Skip to main content

The Kelp Ecosystem

The premise for Kelp is to integrate core central banking philosophy with blockchain technology to create a currency that encompasses the best of both systems. An assembly of smart contracts and server-side algorithms create an ecosystem that can dynamically adjust key variables in order to persuade market behavior in order to achieve a particular result for price stability.

๐Ÿ“„๏ธ 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:

๐Ÿ“„๏ธ 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 Kelpโ€™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.

๐Ÿ“„๏ธ 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.