Lender Loyalty Levels
Last updated
Last updated
It is important for Lenders to understand that the $KSU token generation event is yet to occur. Kasu aims to launch its KSU in due course. Any reference to $KSU Loyalty Levels, token utility and rewards in this document is therefore only relevant upon launch of the KSU token.
The extent to which a Lender benefits from the utility of Lending Strategy access and withdrawal priority, along with rewards of APY Bonus and Protocol Fee Sharing, is dependent upon Loyalty Levels. A Lender's Loyalty Level is determined by their synthetic rKSU value relative to existing USDC lending (inclusive queued Lending Requests).
As noted by the below formula, the synthetic value of rKSU is pegged to the value of $KSU. This value of rKSU is referred to as a synthetic value, given that it is non-transferable, non-redeemable and temporary. I.e. it only remains in place whilst KSU remains locked and is therefore burned once unlocked (Token Lockers retain their $KSU tokens once unlocked, of course).
Therefore, rKSU and its synthetic value simply exists for the calculation purposes of Lender Loyalty Levels. The formula applied is as follows:
Loyalty Levels, and associated utility and rewards, are as follows:
If the synthetic value of a Lender’s rKSU balance, relative to their total combined value of current USDC lending (inclusive of queued USDC Lending Requests) across all Lending Strategies exceeds 0% but is less than 1%, then the Lender will achieve Loyalty Level 1.
This entitles the Lender to the following utility and reward:
Share of Kasu Protocol Fees paid in USDC, determined by the Lender’s rKSU relative to all Lenders’ rKSU.
Loyalty Level 1 does not entitle the Lender to the following utility and rewards:
Priority access to Lending Strategies available on Kasu including loan Tranches in the case that they are oversubscribed.
Priority for Withdrawal Requests from existing Lending.
Additional interest (bonus interest) on all lending on Kasu, awarded in KSU tokens (subject to change according to liquidity demand and supply requirements).
For example, a Lender has 1,500 USDC in existing lending, and a further 100 USDC queued Lending Requests (that have yet to be accepted). The Lender has also purchased and locked 200 KSU for 30 days. The 0.05x rKSU multiplier (per the previous section) provides the Lender with 10 rKSU. For the purposes of this calculation, it is assumed that the current price of KSU is 1 USDC. Therefore, the synthetic value of the Lender’s 10 rKSU is 10 USDC.
Based on the formula outlined above, this ratio of the Lender’s rKSU to current USDC lending (inclusive of queued Lending Requests that have yet to be accepted) is as follows:
rKSU Synthetic Value ÷ (Current Lending + Queued Lending Requests) The resultant output demonstrates that it is greater than 0% but is less than 1%, providing the Lender with Loyalty Level 1:
10 USDC ÷ (1,500 USDC + 100 USDC) =0.63%
If the synthetic value of a Lender’s rKSU balance, relative to their total combined value of current USDC lending (inclusive of queued USDC Lending Requests that are yet to be cleared) across all Lending Strategies equals 1%, but is less than 5%, then the Lender will achieve Loyalty Level 2. This entitles the Lender to the following utility and rewards:
Second order priority access to Lending Strategies available on Kasu including loan Tranches in the case that they are oversubscribed (behind Loyalty Level 3)
Second order priority for Withdrawal Requests from existing Lending (behind Loyalty Level 3) but only for variable interest rate loans (not fixed interest rate loans).
Additional interest (Loyalty Level 2 bonus interest) on all lending on Kasu, awarded in $KSU tokens (subject to change according to liquidity demand and supply requirements).
Protocol Fee Sharing based on the Lender’s rKSU relative to all Lenders’ rKSU, paid in USDC.
For example, a Lender has 400 USDC in existing lending, and a further 100 USDC queued Lending Requests (that have yet to be accepted). The Lender has also purchased and locked 200 KSU for 30 days. The 0.05x rKSU multiplier (per the previous section) provides the Lender with 10 rKSU. For the purposes of this calculation, it is assumed that the current price of KSU is 1 USDC. Therefore, the synthetic value of the Lender’s 10 rKSU is 10 USDC.
Based on the formula outlined above, this ratio of the Lender’s rKSU to current USDC lending (inclusive of queued Lending Requests that have yet to be accepted) is as follows:
rKSU Synthetic Value ÷ (Current Lending + Queued Lending Requests)
The resultant output demonstrates that it exceeds 1%, but is less than 5%, providing the Lender with Loyalty Level 2:
10 USDC ÷ (400 USDC + 100 USDC) =2%
If the synthetic value of a Lender’s rKSU balance, relative to their total combined value of current USDC lending (inclusive of queued USDC Lending Requests that are yet to be cleared) across all Lending Strategies equals 5% or greater, then the Lender will achieve Loyalty Level 3. This entitles the Lender to the following utility and rewards:
First order priority access to Lending Strategies available on Kasu (including loan Tranches in the case that they are oversubscribed).
First order priority for Withdrawal Requests rom existing lending but only for variable interest rate loans (not fixed interest rate loans).
Additional interest (Loyalty Level 2 bonus interest) on all lending on Kasu, awarded in $KSU tokens (subject to change according to liquidity demand and supply requirements).
Protocol Fee Sharing based on the Lender’s rKSU relative to all Lenders’ rKSU, paid in USDC.
For example, a Lender has 100 USDC in existing lending, and a further 30 USDC queued Lending Requests (that have yet to be accepted). The Lender has also purchased and locked 200 KSU for 30 days. The 0.05x rKSU multiplier (per the above table) provides the Lender with 10 rKSU. For the purposes of this calculation, it is assumed that the current price of KSU is 1 USDC. Therefore, the synthetic value of the Lender’s 10 rKSU is 10 USDC.
Based on the formula outlined above, this ratio of the Lender’s rKSU to current USDC lending (inclusive of queued Lending Requests that have yet to be accepted) is as follows:
rKSU Synthetic Value ÷ (Current Lending + Queued Lending Requests) The resultant output demonstrates that it exceeds 5%, providing the Lender with Loyalty Level 3:
10 USDC ÷ (100 USDC + 30 USDC) =7.69%
Lenders who have not had their Withdrawal Request fulfilled (Accepted) after 5 Epochs will outrank all published Loyalty Levels, (exceeding Loyalty Level 3 in the example provided above), regardless of their existing Loyalty Level (if at all). These Withdrawal Requests will therefore be processed first, during the next Clearing Period, to ensure operational compliance and integrity. However, despite the loyalty hierarchy, a Delegate may apply forced withdrawals at its discretion any time and this takes precedence over all other requests.
Upon maturity of a $KSU locking period, any amount of $KSU can be unlocked. There is no requirement to unlock the entire amount. However, once $KSU is unlocked, the proportionate balance of rKSU is burned. This may adversely affect the Loyalty Level should the remaining value of rKSU relative to current and pending USDC lending falls below 5% (for Loyalty Level 3) or below 1% (for Loyalty Level 2).
Given that a key driver of the Loyalty Level formula depends upon the price of $KSU (to derive the synthetic value of rKSU), token price fluctuations will also affect Loyalty Levels (both positively and negatively).
The Kasu Loyalty Level system is specifically designed for inclusiveness, regardless of a Lender’s wealth or socio-economic background. This is achieved by the ratio driven formula of rKSU relative to USDC lending (including queued Lending Requests), as opposed to rewarding absolute USDC lending balances. This enables a Lender with just 1,000 USDC lending to achieve greater utility and relative rewards (higher priority access and withdrawal priority, along with higher APY bonus) than a Lender with, say, 1,000,000 USDC deployed into loans.
Kasu may add additional Loyalty Levels at any time to provide additional increments of utility and benefit. Similarly, it may reduce the number of Loyalty Levels.
