Kujira, a Cosmos-based project that aims to make advanced DeFi strategies more accessible to retail investors, has been on a tear over the past month.
Its KUJI governance token has rocketed up 430% in the past 30 days, while the total value locked (TVL) in the ecosystem has risen from $16M in early September to $86M today.
The growth has been driven by heightened activity on GHOST, a money market similar to Aave, and increased adoption of USK, the ecosystem’s native stablecoin. USK is an overcollateralized stablecoin that can be minted against various crypto assets.
Borrowing USK
Notably, the current interest rate charged to USK borrowers is just 1%, making it much cheaper to access than established stablecoins like DAI or USDC. This could explain why DeFi traders have been piling in to access inexpensive leverage as nascent signs of the next bull cycle emerge. While liquidity is limited, it’s adequate for the smaller investors that Kujira aims to serve.
For comparison, borrowing stablecoins against Lido’s stETH currently costs anywhere from 2% to 6%, according to data from Defillama.
Amid the recent surge in activity, it appears that traders are currently favouring buying USK on secondary markets instead of minting it, causing it to trade at a 2% premium. Arbitrageurs are expected to mint USK at $1 and sell it for $1.02 to close the gap.
KUJI Emissions End
On Nov. 9, the last tranche of vested KUJI tokens was unlocked, meaning that the total supply of roughly 122M KUJI is now in circulation.
This makes Kujira an outlier among crypto projects, most of which have inflationary tokenomics with emissions set to continue for years. Lido is a notable exception.
‘Everyone Deserves To Be A Whale’
Kujira was born out of the ashes of Terra, whose UST stablecoin imploded spectacularly last year, causing over $40B in investor losses.
The team behind Kujira says they wanted to democratize access to sophisticated DeFi tools after seeing retail investors’ collateral liquidated on Anchor by ‘a group of elites.’
Indeed, Kujira is the Japanese word for whale, a nod to the project’s mission.
The ORCA app serves that purpose in the Kujira ecosystem, allowing anyone to bid on liquidated collateral. FIN is the main decentralized exchange (FIN), which also happens to be Cosmos’s first completely on-chain exchange leveraging order books.
Fees Flywheel
KUJI’s tokenomics are designed to be self-sustaining without the need for additional token emissions. KUJI stakers accrue 100% of protocol fees, which has led to an influx of stakers as activity increases. Over half the KUJI supply is currently staked.
The number of Kujira users spiked in August and has been trending higher ever since.
Looking ahead, Kujira plans to get into the perpetual futures business. With more traders turning to decentralized perps exchanges like dYdX and GMX this year, a successful product could generate substantial revenue for KUJI stakers.
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