📄️ Kelp Protocol (KP)
The Kelp Monetary Policy framework is guided by a modified Quantity Theory of Money (QTM) which asserts that there is a direct relationship between the amount of money in circulation and the general level of prices. This modified framework is expressed as:
📄️ The Ecosystem Relationship
As Kelp launches as the first cryptocurrency governed by the workings of a Monetary Policy framework, the model that examines interactions among variables within the ecosystem need to be set out. The Vector Autoregressive (VAR) based Johansen cointegration analysis will be applied to all our variables, and in the absence of cointegration, we will apply a vector autoregressive model to the return of the variables.
📄️ Variable Interest Rate (VIR)
The Variable Interest Rate is a strategy determined by the current Kelp market conditions. Once affirmed, the rate is dynamically adjusted in order to persuade the market to change behavior so that the targets for \$KELP are reached. The initial rate will start at 2.5%.
📄️ Money Supply Model
Money supply is an integral part of monetary policy as it reflects the types and sizes of liquidity in an economy. Although the U.S. Federal Reserve no longer sets targets for money supply given its dissociation from the economy and inflation starting in the 1990s, useful lessons prior to this period can still be learnt. In the Kelp ecosystem, the money supply framework will be built around the business cycle, whereby, the money supply adjustment mechanism mirrors that of the U.S during the historical expansion and peak phases of its business cycle. The traditional Money Supply Model is:
📄️ Kelp Savings Account (KSA)
This is the Kelp Staking Smart Contract that allows users to deposit funds in order to earn interest on their deposits through Kelp’s Variable Interest Rate (VIR). The VIR is calculated based on input from the Kelp Protocol and then provided to the Kelp Oracles for consumption by the Staking smart contract. During times where there is Negative Price Drift (NPD), the interest rates will increase to sway behavior towards savings and earning interest on their balance within the contract. During Positive Price Drift (PPD), the interest rates will decrease to sway behavior towards trading.
📄️ Kelp Savings Vault (KSV)
This is a pool of $KELP, generated through a distributed portion of the VTF, that is used for interest payments to those who have an active balance in the holder's KSA.
📄️ Kelp Reserve Vault (KRV)
This is the main reserve of $KELP. From this pool, funds are used to stabilize the ecosystem through the various monetary policy mechanisms built into the token framework. The ultimate objective is to utilize AI to decentralize all monetary policy mechanisms.
📄️ Token Release Strategy (TRS)
One of the more central strategies in the Kelp ecosystem, the Token Release Strategy (TRS) manages the emission of new Kelp tokens into the circulation from 3 sources: Kelp Saving Accounts, Liquidity Guard, and the Reservation Program. Using varying intervals of predictions from the Kelp Protocol, the TRS, upon affirmation of a positive upward price momentum, or Positive Price Drift (PPD), will calculate a daily amount of Kelp tokens that would be acceptable to release into the circulating supply while still achieving daily price targets set out by the Seed Phase objectives. During the next 24 hours, the Liquidity Guard (LG) and Reservation Program (RP) will sell and release, respectively, to users.
📄️ Variable Taker Fee (VTF)
The Variable Taker Fee (VTF), a range between 0-25%, is one that's based on market conditions as determined by the Kelp Protocol (KP) and distributed to the Kelp Reserve Vault (KRV). During Positive Price Drift (PPD) or affirmation of positive upward price momentum, the fee is reduced to promote trading while during Negative Price Drift (NPD), or affirmation of negative downward price momentum, the fee is increased to discourage trading.
📄️ Liquidity Guard (LG)
The Liquidity Guard provides users with a mechanism to obtain a lower transaction fee in exchange for allowing the Token Release Strategy to dictate the timing of their sell orders. It prioritizes these orders based on user-defined criteria such as Priority Fee, Slippage Tolerance, and Transaction Speed.
📄️ Kelp Reservation Program (KRP)
The Reservation Program is designed for two objectives: grow the Kelp community and allow the general public distribution without a fiat cost. 25B Kelp tokens have been allocated for this initiative and for users to reserve Kelp, they must refer others to Kelp or perform Action Tasks to grow Kelp.
📄️ Kelp Oracles (KO)
Used to provide on-chain and off-chain data to the Kelp servers and Kelp Smart Contracts. The data includes: