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FAQ for D2D

1. Who provides liquidity?

Anyone can provide liquidity to Kyoko’s liquidity pool.

2. What is the incentive for users to provide liquidity?

Liquidity providers will earn interest income from borrowers while also mining KYOKO tokens. Liquidity providers may also be eligible for airdrops from DAOs and/or guilds that borrow from Kyoko’s credit bank.

3. Who can borrow from the credit bank?

Emerging DAOs and/or guilds that need additional resources to grow can apply to join the Kyoko credit loan whitelist. Though, loan approval is contingent upon the results of Kyoko’s due diligence evaluation process.

4. Why would a borrower apply for loans with Kyoko?

Kyoko provides uncollateralized credit loans, which means that the borrower is not required to provide collateral in exchange for credit. Borrowers can then use this credit to borrow in-game assets to grow guild membership count and capabilities.

5. At what rate must borrowers repay their loans?

Kyoko extends loans at variable interest rates. These rates fluctuate depending on the level of liquidity at the Kyoko credit bank.

6. How does Kyoko secure its credit bank?

Credit is extremely important to the growth and normal operations of guilds. This was exemplified by the recent Cream hack. Cream’s Iron Bank had provided Yearn with a line of credit – despite Cream being hacked, the Iron Bank’s capital was secure and no money was withdrawn or lost. Demand for DAO-to-DAO loans have therefore been proven remarkably robust.
Kyoko’s credit bank is governed by a multi-signature address that includes the Kyoko DAO, well-known VCs, and top DAOs and/or guilds.
We will also employ a strict screening model for evaluating emerging guilds and DAOs. This data will be fed by BlockchainSpace and other considerations from the investors. The loan quota will be relatively smaller at the beginning, and this amount will be calculated by our risk model.

7. What would happen in the case of a liquidity shock?

This is a very secure protocol. The Kyoko team, VCs, and top guilds are all responsible for providing and maintaining platform liquidity. The Kyoko whitelist is subject to rigorous due diligence evaluations and credit limit reviews, and loan volume is dependent on platform liquidity.