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Automation of KSP distribution rate

Among the three ecosystem participants in KLAYswap, KSP distribution for pair deposits plays a particularly important role in a sense that it is directly related to the increase in value of KSP and overall growth of the protocol. This is because distributing more KSP to robust pairs that generate more transaction fees can contribute to an increase in the value through active KSP Buyback & Burn, and again, KSP rewards can be distributed to individual pairs' liquidity providers, further generating an powerful synergy of increasing total TVL of KLAYswap ecosystem. In order to make more efficient use of limited KSP resources, KLAYswap governance distributes KSPs to each pair through the following criteria.

Governance voting process for general assets

KLAYswap governance classifies liquidity within the ecosystem into the following three categories. At this time, the DAO decides by governance vote of the assets that will qualify for KSP distribution among general assets. Even in the case of which a general asset has passed governance once, it is reviewed by DAO through a vote to maintain qualifications every three months.
(1) KSP
  • As a governance token that plays a key role in KLAYswap, activation of liquidity pairs combined with KSP can achieve a temporary asset freezing effect in distribution of KSP.
  • KSP Fair even provides opportunities for additional profits using KSP, creating additional demand for KSP, leading to a stabilization of price value of KSP.
(2) Grade A assets
  • Major assets whose market caps are above a certain level and accessible in number of main exchanges have high asset accessibility, holder community, and a large volume of liquidity backed by the public
  • By attracting these major assets to KLAYswap’s ecosystem, it would bring along the public's transaction demand of the assets, create huge transaction volume, and induce an increase in value of KSP and inflow of new liquidity through KSP Buyback & Burn.
  • Through this process, KLAYswap and KSP can be exposed to the holder community of major assets, creating a strong public-based market dominance.
(3) Government-Passed Assets (Grade B assets)
  • The evaluation of general assets (C level) is a grey area where it is difficult to access the current value of teams, technologies, and communities, and for that reason, decisions are made whether to participate in the ecosystem by the judgment (governance vote) of DAO, a strong supporter of KLAYswap and KSP.

Reflecting the weight of each pair

Each pair is classified as follows according to the asset combination type, and DAO adjusts the weight for each pair through voting. The weight by pair applies to the user pool vote ag gregated by pair, and KSP buyback indicators.
A. KSP Core pair (5): A pair of KSP + Grade A asset
B. Core pair (4): A pair made by Grade A assets
C. KSP Community pair (3) : A pair of KSP +Grade B asset
D. Community pair(2): a pair of Grade A asset + Grade B asset
  • () parentheses are the weights of each item and can be changed through governance voting.

KSP distribution ratio automation

KLAYswap governance distributes KSPs by evaluating each pair's contribution and growth potential through the automated KSP distribution rate system that comprehensively reflects KSP buyback quantities and user pool voting. DAO adjusts the detailed reflection ratio of the two items through voting.
(1) KSP buyback quantity (50%)
  • The clearest indicator that measures the degree of contribution to KLAYswap and KSP is the volume of transactions, and the KSP buyback quantity functions as an objective indicator that measures the volume in a continuous manner.
  • Smart contracts automatically buyback KSP every hour with the transaction fees generated from each pair, and the daily KSP buyback volume accumulated per pair is burned once a day, and counted as a daily indicator.
  • To reflect both short-term and long-term indicators, we reflect all KSP buyback quantities; 1st day (15%), 7th day (15%), 30th day (20%).
(2) User pool vote (50%).
  • Evaluation of grey areas mentioned earlier where automated aggregation cannot perfectly cover, such as trustworthiness and contents of tokens, and future growth potential of products, are supplemented through user pool voting.
-> () parentheses are the reflection ratio of each item and can be changed through governance voting.