KAKI 2.0: Capture DeFi yields through gaming

KAKI is a multi-chain DeFi protocol, currently deployed in both the Arbitrum and BSC ecosystems, with potential future deployments in more ecosystems. KAKI has launched two products: the No-loss Trading Game and the Squid Game. Users deposit assets into KAKI, which are automatically pooled into a yield prize pool through lending protocols. Players can win the previous week's yield prize pool through trading games every Friday. Additionally, players can team up and socialize on KAKI.

KAKI aims to connect long-tail users with early protocols, currently focusing on long-tail users. Initially, KAKI was positioned as a retail options protocol, which can be seen as a significant upgrade, incorporating the derivatives model represented by retail options into the current sub-sector.

The 2.0 upgrade is a result of KAKI's nearly half-year exploration and practice in DeFi, responding to the rapid development of the DeFi industry and changes in user needs. The most significant change is the shift in user demographics, evolving from a niche community of early adopters to a more universally appealing product. This is an inevitable development in DeFi, allowing more people to accept, use, and profit from DeFi, becoming the cornerstone across various tracks in the crypto world. KAKI actively embraces change and is committed to the new form of development in the DeFi industry.

DeFi Needs of Long-Tail Users

In the DeFi market, the needs of long-tail users can be divided into high-risk speculation and stable risk-return. High-risk speculation includes trading tokens, futures, options, and other leveraged trades, where theoretical returns are unlimited, but the principal may go to zero; stable risk-return includes lending funds for interest, aggregator yields, and AMM market-making, where expected returns and risks are controllable.

There are no low-risk returns; the current crypto industry does not have such a situation, as the entire industry is in a high-risk investment state. Strategies like arbitrage, hedging, and other advanced tactics are unfortunately set for professional investors, leaving long-tail traders without opportunities to enjoy. It seems that long-tail users have many choices, but due to limited capital and expensive on-chain fees, their options are actually very limited. Most long-tail users lack rich financial knowledge and risk awareness, and they recklessly venture into the crypto market seeking their first pot of gold.

However, contrary to expectations, this market is clearly not friendly to them. A plethora of DeFi products are filled with advanced vocabulary and terminology, along with complex operations, leading most users to only engage in simple token trading without truly entering the DeFi world to enjoy its excitement and benefits.

User demand is simply to participate in DeFi projects in a pleasant manner; it is difficult to force them to learn a vast amount of financial terminology and concepts. By the time they have learned, they may have missed out on the significant benefits of the entire market.

Product Planning of KAKI Protocol

For high-risk speculation, perpetual contracts created by CEX can be considered the best products currently available. CEX has done well enough that they do not need to use inferior DEX products with real money. What they want is the convenience of using leverage in the DeFi world to achieve high returns with low capital. Of course, the flip side is that they may lose a significant amount of principal, and these users entering the crypto world are likely prepared for such outcomes. The Squid Game and DVH European Options are products created by KAKI for long-tail users, allowing them to play with leverage in the DeFi world in a transparent and fair manner, participating easily in the process of exchanging small for large.

For stable risk-return, as the high yields for farmers gradually decline, long-tail users' capital is relatively small, and low yields are increasingly difficult to meet their needs. Here, stable risk-return does not mean avoiding risk or considering it a stable income method, which clearly contradicts the definition of the crypto world. Stable risk refers to controllable risk, where users can accept losses but can also anticipate their loss range and maximum returns.

They do not expect tenfold or hundredfold returns, but they cannot accept a halving of their capital or a total loss (rug-pulls are not discussed here). The No-loss Trading Game and AMM Fund Managers will provide users with new choices and experiences, allowing long-tail users to potentially achieve higher expected returns through social trading in a gamified manner.

KAKI's product planning is very clear: to provide long-tail users with opportunities to participate in DeFi and achieve higher returns through simple gamification. The product development process ranges from zero-sum game mechanics to market profit mechanisms, considering both user acceptance progress and product launch rhythm. In terms of high-risk speculation, the Squid Game is a zero-sum game for the principal part, while simple European options represent market profits for the principal part; for stable risk-return, No-loss is a zero-sum game for the yield part, and fund market makers represent market profits for the yield part.

This stable risk-return method considers the limited capital of long-tail users, as frequent on-chain operations can incur significant gas fees, leading to a situation where intensive operations yield little. Therefore, KAKI has developed a Decentralized Team Mechanism to address capital pooling and provide solutions for professional investors and long-tail investors. This solution not only addresses the inefficiency of small capital frequently interacting with contract operations but also creates a win-win model where professional investors help long-tail users achieve higher returns by forming small organizational alliances.

Currently, this Decentralized Team approach has been initially implemented in the No-loss product, addressing capital management, profit distribution, and risk control for team operations. It is worth mentioning that fund-based market makers allow professional investors to use leverage (through lending platforms) under the premise of ensuring controllable losses (for example, setting a 20% floating loss liquidation line), helping long-tail users achieve AMM market-making yields exceeding 100% APR.

Products Launched by KAKI

Currently, KAKI has launched the No-loss Trading Game and the Squid Game. The No-loss Trading Game is initiated by managers who form team funds, ranking results through weekly predictions of coin prices. The more accurate the predictions, the more rewards one can receive, redistributing all fund profits. Followers have the opportunity to select excellent managers for higher returns, while managers can create more value through recruiting followers and temporarily higher management levels, also receiving corresponding management rewards.

The Squid Game draws inspiration from the currently popular IP Glass Bridge mechanism, combining prediction speculation with a leverage model to bring users a new derivative speculation mechanism. This can be seen as a significant attempt by the KAKI team in high-risk speculation on-chain. Users can judge the current price trend, effectively allocate initial chips, and combine their risk preferences with price change trends in each round to create a myriad of possibilities. This resembles a strategic trading game, where users have the opportunity to achieve exceptionally high returns in a short time.

Vision for Providing Users and Liquidity to Early Protocols

Finally, let's talk about the other side KAKI connects, which is early protocols. Early protocols refer to those with relatively low user volumes and liquidity but possess the foundation for development and potential explosion. The greatest need for early protocols is users and liquidity. KAKI's stable risk-return products can effectively address the liquidity needs of early protocols, while high-risk speculation products can help bring more token application scenarios and users to early protocols.

KAKI's long-term vision is to aggregate fragmented liquidity for more protocols, managed by specialized managers through the Decentralized Team Mechanism, and to provide these protocols with more usage scenarios and users based on scalability.

Of course, KAKI is still in the growth process, and only by establishing sufficiently powerful tool components and forming a stable ecosystem can it challenge higher goals.

Conclusion

For KAKI, the main goal at this stage is to maximize the creation of interesting and innovative products to attract more long-tail users, allowing them to truly enter the world of DeFi. They do not need to understand obscure financial knowledge or seek advanced strategies; they can still have the opportunity to achieve high returns and rewards under the premise of recognizing equivalent risks. This is KAKI's mission and honor.