FOR TERRA FANS | $KUJI | NEW | KUJIRA's ORCA Collateral Liquidator Engine

By crush89 | FOR TERRA FANS | 22 Oct 2021

What’s going in Terra

The columbus-5 upgrade has brought a plethora of amazing dApps into Terra. About 160 dApps have been promised for Q1 2022, and so far we have seen:

The release of bountiful LPs on the new LOOP AMM DEX ($Loop)
The insane x30 price action of the new Nexus Protocol ($Psi) and its LP currently lashing out +300% APY,
The 1000% LP and 500% Staking rewards of the marketing campaign Valkyrie Protocol ($vkr) which has had a way bumpier price action.
The release of the Wormhole Bridge, which will see UST used on other blockchains and some tokens coming into Terra very soon (New LPs on LOOP, and some other cool new vaults on protocols like Anchor and Nexus).

Background on KUJIRA

Anyway, we are here to talk about the new multi-prupose dApp: KUJIRA (Name meaning “whale” in Japanese) which has recently closed its whitelist for the IDO sale.

In summary, KUJIRA is an amalgamation of dApps that will permit the layman crypto user to do strategies normally reserved for whales. The Litepaper (which btw, is a very easy read) makes it very clear that “Everyone deserves to be a whale”.

The first application launched on Terra’s KUJIRA is the Liquidation Protocol ORCA which is currently on beta (not to be confused with the ORCA AMM DEX). The idea is that this market has been ruled by bots and whales since forever, so ORCA will allow little LUNA plankton like you and me to participate.

The story goes that this was once known as the Harpoon Protocol, but disagreements in the deployment of the liquidation mechanism caused the team to break away into two different dApps: Kujira and Lighthouse.

It’s clearly a project still in the making, with the Litepaper only caming out yesterday and it missing out on a few key details like DAO governance and private sale details (it is called a ‘Lite’ paper for a reason though…)

ORCA

Kujira’s first application is called ORCA and is basically a way in which community members like you and me can bid on loans which are at the brink of liquidation. Beforehand, you needed a well-programmed bot and a lot of money to participate, but not anymore.

ORCA for Dummies like me

I have tried to simplify the explanation from the Litepaper (which is already very simple) as follows:

1) We like borrowing: Many LUNAtics on Terra tend to borrow money on protocols like Anchor by putting assets as collateral. These financially saavy users then use this money in some crazy Degen strategies, or whatever. Others, just need UST liquidity to buy their wife a new washing machine, the point is that people borrow a lot of money on Terra (currently, 1.1 billion UST have been borrowed from Anchor)

2) Whoops!! If the markets suddenly dip and the value of the collateral (e.g. bLUNA, bETH) falls below a certain amount (LTV), the collateral (guarantee) us investors put in place for the loan gets liquidated to make sure debts are re-paid. This all happens at the Smart Contract level, and so you need a well-programmed bot and a lot of crypto cash to buy these liquidations (which lets you buy these assets for cheap cheap cheap!!)

3) In comes the ORCA, which will let users like you and me visualize on a very silky UI what loans are at very high risk of being liquidated and start bidding to buy them at different premiums (prices). Why bidding? Because there is competition to buy the cheap collateral, and so only the lowest bidders will be able to get it. These collaterals can be in the 10s or 100,000s of UST, allowing us to adjust our bidding accordingly: if it’s a huge one, probably many of us small-fry can participate in the liquidation, and we can increase our bidding premium.

4) The plot thickens as Mr $KUJI token is introduced. Once a bid wins and the bidder get to buy bLUNA or bETH at a discount, a small $UST transaction and a small $KUJI withdrawal fee are paid to ORCA. Why does ORCA want UST and $KUJI?:

To issue community Staking and Utility Rewards in $KUJI and create a local economy (Users paying fees in $KUJI will have a 50%-90% discount)
To airdrop $KUJI to liquidated borrowers as an incentive to use ORCA in the future.
To maintain balance in the UST-$KUJI Liquidity pool (This is how any user or algorithm acquires $KUJI, and it is very important to keep liquidity in the DEX to avoid slippage and reinforce price stability)
To keep the buying pressure on $KUJI so that we can see some price gains on this new token.

$KUJI Tokenomics

$KUJI is essentially a staking and utility token (Nothing about being the governance token in the litepaper, but the very helpful community admin called “Dove” on Telegram has said this is still in the works).

There is not much detail in the chart yet, but the following can be highlighted:

Total Supply of 150,000,000; smaller than many of the new Terra tokens ($Psi, $Mine).
A large proportion of the tokens appear to be privately distributed (43% in total). This would be distributed to the team (20%), seed and private investors (18%), and Advisors & Testers (5%). I have been re-assured on the Telegram group that “keep those figures in line with other projects and research”, although at the moment this looks at big high for me.
To avoid big sell-offs, the vesting of $KUJI will be linear over 12 or 6 months, with some ‘cliff’ periods where vesting is accelerated (vesting is just the rate at which new tokens are distributed to a party).
Airdrops only comprise 3% of the total, so it’s going to be quite small rewards. I speculate this would go to $LUNA and maybe $MINE and $ANC stakers.
8% for marketing is quite a big chunk. I would speculate some use of Valkyrie Protocol, which would be nice!

PRIVATE AND PUBLIC SALES

No specific answer yet to “wen”, but we know whitelisted members of the community will have access to an initial public sale on StarTerra and Pylon Gateway. Others will also be able to get in early through pools on both platforms soon after.

For those who got whitelisted for the Private Sale, there are a few things to note about the launch:

There will be KYC as Kujira are a registered company.
No $MINE or $STT will be necessary to buy $KUJI.
Everyone will have time to buy their share.

FUTURE ROADMAP

ORCA v2

Added functionality to users staking >5000 $KUJI will have enhanced liquidations tools.
Automatized functions for re-bidding, so that you don’t have to manually do this all the time.
New collateral markets as new Wormhole tokens are available, e.g.bSOL, bATOM.
Take ORCA to the other blockchain of the Cosmos.

BELUGA

Will allow sending of CW-20 tokens (basically, any Terra fungible token like UST, $Luna, $Mine, $Psi, $ANC, $MIR, etc) to multiple addresses simultaneously.
“In testing we sent a transaction to 11 different addresses, with a total gas cost of $3.20. The cost for sending 11 separate transactions would have been $22.”

Potential Clash with Nexus Protocol? It appears not!

The Kujira team has said they’re “frens” with Nexus which is great, because at the beginning I didn’t see how they would not be competing, as Nexus aims to avoid liquidations on Anchor while Kujira (initially Harpoon) aims to profit from them.

However, Ernestas (admin of Nexus Telegram group) made it clear to me that there is need for both, as Nexus is not a financial creativity damper, and will only have bots for some strategies, even in its more advanced stage. Saavy LUNAtics can do crazy leveraged strategies which will not always work, and there will always be LUNAtics who will get leveraged to go on that dream fishing trip to Alaska, or buy that brand new Lambo, so the risks of liquidations will always exist.

Conclusion

Kujira’s ORCA has a clear use-case in the Anchor liquidations market and other markets in the Cosmos beyond. It's also really cool how it can be used as a liquidation hedge by Anchor borrowers. I have to admit I dislike the proposed v2 upgrade of added functionality to heavy $KUJI Stakers that will differentiate between $KUJI whales and plankton.
Kujira’s BELUGA also seams like a great idea for reducing fees when paying multiple wallets, more use-cases for the future.
Users of Kujira at Beta have reported pretty smooth usage on the Telegram group which is well administered by Dove

The project is obviously still in the making, with many details like the IDO, governance DAO and details on private sale still in the making.
Don’t know exactly by whom the team at Kujira is composed of, but the team at Harpoon do have solid credentials, and some of them make up Kujira.
Would be interesting to have more details on how Kujira and Lighthouse are different.
Access to the Litepaper here.
WEN IDO? Soon!

Disclaimer:

Non of this content is or should be considered financial or investment advise. I am no financial advisor, I am merely a content writer using freely available data and information to produce the best OC I can come up with for informative and entertainment purposes.

Also, I replicate my content on multiple platforms to make it visible to a larger audience. This article can also be found on my Loop account here.

Content references below and in-text.

Resources

Terra UST Kujira Orca Harpoon

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crush89

@CCrush89 on Twitter

FOR TERRA FANS

Terra is an ecosystem based around the UST stablecoin which is algorithmically pegged to LUNA, making it one of the best DeFi spaces in the crypto cosmos!!