The KUU Protocol

Avalanche's Decentralized On-Chain Liquidity Underwriter

What is it?

KUU is a decentralized protocol designed to provide reinforcing liquidity to on-chain keepers to maximize on-chain profit through liquidations, DEX arbitrage and other on-chain opportunities.

At the heart of KUU is a communal liquidity pool which enables users to pool capital into smart contracts to collectively capture value from on-chain arbitrage and liquidation opportunities. Capital staked in these pools (e.g AVAX, USDT) is used to extract on-chain opportunities presented by protocols such as Bonobo, BENQI, bZx and Pangolin.

By having a large pool of liquidity, KUU is able to capture opportunities much larger than what could be captured by individuals. Liquidators will be able to get a share of larger opportunities by using the KUU liquidity pool, opportunities that they could not necessarily capture by themselves. It also has the added advantage that contributors to the KUU liquidity pool do not have to run their own infrastructure and bots, making the barrier to entry much lower.

The goal of KUU

Liquidity underwriting is a critical component of a flourishing financial system, and is particularly important for Avalanche's nascent DeFi landscape. Without a predictable and consistent liquidity pool to draw upon, the DeFi space on Avalanche is subject to gap risk, such as on March 12th.

KUU scales DeFi on Avalanche by acting as a proxy volatility fund, providing backstop liquidity for on-chain lending and synthetic asset protocols. Additionally, KUU allows participants to be long convexity, harvesting excess returns by capturing arbitrage opportunities during times of market volatility and distress. This provides on-chain keepers and participants beneficial opportunities whilst ensuring DeFi applications remain liquid and orderly.

KUU plans to expand beyond a backstop liquidity protocol by merging DeFi with art and culture. The protocol anticipates bringing its user along a journey that explores stunning visuals in the form of NFTs with potential future use-cases towards the protocol.

Why the name KUU?

In Finnish mythology, Kuutar is a Moon goddess while Kuu is the Finnish term for moon. According to the Kalevala, a 19th-century work of epic poetry telling an epic story about the Creation of the Earth, the daughter of the air, Ilmatar, allowed a teal to lay its egg on her knee as she floated in the abyss. The egg fell and its parts formed the universe: the white of the egg became the Moon, and the yolk the Sun.

Smart Contracts

KUU will be implementing KeeperDAO's audited liquidity pool smart contracts. Since KeeperDAO has become the gold standard for liquidity underwriting in DeFi, our solution is to implement KeeperDAO's liquidity pool smart contracts, and oversee any upgrades that will be needed in the future. By using a trusted, tested, and audited protocol, KUU users can have peace of mind while interacting with the protocol