Wednesday, February 19, 2025

Kaia’s D2I Program Aims to Revitalize DeFi Ecosystem

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KEY TAKEAWAYS

  • The D2I program aims to revitalize Kaia’s DeFi ecosystem by establishing a strong financial foundation for new DApps before the chain merger.
  • Three DEXs, Dragonswap, Kaiaswap, and CapyBara, have been selected as D2I partners, achieving significant swap volumes and user engagement.
  • Avalon Labs is expanding its role in the DeFi landscape by integrating with Kaia’s ecosystem and focusing on derivatives based on native coins and stablecoins.
  • Strategic collaborations with partners like Lair Finance and Superwalk are enhancing the synergy within Kaia’s ecosystem.

The D2I program, specifically designed for Kaia (formerly Klaytn), is an incentive initiative aimed at rapidly restoring Kaia’s DeFi ecosystem. The program seeks to establish a robust financial foundation for new decentralized applications (DApps) before the chain merger.

During the 2021 DeFi summer, Kaia secured significant liquidity through mining activities. However, the 2022 on-chain bubble burst led to a substantial contraction in the on-chain economy, weakening Kaia’s competitiveness. This was primarily due to the ecosystem’s composition of DApps with relatively low synergy with other services.

Initially, the ecosystem operated around KAIA and KCT (Kaia Compatible Tokens). However, the depegging of bridge assets earlier this year distorted the on-chain value of KCT. This resulted in bad debts in various DApps offering liquidity lending services, such as lending, collateralized debt positions (CDP), and leveraged yield farming. Consequently, users faced difficulties in participating in DeFi on Kaia.

DEX Partnerships and Ecosystem Expansion

The D2I program’s short-term goal is to activate the underutilized ecosystem and build financial infrastructure for new DApps post-chain integration. In the long term, it aims to revitalize Kaia’s DeFi ecosystem.

In the first half of 2024, three decentralized exchanges (DEXs) were selected as D2I partners: Dragonswap and Kaiaswap, both v3 AMM (spot) DEXs, and CapyBara, a coverage ratio AMM (spot) DEX. Although Kaiaswap recently exited, the remaining teams continue to build within the ecosystem.

Since launch, these teams have achieved notable results, including over $710 million in swap volume, more than $39 million in total value locked (TVL), over 3.1 million swap transactions, and a cumulative user base exceeding 260,000. Additionally, more than 245,000 KAIA have been burned. On-chain DEXs for $KAIA are currently recording trading volumes similar to Binance.

Avalon Labs and Strategic Collaborations

Looking forward, D2I builders are evolving beyond simple DEXs into comprehensive platforms. They are continuously adding features such as launchpads, meme platforms, liquidity managers, raffles, and perpetual futures trading. This robust infrastructure supports all Kaia ecosystem DApps, including those on the soon-to-be-launched Line MiniApp platform.

Both teams are actively collaborating with partners to enhance synergy. These partnerships include Lair Finance (LSD & LRT), Superwalk (M2E), KnightFury (launchpad), Smart Layer (token app platform), Fusionist (gaming), and Kaiafun (meme coin platform). Strong integration with the mini DApp ecosystem is anticipated.

With two spot DEX teams selected through the D2I program in the first half of the year, Kaia plans to onboard Avalon Labs, a money market, and potentially add major DEX teams capable of handling institutional liquidity as needed.

As the DeFi environment evolves, there is a shift from complex “money legos” like yield aggregators and leveraged yield farming to derivatives based on native coins and stablecoins, driven by increasing institutional demand. With the stabilization of core financial infrastructure (spot DEX and money market), the focus will be on creating derivatives based on native coins and stablecoins, such as LSDfi, LRTfi, and yield-stripping derivatives.

Avalon Labs, uniquely positioned at the intersection of DeFi, CeDeFi, and RWA (real-world asset) lending, is a Bitcoin-centric lending ecosystem. By connecting these three core areas, Avalon Labs plays a pivotal role in the rapidly evolving decentralized finance landscape.

For more details, the full report can be accessed here.


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Shree Narayan Jha
Shree Narayan Jha
Shree Narayan Jha is a tech professional with extensive experience in blockchain technology. As a writer for CoinsHolder.com, Shree simplifies complex blockchain concepts, providing readers with clear and insightful content on the latest trends and developments in the industry.

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