Kopio Assets

The synthetic asset in Kopio project

Minting Kopio Assets

Minting / Borrowing

Burning Kopio Assets

Burn / Repay

Overview

A synthetic asset or Kopio Asset in the protocol is a derivative tracking the price of another asset or group of assets. This exposes the holder to an external asset without owning it. New Kopio Assets are minted as regular ERC-20 tokens and can be freely used outside of the protocol.

Each Kopio Asset is evaluated, deployed and configured separately. One asset could be swappable in the SCDP but not mintable from the ICDP, or one is depositable as collateral into an ICDP while another is not.

Kopio Assets reflect the value of the underlying only within the core synthetic asset protocol.

There are no guarantees for Kopio Assets to have any value elsewhere.

Types of Kopio Assets

• Stocks, ETFs: Assets traded on traditional exchanges. eg. AAPL, TSLA, QQQ.

• Commodities: Commodities such as gold, silver, and oil. eg. IAU, USO.

• Synthetic Assets: Synthetic representation of other cryptoassets eg. ETH, BTC.

• Indices, Rates: eg. Combining multiple assets with different weights, ETH volativity, BTC borrow rate.

Stock Splits and Stock Merges

Kopio Assets handle stock splits and merges gracefully. Asset balances can be rebased using a positive or a negative rebase index. This adjustment instantly reflects in the account balances and protocol valuations and no user action is required.

Dividends

The synthetic assets created through the protocol do not pay any dividends.

What can I do with them?

Fundamentally they offer a permissionless way to invest or speculate in the value of the underlying asset with minimal counterparty-risk. This makes financial markets accessible for users with otherwise restricted and/or untrustworthy access.

Here are a few common use-cases:

Speculative

For example, Kopio Assets borrowed using the ICDP can be exchanged to another Kopio Asset which translates to a short position on the borrowed asset.

Conversely, using KISS or synth wraps to obtain Kopio Assets which are further swapped using the SCDP allows any Kopio Asset to be acquired without borrowing that can be used to eg. open a long position on an asset.

Hedge

Using Kopio Assets you can easily hedge a position elsewhere. Simply having a short position in the synthetic asset and a long position for the underlying at the same time can be used to manage risk according to the ratio of positions.

Liquidity

You can also provide liquidity into the SCDP which is incentivized from the fees paid by traders. Alternatively, anyone can bootstrap liquidity for the Kopio Asset in an external AMM like Uniswap.

Other

Another option is to perform the liquidations in the protocol. Further, a bit advanced use-cases are things like price arbitrage, extending or using the protocol with your own smart contracts.

Kopio Assets can also be whitelisted as a Collateral Asset.

Liquidity Providers can use this to create a delta neutral CDP in the protocol to greatly mitigate price-risk when providing external liquidity.

kFactor

Protocol values each Kopio Asset separately based on its risk profile. The higher the volatility of an asset, the higher the risk.

The kFactor is a number between 1 and infinity that is used to calculate the risk-adjusted valuation of a Kopio Asset. It shows the debt taken to borrow $1 worth of a Kopio Asset.

kFactor is a premium applied to the collateral required for borrowing, it is higher for riskier Kopio Assets.

Given a Kopio Asset a, kFactor can be represented as:

$$kFactor_a = [1, ∞]$$

Additionally, kFactor can be used to encourage (i.e., by setting low kFactor) or discourage (i.e., by setting high kFactor) borrowing of certain Kopio Assets based on the needs of the protocol.

Open Fee

A configurable parameter for each Kopio Asset which is used to deduct a fee when borrowing Kopio Assets. This fee is taken from the collateral deposits in Last In-First Out order and is transferred to the fee recipient address set in the protocol.

It must be within 0-10%.

Close Fee

A configurable parameter for each Kopio Asset which is used to deduct a fee when repaying Kopio Assets. This fee is taken from the collateral deposits in Last In-First Out order and is transferred to the Fee Recipient address set in the protocol.

It must be within 0-10%.

For example, if a borrower repays $100 worth of kAsset and the repayment fee is 1.5%, then the protocol collects $1.50 worth of repayment fee from the collateral.