Summarizing the core logic into two bullet points:

1. Crypto Pool provides concentrated liquidity around the equilibrium price, but a similar amount of liquidity as CP-AMM beyond a certain range away from the equilibrium price.
2. The equilibrium price tracks the market price but is adjusted within a set boundary — half of the accumulated fees — to prevent the liquidity provider’s loss.

CP-AMM is logically simple in that it just provides relatively uniform liquidity for every price point from zero to infinity, but contains a critical flaw of wasting most of the liquidity, away from where most swaps occur. On the contrary, Crypto Pool concentrates liquidity only around the current equilibrium price, providing much richer liquidity at most times than CP-AMM. This would attract more users, leading to larger trading volumes and higher yields for liquidity providers.

Uniswap V3 also attempts to provide concentrated liquidity around the equilibrium price. There, liquidity providers can select a price range for which to provide liquidity. Thus, “overall concentrated liquidity” is achieved through active market participation of liquidity providers on where the liquidity should be focused. However, its drawbacks are clear in that liquidity providers not only need to understand the exact mechanism of this pool but also need to constantly monitor the market conditions as well as react to them. On the other hand, Crypto Pool doesn’t require actions on the liquidity provider’s side, making it suitable for the wider mass audience.

Moreover, Uniswap V3’s LP position cannot easily be integrated with other protocols, for they are not fungible — they are NFTs — due to the price range attached to each of them. This also makes it much harder to implement yield farming in the form of staking the fungible LP tokens. Sure enough, Crypto Pool need not consider these limitations at all, rendering it applicable throughout the whole DeFi ecosystem.


# KOKOS Token

The KOKOS token is the governance token for the Kokonut Swap protocol. Users can stake KOKOS tokens to take part in i4i’s decentralized governance and receive rewards. i4i’s governance will be in the form of KOKOS-based DAO; in the long term, decisions around protocol coefficients such as fee rates or the distribution of newly minted KOKOS tokens, and even fundamental authority over its smart contracts(upgrade authority) will all be put under the DAO’s governance boundaries.

## Tokenomics

The maximum supply of KOKOS is 134,844,000. 8,700,000 of them are allocated to **Initial Liquidity Contribution(ILC)** and **initial pool liquidity.** 1 KOKOS is minted and distributed per block for the next 126,144,000 blocks. Every KOKOS token supplied after each block is entered through **Liquidity Mining(LM), Liquidity Contribution(LC)**, community pool, and team compensation. KOKOA governance staking pool would also receive block-wise airdrops in order to bootstrap the i4i community with the wider Kokoa community.

#### Initial Supply

The initial supply of KOKOS is 8,700,000. 300,000 KOKOS will be added to the initial pool liquidity along with 900,000 KSD. Another 7,000,000 KOKOS will be rewarded to ILC participants linearly over 24 months and another 1,400,000 KOKOS are also linearly rewarded over 24 months to participants who acquired Priority Ticket by staking more than 10,000 KOKOAs.

#### Token Emission

Block-wise KOKOS emission is distributed as below. sKOKOS is the governance(staked) token of KOKOS. sKOKOS in the parenthesis means that KOKOS is staked automatically and then rewarded as sKOKOS.

* Community Pool: 8% (sKOKOS)
* KOKOA Staker 2% (sKOKOS)
* Team: 20% (sKOKOS)
* Liquidity Mining: 50% (sKOKOS)
* Liquidity Contribution: 20% (KOKOS)

#### Liquidity Mining

Liquidity Mining is a reward system for liquidity providers to the protocol. Users can earn KOKOS by providing liquidity to pools such as KSD4NUTS. Liquidity mining rewards will be distributed to the KOKOS governance staking pool and KSD4NUTS pool.

#### Final Distribution

The final expected composition of KOKOS tokens after supply is finalized is as follows.

![](https://3792619796-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FwdgLWm2wlJO3nDeSRU2L%2Fuploads%2F4UZtktxvHLlvFdwqOvEG%2FEYE%20Final%20Distribution.png?alt=media\&token=4baee789-d00f-4285-9fa8-23cf650be9af)


# Liquidity Contribution

‘Liquidity Contribution(LC)’ is a mechanism for contributing to Kokonut Swap’s Protocol-Owned Liquidity. Protocol-Owned Liquidity(POL) refers to liquidity that is owned and governed by smart contract protocols(that is governed by DAOs). Since it is “Protocol-Owned,” it is a reliable way of securing long-term liquidity for the service.

Through LC, users can provide liquidity and receive KOKOS rewards. Generally, LC allows liquidity providing users to receive KOKOS at a better rate than the market. This KOKOS reward is distributed linearly over 15 days.


# Fee

The current swap fee rates are as below.

## Klaytn

#### Stable Pools (LP Fee / Protocol Fee)

4NUTS: 0.02% / 0.04%

KSD-oBUSD: 0.02% / 0.04%

KLAY-AKLAY: 0.15% / 0.15%

USDK-4NUTS: 0.02% / 0.04%

SYN\_4NUTS: 0.02% / 0.04%

KSD-SYN\_4NUTS: 0.033% / 0.067%

#### Crypto Pools (Mid Fee \~ Out Fee)

KLAY-KSD: 0.2% \~ 0.25% (Mid Fee \~ Out Fee)

AKLAY-KSD: 0.2% \~ 0.25% (Mid Fee \~ Out Fee)

oXRP-KSD: 0.2% \~ 0.25% (Mid Fee \~ Out Fee)

oETH-KSD: 0.2% \~ 0.25% (Mid Fee \~ Out Fee)

KSP-KSD: 0.2% \~ 0.25% (Mid Fee \~ Out Fee)

KLAY-WEMIX: 0.2% \~ 0.25% (Mid Fee \~ Out Fee)

KLAY-oXRP: 0.2% \~ 0.25% (Mid Fee \~ Out Fee)

KLAY-KSP: 0.2% \~ 0.25% (Mid Fee \~ Out Fee)

KOKOS-KSD: 0.8% \~ 1.2% (Mid Fee \~ Out Fee)

KOKOA-KSD: 0.8% \~ 1.2% (Mid Fee \~ Out Fee)

HOUSE-KSD: 0.8% \~ 1.2% (Mid Fee \~ Out Fee)


# FAQ (Klaytn)

### What is a ‘stableswap,’ and how is it different from other DEX protocols?

* Please refer to our introduction page.

### What are the risks of providing liquidity to a stableswap? (Beside the smart contract hack/exploit risks)

* Providing liquidity to a stableswap pool means you are exposed to all of the assets in the pool. For example, if you provide liquidity to the k3EYE pool, you get exposed to kDAI, kUSDT, and kUSDC.
* Additionally, because the stableswap curve provides liquidity under an assumption that the exchange rate between the underlying assets is constant, arbitragers might take advantage of the provided liquidity when the assumption itself is violated. For example, suppose Tether is bankrupt, and the value of USDT drops to $0.00. In this case, fast-movers will sell all of their kUSDT to kDAI or kUSDC via a stableswap pool because the liquidity-providing algorithm will offer them a near-one-to-one exchange. This will leave the liquidity providers with a massive amount of USDT - which has no value.

### What are the benefits of providing liquidity?

* Liquidity Providers to the Kokonut Swap’s StablePool can receive transaction fees as rewards. This reward is automatically compounded to the StablePool LP token. To realize your returns, you could return the LP tokens back to the pool and withdraw your original liquidity. For example, if a user deposited 3 kDAI, 3 kUSDT, 4 kUSDC to receive 10 k3EYE LP tokens, assuming APY was 100% for that pool, the user could withdraw 6 kDAI, 6 kUSDT, 8 kUSDC with the same 10 k3EYE after 1 year(This also assumes the composition of the pool remains constant).
* Additional rewards can be earned if you use the same LP tokens for yield farming. For example, Kokoa Finance, a decentralized stablecoin project, offers liquidity incentives for their stablecoin(KSD). If you provide liquidity to the KSD4EYE pool and deposit the received KSD4EYE LP token in the Kokoa FARM, you can earn additional KOKOAs. Moreover, in the near future, KSD4EYE will also be used as a pathway to further rewards after Kokonut Swap's governance token, EYE, is launched.

### How to provide liquidity

* When providing liquidity to a pool, you can deposit any combination of assets that are in the pool. In any case, the assets will be converted automatically with respect to the pool’s token composition before being deposited into the pool. For example, you may deposit 10 KSD into the KSD4EYE pool - which consists of KSD, kDAI, kUSDT, and kUSDC. You may also deposit 5 KSD, 3 kDAI, 1 kUSDT, and 1 kUSDC at the same time.

### What are k3EYE and KSD4EYE?

* k3EYE and KSD4EYE are LP tokens for the ‘kDAI-kUSDC-kUSDT’ pool and the ‘KSD-kDAI-kUSDC-kUSDT’ pool.

### What is sEYE?

* sEYE is a tokenized representation of gov-staked EYE. Users can gov-stake EYE to participate in EyeDAO governance and earn gov-rewards. It takes 21 days to convert sEYE into EYE. However, there is also an 'Instant Unstake' option where one can pay some protocol fee to instantly convert sEYE into EYE.


# Logo

##


# Rebranding Events


# Welcome Airdrop

![](https://3792619796-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FwdgLWm2wlJO3nDeSRU2L%2Fuploads%2Fig9bsbYqnZhxionzizX8%2FUntitled%20\(19\).png?alt=media\&token=4d465ebb-5e69-4b76-9296-c02f83aa696b)

> Event Period: 6/8 \~ 6/21
>
> Rewards to be distributed: 37,500 KOKOS (First 2,500 addresses, 15 KOKOS each)

The first in line is the Welcome Airdrop Event. This event is for members of the existing Klaytn DeFi ecosystem, more specifically, users who own or stake a certain amount of governance tokens of other Klaytn-based DeFi protocols. Eligible addresses(that will be announced as the event period begins) can claim airdrops by executing their first trade (volumes as small as 1 KLAY is fine) in Kokonut Swap during the event period.

The list of tokens eligible for the airdrop is as follows, and if you owned a certain amount of tokens in your wallet at the snapshot period, they may be included in the airdrop whitelist. The snapshot period is block #91,638,946(meaning it has already taken place as of this announcement moment to prevent the unnecessary addresses created specifically for the airdrop).

> Tokens eligible for the event: SCNR, KSP, vKSP, CLA, CLS, KLEVA, KOKOA, sKOKOA, HOUSE, VIPS, KBT, sKBT, KROME, EKL, KFI, BTRY, KORN, KRNO, sKRNO, wsKRNO.

*(\*Staking pools such as vKSP, CLS, and sKOKOA that are already in their tokenized form(making staker identification much easier) have been included in the snapshot, but not other staking pools that are hard to identify.)*


# Migrate2Earn (M2E)

![](https://3792619796-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FwdgLWm2wlJO3nDeSRU2L%2Fuploads%2FppewIC3HpR1C3jvSr6BF%2FUntitled%20\(20\).png?alt=media\&token=7a9c0f6e-fac5-4b0f-8972-02ccb82c3cc6)

> Event Period: 6/8 \~ 6/14 (Migration Period), 6/15 \~ 6/21 (Private Farming Period)
>
> Rewards to be distributed: 300,000 KOKOS (Migration Period) + 170,000 KOKOS (Private Farming Period)

The migration event(a.k.a. Migrate2Earn, M2E) aims to bootstrap liquidity for the 8 initial crypto pools that will be launched following Kokonut Swap Rebranding. **Current KLAYSwap liquidity providers can migrate liquidity and receive additional KOKOS rewards on top of the KSP rewards that they were receiving.**

Crypto pools do not require large liquidity like normal CPMMs because they are highly liquidity-efficient. Therefore, the Migration Event will be conducted on a **first-come, first-served basis** based on the amount of target liquidity set for each pool. For example, if the target liquidity of a particular pool is $1,000,000, and the target is satisfied, then no more LP will be able to participate in the event beyond the target.

The Migration Event can be divided into two separate periods: **Migration Period** and **Private Farming Period**, 7 days each. Users can migrate KLAYSwap LP tokens for each pool on a first-come, first-served basis during the migration period. After the migration period is over, the LP tokens will be converted to crypto pool LP tokens, and **KOKOS will be mined exclusively** during the ensuing private farming period.

No more additional deposits will be allowed during the private farming period, so users who wish to mine KOKOS during this period must participate in the migration ahead of time. As a note, the KSP reward generated from the LP tokens deposited during the migration period can be fully claimed by the user, so there will be no opportunity costs for all participants.

**Migration pre-mine rewards can be claimed at once after the M2E event.** In addition, since Instant Unstake will be open even after M2E participation, users can respond to urgent market circumstances(such as sharp declines) by withdrawing their LP. However, when an immediate withdrawal is executed, the pre-mine reward allocated will be recovered.

The pools to be migrated are as follows, and among them, **USDT-based pools are converted to KSD (without slippage) according to the market exchange rate through Kokoa Finance’s PSM (Price Stability Module) function and then repaired as KSD-based crypto pools.** For example, the KLAY-oUSDT pool will be converted to the KLAY-KSD pair and migrated afterward.

#### Migration Target Pool List and Target Liquidity Size

* KLAY-WEMIX: $4,500,000
* KLAY-KSP: $2,000,000
* KLAY-oXRP: $2,000,000
* KLAY-oETH: $2,000,000
* KLAY-oUSDT: $2,000,000
* ETH-oUSDT: $1,500,000
* oXRP-oUSDT: $500,000
* KSP-oUSDT $500,000

#### Migration Period Pre-Mining Rewards

Pre-Mining reward pools are designed to assure approximately 50% APR in KOKOS given each pair’s migrated liquidity reaches its target(assuming KOKOS=$0.5). For example, if the KLAY-oUSDT pool liquidity only met 50% of the target amount, KOKOS reward that would be pre-mined throughout the Migration period for that pool will approximately reach 100%.

### M2E UI Explained

![](https://3792619796-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FwdgLWm2wlJO3nDeSRU2L%2Fuploads%2FMDOPcnEAdpXDYUY5xAhw%2FUntitled%20\(23\).png?alt=media\&token=2a64682c-7a0b-456a-8e9f-3663a7a16ba4)

(A) Target Liquidity: If the total amount of LPs that have participated in the migration event exceeds the target liquidity, no additional participation is available.

(B) KSP APR: This refers to the KSP reward APR that can be received during the migration period. During the migration period, the deposited LP tokens still exist as KLAYSwap LPs, so users can claim all KSP rewards generated during the period.

(C) Private Farming APR: The estimated APR for the subsequent Private Farming period after the end of the migration period. The previously deposited KLAYSwap LP tokens will be converted to Kokonut Swap Crypto Pool LP at the end of the migration period. Therefore, you can no longer receive KSP rewards during the private farming period, and you will receive private farming rewards in KOKOS instead. During the private farming period, additional deposits cannot be made to the farm, so users who have participated in the migration in advance can enjoy exclusive benefits.

(D) My LP Migrated: The quantity and value of LP tokens deposited by users to participate in migration. If necessary, you can cancel your participation in the migration by waiving the migration airdrop reward and withdrawing LP through Instant Unstake.

(E) LP in Wallet: The quantity and value of LP tokens currently held in user wallets.

(F) Migrate to Earn n KOKOS: By clicking this button you can participate in the migration event. “n” shows the amount of airdrops you can receive when you migrate all your LPs. Users can participate in the migration and receive airdrops through this button as well as additional yield-farming rewards during the private farming period.


# Trade2Earn (T2E)

![](https://3792619796-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FwdgLWm2wlJO3nDeSRU2L%2Fuploads%2FV5wlqWZuwyokIBlWADR6%2FUntitled%20\(21\).png?alt=media\&token=4899342a-23a0-48bb-8d9f-2864e5f103b2)

> Event Period: 6/18 \~ 7/2
>
> Rewards to be distributed: 300,000 KOKOS

The third event is Trade Mining (Trade2Earn, T2E). To promote more asset swaps on Kokonut Swap, the protocol will reimburse 120% of the transaction fee spent by users as sKOKOS during the two weeks following migration completion. Through this event, many participants in the Klaytn DeFi ecosystem will experience with their own hands the efficiency of Stable Swaps and Crypto Pools.

The rewards are distributed linearly in block units to the reward pool during the event period, and when a swap transaction occurs (as long as the reward pool isn’t depleted), sKOKOS equivalent to 120% of the fees already paid will be rewarded.

However, since the main purpose of this event lies in promoting Kokonut Swap’s brand as a general-purpose DEX platform, indirect swaps through external DEX aggregators will not be included in the rewards. **Only swaps occurring through the Kokonut Swap website or through direct interaction with the Kokonut Swap contract on the Wallet (EOA) without going through a third-party contract will be eligible for rewards in the T2E Event.**


# KOKOS Trading Event

![](https://3792619796-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FwdgLWm2wlJO3nDeSRU2L%2Fuploads%2F8MBmqkBP2so21lnXsOWH%2FUntitled%20\(22\).png?alt=media\&token=cac5725c-b657-4eb5-9dcc-063627d9a5af)

> Reward Period: 6/8 \~ 6/28
>
> Target: KOKOS traded through the KOKOS-KSD crypto pool in Kokonut Swap
>
> Reward to be distributed: 20,000 KSD + 10,000 KOKOS

The fourth event is the KOKOS Trading Volume Event. In this event, ‘Trading Score’ is defined as the net daily KOKOS purchase amount(counted every day at 9 AM KST) and the rewards will be paid to the top 3 users with the highest total trading scores. As an example, assuming that the event period is 3 days in total, the trading score of a user who bought 100 KOKOS on the first day, sold 50 KOKOS on the second day, and bought 70 KOKOS on the third day would be 100 + 0 + 70 = 170 points. (On the other hand, transferring KOKOS to other addresses is also counted as 'selling')

In the trading volume event, 9 AM to 24 AM (KST) is defined as ‘Trading Time’, and 24 AM to 9 AM is defined as ‘Break Time’. Daily net purchase counts only trades that occurred during the trading time and not during break time. However, if a net sale occurs during the break time, it is deducted from the net purchase amount of the previous trading time. For example, if you bought 100 KOKOS on the first trading day and sold 50 KOKOS on the break time, your trading score for that day would be 100 - 50 = 50 points. However, even if you had a net purchase of 100 KOKOS during the trading time with an additional net purchase of 50 KOKOS made during the break time, the trading score on this day is 100 + 0 = 100 points(not counting the one during the break time).

(This only includes swaps through direct interaction between the Kokonut Swap contract and user’s wallets(EOA). Swaps generated by third-party contracts and swaps on ClaimSwap’s EYE-KSD LP are not included.)

### Rewards

* 1st place : 12,000 KSD + 6,000 KOKOS
* 2nd place : 6,000 KSD + 3,000 KOKOS
* 3rd place : 2,000 KSD + 1,000 KOKOS
* 4th - 10th place: 100 KSD
* 11th - 25th place: 30 KSD
* 26th - 50th place: 10 KSD