At Cetacean Capital, we know all about ‘making a splash’ in the market. Our partnership with Kujira is no exception and we have proudly supported them since their launch in Q4 of 2021.
Originally based on the Terra blockchain (now Terra Classic), Kujira started as a marketplace for liquidations which aimed to open up investment opportunities to retail investors that were once reserved for whales, elites and insiders.
Then came Terra’s infamous demise — many projects buckled as the global crypto market tumbled.
In stark contrast, the Kujira team remained undeterred in achieving their goals and migrated to a new Cosmos chain. Through grit and resilience, Kujira’s mainnet launched on 1st July 2022 and there are further exciting developments in the pipeline, such as their new DEX called FIN.
It has been inspiring to see how well Kujira has ridden through the storm, and we are pleased to share the latest updates to look forward to over the coming months.
Let’s dive in.
The Origins of Kujira
You may be surprised to learn that the name ‘Kujira’ derives from the Japanese word for whale, a fitting metaphor for the sheer size and power of the team’s vision from day one. Was there a destined marine connection between us? Perhaps.
Initially, Kujira built a name for itself as a liquidation marketplace that allowed users to place automated bids on collateral, thus providing greater stability to the market
The project launched several whale-themed decentralized applications (dApps) such as BLUE, where staking and governance are allowed, and BELUGA, which allows users to send tokens to multiple addresses in a single transaction.
However, Kujira is most often associated with ORCA, a dApp that allows any user to bid on liquidated collateral (at a discount), via a simple user interface.
ORCA works with a queue-based and anti-bot approach that allows Defi users to purchase collateral assets at a discount. A user simply places a bid to purchase collateral at their desired discount level (from 0% upward). When the loan-to-value (LTV) ratio is breached during a market downturn, collateral is sold to repay the outstanding loan balance. The user is then able to ‘cash in’ on their bid, as summarized below:
Everything was going swimmingly with the above model. In the background, the team was getting ready to launch FIN — the first order-book style DEX on Terra that incorporated the advantages of both AMMs and traditional order books. FIN was novel in a sense that it was designed to emulate the experience of trading on a centralized exchange. Then, out of nowhere, Terra collapsed and Kujira’s plans were momentarily derailed.
Instead of being defeated, the team was quick to formulate a revival plan. Soon after the Terra catastrophe, they announced that they would be building their own sovereign chain using the Cosmos SDK, powered by the Tendermint consensus engine.
As the saying goes, ‘just keep swimming’ — and that’s exactly what the robust Kujira team did. Fast forward a couple of months and the project has spun up their new sovereign blockchain on Cosmos.
Building a Sovereign Chain in the Cosmos
With the swift introduction of Kujira as a Layer 1 blockchain on Cosmos, the team were finally able to launch their premier product — FIN.
FIN is an improvement on the current DEX style model that focuses on sustainability and robust tokenomics.
What makes FIN sustainable is that sellers, arbitrage bots and market makers provide liquidity. This is contrary to how many DEXs work where liquidity providers (LPs) can temporarily park their liquidity to earn liquidity incentives in the form of finite block rewards.
As FIN grows, liquidity will increase as traders migrate to a longer-lasting model that reduces their risk. In turn, this provides more buys and sells for a market maker to produce profit around the spread, causing them to tighten their belts around the central limit. Consequently, slippage is reduced as the spread between bids and asks is tightened to provide more profit for these market makers.
The swap fees are accumulated in the underlying token, so KUJI stakers that secure the network are rewarded in a variety of assets, without the KUJI token ever being inflated.
By guaranteeing superior trade execution, low fees and an aesthetic user interface, FIN cements itself as a competitor in the decentralized exchange (DEX) space.
The KUJI Tokenomics
Kujira has unique tokenomics compared to most other Layer 1 blockchains mainly due to the token’s non-inflationary nature. Unlike other chains such as the Cosmos Hub which has an unlimited token supply and block reward schedule, Kujira has a fixed token supply and rewards users through the distribution of protocol revenue.
The intentional token design means protocol revenue must increase in order to guarantee an attractive APR for Kujira validators (i.e., they need to be incentivised to secure the chain).
Our bet is that the protocol revenue will continue to grow.
In a recent talk, Dove from Kujira laid out the team’s vision which comprises ORCA becoming the established cross-chain liquidation marketplace. For example, being deployed on high-quality markets, such as Polkadot’s parachain Acala and Kusama’s sister-chain Karura.
Additionally, Kujira has the capability to integrate with EVM-compatible lending markets and is positioning itself as a critical piece of web3 infrastructure that supports a wide array of marketplaces cross-chain.
Kujira has an exciting roadmap filled with hackathons and a vast number of product plans.
Here are some areas to watch:
- Leverage trading: This has been activated on FIN, and will be integrated with ORCA in an interesting fashion.
- ORCA Liquidations: Through the IBC protocol, the plan is to onboard different assets across the Cosmos and to offer discounted liquidated collateral with a seamless UX.
- New wallet: This is set to compete with Keplr on the UX/UI front and there are also provisional plans to create a mobile application.
- More assets are being added to FIN: At the time of writing, only $KUJI & $USDC were active. At the moment there is an open proposal for $ETH and $BTC with further plans on the horizon.
Shortly before publishing this article, Kujira’s team released another milestone announcement: They are releasing their own stablecoin on the chain, named $USK. You can read the full details on the launch at this Medium article.
As Kujira has only recently launched its mainnet, we can expect further developments soon. There’s only a matter of time before the huge tides come in.
To show our continued support for the project, we’ve launched a validator and will be setting the commission to 0% for an initial period of seven months, with a gradual increase after that of 1% per month till it reaches 5%. Feel free to support our node and ambitious partnership with Kujira.
Whale be in touch.
Who We Are
Cetacean Capital is not your average capital vehicle. Our ethos is built on the philosophy of the POD power as a coordination mechanism for our whale members. We are proudly structured as a DAO, valuing a flatter business model, decentralization and a libertarian outlook.