KUU Finance Is Pausing Its Liquidations Program

KUU will be pausing its liquidations program indefinitely

Dear community,

KUU will be pausing its liquidations program indefinitely as the team works out a sustainable business model for the project. What this means in a practical sense is that all the asset pools on KUU will not be receiving any liquidation profits. Funds are safe and will not be providing yielding in the pools.

Why is this happening?

KUU’s original mission was to help scale DeFi on Avalanche by supporting the liquidity and solvency needs of foundational protocols on the network, such as BENQI, Trader Joe and Vee Finance. When the team set out on this journey, the situation on Avalanche was vastly different, e.g. the Total Value Locked on the network was less than $200 million at one point. More importantly, there were no liquidators to help ensure solvency of upcoming lending markets. Based on these factors, the team believed that a sustainable business model, whereby liquidity providers could indirectly take part in liquidations through KUU’s infrastructure, was possible. Conversely, despite strong demand from strategic partners to invest in the project, the team decided to bootstrap the initial costs of the protocol, and only release a governance token at the right time. However, after two months since launch, and numerous iterations, it has become clear that KUU’s current model simply does not work for all stakeholders.

With the TVL on Avalanche currently over $5 billion, the competitive landscape for liquidations is hyperefficient. The network now has dozens of liquidators, each with increasing sophistication and ever-evolving strategies; no single actor has been achieving profitability in a consistent manner, especially during periods of high volatility. Despite making ongoing optimizations, KUU’s liquidation infrastructure has not been able to succeed consistently either. Additionally, Avalanche’s fast finality and low transaction costs is also a key reason for the competitive and efficient liquidator network, negating the impact of KUUs pools. Therefore, the team has come to the conclusion that the KUU liquidations program needs to be put on hold indefinitely.

Why has it taken this long to express to the community?

KUU protocol needed time to assess the situation from all angles. We have contacted multiple sources to assist in the challenges at hand. However, the model crafted is not sustainable long term and the KUU objective is not to run on limited time.

What’s next?

KUU, from day one, has expressed its focus on blending the world of DeFi and art, as shown by its distinctive design. The team has been working together with a collection of artists to launch a series of unique NFTs with some exciting mechanics. The exact details of this work will be revealed in due course. Additionally, a historical snapshot of KUU liquidity providers has been taken, and users will receive a privileged position in KUU’s future work. We are in good standing with our current partners and will continue exploring ways to add value on different scales.

We would like to take this opportunity to genuinely thank all of you who supported KUU over the last two months.

Note: Pools are live but will not be yielding. We recommend everyone to proceed with removing funds as there is no value to leave it in the pools at this point in time.

The team will be available on Telegram to answer any questions

KUU is an on-chain liquidity underwriter designed to scale Avalanche’s DeFi ecosystem