Proposal Summary
Kaia Consensus Liquidity (CL) is a groundbreaking initiative designed to enhance the Kaia ecosystem by enabling simultaneous participation in validator staking and decentralized exchange (DEX) liquidity provision. By allowing a portion of staked KAIA to be utilized for liquidity pools, CL ensures both enhanced economic security and deeper liquidity within Kaia’s DeFi ecosystem. By integrating CL token Total Value Locked (TVL) into the Kaia ecosystem, we can significantly boost overall TVL while driving sustainable liquidity growth.
This proposal seeks governance approval for the first three projects to participate in CL:
- BORA (first participant) – Strengthening the ecosystem with liquidity and game-related services.
- Swapscanner (second participant) – Expanding liquidity aggregation and trading efficiency.
What is Kaia Consensus Liquidity?
Kaia Consensus Liquidity is an innovative liquidity mechanism that allows KAIA stakers to contribute to both network security and decentralized liquidity provision. By staking KAIA, users can allocate a portion of their stake to liquidity pools, thereby supporting DeFi growth while still earning validator staking rewards. This eliminates the traditional trade-off between staking and liquidity provision, allowing users to maximize their capital efficiency.
Motivation
The Kaia ecosystem currently faces a dual challenge: ensuring sufficient KAIA staking for network security while maintaining ample KAIA liquidity to support DeFi growth. Traditional models force users to choose between staking rewards and liquidity provision. CL eliminates this trade-off by introducing a mechanism that enables KAIA holders to participate in both simultaneously.
This proposal seeks governance approval to:
- Form liquidity pools that pair KAIA with CL-approved tokens.
- Allow staked KAIA to be used for validator staking and LP provisioning.
- Establish a structured fee-burning and reinvestment mechanism to enhance ecosystem sustainability.
- Leverage CL token participation to drive a significant increase in Kaia’s ecosystem TVL.
Key Benefits
- Dual Rewards Mechanism – Participants earn both staking rewards and DEX swap fees from a single KAIA deposit.
- Increased TVL – Large-scale liquidity creation bolsters the overall DeFi ecosystem by incorporating CL token TVL into Kaia’s ecosystem.
- Sustainable Economic Model – A portion of CL DEX fee revenue will be burned or re-deposited into liquidity pools, enhancing real staking APY.
- Enhanced Ecosystem Growth – CL fosters partnerships with high-quality projects, driving ecosystem expansion.
- Greater Utility for CL Tokens(‘Gas Abastraction (‘GA’)) – Approved CL tokens gain priority in Kaia’s mainnet feature implementations and potential use cases, such as gas fee payments.
- Strengthened Economic Security – By integrating CL into Kaia’s consensus mechanism, overall network resilience is improved.
Initial CL Participants
BORA
BORA is a leading blockchain project with a strong community and ecosystem. As a governance council member of Kaia, BORA has demonstrated a long-term commitment to the network’s growth and sustainability. By onboarding BORA as the first CL participant, we can leverage its liquidity, ecosystem partnerships, and community engagement to accelerate the adoption of CL.
Benefits of BORA’s CL Participation:
- Increased TVL – Based on the collaborative effort, BORA’s DeFi ecosystem will be strengthened significantly by boosting overall TVL and deepening liquidity within the Kaia ecosystem.
- Liquidity Boost – BORA’s integration into CL will contribute significant liquidity to the Kaia ecosystem, enhancing trading efficiency and stability.
- Ecosystem Synergy – BORA’s participation will strengthen collaboration between the two ecosystems, enabling new synergies and use cases.
- Economic Sustainability – CL participation allows BORA to earn both validator staking rewards and DEX swap fees, ensuring sustainable long-term engagement.
- Gas Abstraction & Token Utility – The introduction of Gas Abstraction on Kaia will allow BORA to be used as gas fees, further increasing its token utility and adoption within the Kaia network.
Key Components of BORA’s CL Participation
- Liquidity Provision: BORA will participate in CL by pairing its tokens with KAIA in designated liquidity pools.
- Gas Abstraction: BORA tokens will be enabled as a transaction fee payment option, enhancing user accessibility and engagement.
- Ecosystem Collaboration: BORA will launch a new game-related service dedicated to gamer engagement (‘BORA Engagement Hub’), which will function as a key infrastructure within the BORA ecosystem. As a central platform, future games released by BORA will actively leverage this infrastructure.
Including the above, BORA and Kaia will work together on new utilities, partnerships, and feature rollouts to optimize mutual growth
Key Implementation Details
- Liquidity Pool Creation: A KAIA-BORA liquidity pool will be established on the CL DEX.
- Staking & Liquidity Provision: A portion of staked KAIA will be utilized for liquidity provision, with governance oversight.
- Fee Structure: Swap fees generated from KAIA-BORA trades will be distributed among LPs, with a portion allocated for burning.
- Utility Enhancements: BORA’s participation in CL will prioritize BORA for future Kaia mainnet features, including Gas Abstraction payment options.
Budget Considerations
To facilitate BORA’s participation and ensure robust liquidity for CL, Kaia will allocate a 14,000,000 amount of KAIA tokens for liquidity provision. This allocation will support the initial liquidity pool, ensuring sufficient depth for trading while maintaining overall market stability.
Swapscanner
Swapscanner is the leading DEX aggregator on the Kaia network, utilizing its proprietary Navigator engine to ensure optimal token swap prices by aggregating liquidity from all DEXs within the KAIA ecosystem.
Benefits of Swapscanner’s CL Participation:
- Enhanced Liquidity: By integrating with CL, Swapscanner can channel aggregated liquidity into the Kaia ecosystem, improving trading efficiency and price stability.
- Ecosystem Expansion: Swapscanner’s participation will foster deeper collaboration within the Kaia ecosystem, promoting new partnerships and use cases.
- Economic Sustainability: Through CL participation, Swapscanner can earn validator staking rewards and DEX swap fees, ensuring a sustainable engagement model.
Key Components of Swapscanner’s CL Participation
- Liquidity Integration: Swapscanner will integrate CL dex into its aggregated liquidity pools, enhancing the depth and breadth of available liquidity.
- Ecosystem Collaboration: Swapscanner will work closely with Kaia to develop new utilities, partnerships, and features that drive mutual growth.
Key Implementation Details:
- Liquidity Pool Creation: Establishment of KAIA-SCNR liquidity pools on the CL DEX to facilitate seamless token swaps.
- Ecosystem Collaboration: Joint development of new utilities and features.
- Fee Structure: Distribution of swap fees generated from KAIA-SCNR trades among liquidity providers, with a portion allocated for token burning to support value appreciation.
Budget considerations:
To support Swapscanner’s participation and ensure robust liquidity for CL, it is proposed that Kaia allocates a 4,000,000 amount of KAIA tokens for liquidity provision. This allocation will support the initial liquidity pool, ensuring sufficient depth for trading while maintaining overall market stability.
Liquidity Pool Setup & Vesting Schedule
To ensure smooth CL pool operations, KAIA tokens will be allocated to LP pool for a duration of two years as follows:
- BORA: 50% deployed initially, 50% vested over 10 months (linear).
- Swapscanner: 50% deployed initially, 50% vested over 10 months (linear).
Implementation Plan
Phase 1 : Initial Launch
- Development of CL infrastructure, including DEX features and staking mechanisms. (March, 2025)
- Bora and Swapscanner as first and second CL participant, iquidity deployment (May~June, 2025)
- Swapscanner aggregator integration for CL dex pools (June, 2025)
- Launch of CL DEX, initially restricting LP participation to the foundation and approved CL projects. (June, 2025)
- Webpage development and deployment (July, 2025)
Phase 2 : Expanded Participation
- Selection of multiple CL projects to participate in consensus liquidity.
- Opening LP participation to all users, enabling broader engagement in CL pools.
- Further enhancements to CL token utility, including integration into additional Kaia features.
- Continuous governance review to refine CL policies and adjust economic models as needed.
Budget Considerations
The implementation of Kaia Consensus Liquidity will require funding for various aspects of development and deployment. Key areas of budget allocation include:
- Incentives & Liquidity Support – Potential incentive programs to attract CL participants and ensure sufficient initial liquidity. The 1st initial CL will allocate a total of 18,000,000 amount of KAIA to create CL token paired liquidity pools.
- Operational & Security Costs – Continuous monitoring, security audits, and administrative costs for CL governance.
- Marketing & Community Engagement – Promotional efforts to attract CL token projects and engage the wider Kaia community.
- Long-Term CL Sustainability – Ensuring sufficient liquidity reserves and ongoing development efforts for continued success.
Governance Approval Process
To ensure a transparent and community-driven approach, the following steps will be taken:
- Community Review & Feedback – Open discussions on governance forums (by 21 March 2025)
- Formal Governance Vote – Approval of BORA, Swapscanner as CL participants and the initial list of CL tokens and protocol parameters (by 4 April).
- Monitoring & Iteration – Ongoing governance engagement to assess the impact and make necessary adjustments.
Voting Options:
- For: Approve the implementation of Kaia Consensus Liquidity, BORA, Swapscanner as CL participants.
- Against: Do not proceed with the implementation of Kaia Consensus Liquidity and the listed participants.
- Abstain: No opinion on the matter.