Hi Colin, We had prepared responses for all of your questions. It would be highly appreciated as crucial questions that guided the improvement of the protocol.
Q1. / How many $invi I will get If I stake and leverage 10K KLAY with 4x leverage ratio?
A1. / Total INVI Received:
- Based on the calculations, the total amount of INVI you can loan is 31,249.5824 INVI, assuming an exchange rate of 1 INVI = 1 KLAY.
here’s the logic following the amount of INVI that the user who leveraged 4X and staked 10K Klay would receive.
- Leverage Staking:
- If you stake 10K KLAY with a 4x leverage ratio, it means you’re using your 10K KLAY plus borrowing an additional 30K KLAY, resulting in a total staked amount of 40K KLAY.
- Lock-up Period:
- With a leverage multiplier (L) of 4, the mandatory lock-up period is calculated using the formula
10*L^3 + 50, which equals 690 days.
- With a leverage multiplier (L) of 4, the mandatory lock-up period is calculated using the formula
- Protocol Fee:
- The protocol fee is determined by the formula
2 + (360 * leverage multiplier * (leverage multiplier - 1) * principal) / pool amount, which in this case amounts to 218 KLAY.
- The protocol fee is determined by the formula
- Staking NFT:
- The staking position is issued as an NFT, which records the leverage ratio, principal, borrowed amount, lock-up period, and fees.
- Future Value Prediction and Discounting:
- Assuming a 6% annual increase rate for KLAY, the expected KLAY amount after 690 days is calculated as
(40K - 218) * (1.06)^(690/365), which is approximately 44,566.567 KLAY. - To discount this to present value using a 7% discount rate, the calculation
44566.567 / (1.07)^(690/365)gives us a present value of approximately 39,061.978 KLAY.
- Assuming a 6% annual increase rate for KLAY, the expected KLAY amount after 690 days is calculated as
- INVI Loan:
- You can borrow up to 80% of the value of the NFT as INVI, so by the calculation
39061.978 * 0.8, you can loan about 31,249.5824 INVI.
- You can borrow up to 80% of the value of the NFT as INVI, so by the calculation
- INVI Burn and Lock-up Period Reduction:
- If you choose to burn the entire amount of INVI to reduce the lock-up period, the reduction time is calculated using
Burned INVI's KLAY equivalent current value * total period / (NFT's KLAY equivalent current value * 1.1), which results in approximately 501.81 days. However, even with this burn, the lock-up period does not reduce to zero; about 189 days remain.
- If you choose to burn the entire amount of INVI to reduce the lock-up period, the reduction time is calculated using
- INVI and KLAY Demand Increase:
- This process will naturally increase the demand for both INVI and KLAY in the market, potentially affecting their value.
Q2. / Why the NFT is needed? What is the difference if users can get $invi directly instead of NFT?
Building upon the Klaytn ecosystem, the Invincible Node seeks to boost Klaytn demand and liquidity.
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Capturing the Potential for Diverse Financial Products:
NFTs act as a “bond” representing the user’s Klay staking position, which ties together the principal, borrowed amount, and interest for a user. This bond can be used for hedging investment positions based on market interest rates and the value of Klaytn. It has the potential to evolve into various financial products, expanding the choices for users. Possible directions for development include:
- NFT Marketplaces:
- Registering on marketplaces within the Klaytn network and hedging investment positions.
- Expanding into the Ethereum network and trading Klaytn staking positions within that network.
- Using NFTs as proof of investment positions in the ecosystem’s DeFi
- Acting as a trading element, leading to an increase in trading volume within the ecosystem.
- NFT Marketplaces:
-
Protecting the Value of Klay:
Providing users with NFTs as staking certificates instead of INVI prevents situations where large amounts of Klay could be captured at a low price using devalued INVI. A potential scenario is as follows:
- Issuing INVI tokens (via Klay staking) followed by dumping → Repurchasing Klay with the devalued INVI → Decrease in Klay value.
NFTs, due to their characteristics, have a very low potential for such risky situations, hence the approach was taken to prevent the aforementioned scenario.
Additionally, INVI has been designed to be relatively difficult to acquire for the following reasons:
- It induces further locking up the Klay staking position NFTs to enhance the loyalty for the ecosystem.
- INVI is influenced by various factors, not just the value of the staked Klay, such as the protocol’s yield rate and INVI’s own governance. This makes it inappropriate for hedging Klay positions.