Kujira Investor Series Episode 4 -- Minting USK And Lending On GHOST

Perhaps the most important component of Kujira’s ecosystem is the USK (US Kujira) stablecoin, which is pegged to the US dollar.

But how does this work? What processes underlie the minting of USK, and how does it unlock your DeFi potential within Kujira?

This article provides a guide on how to mint USK, and explains a related strategy that leverages GHOST.

What is USK?

USK is a decentralized stablecoin that is soft-pegged to the US dollar. It is backed by a variety of collateral including ATOM, wBTC, wETH, wBNB, LUNA, MNTA, DOT, and gPAXG. In order to create or ‘mint’ more USK, users need to lock these crypto assets in smart contracts, similar to the MakerDAO stable model.

It is an overcollateralized stablecoin, meaning that it is backed at a minimum of 166% by digital assets. This helps ensure the stablecoin’s stability and reduces the risk of a depeg event where stablecoins are no longer worth $1 each. It is a crucial cog in the Kujira ecosystem and is designed to provide users with a reliable, low-volatility asset.

How to mint USK

To begin minting USK, you need to navigate to https://blue.kujira.network/mint and connect your Keplr or Sonar wallet.
Once here, you will be greeted with the different USK markets available to lock your assets and mint USK.

To demonstrate the process, we will mint 0.5 $USK locking 1$ worth of Arbitrum tokens ($ARB). Click the ‘Open Position’ button.

Now you will have two main values to input:

A. Input the amount of tokens you wish to lock as collateral. In this example, we’ll lock 1 ARB token.

B. Input the amount of USK you wish to mint.

Important note: The more $USK you mint relative to the amount of $ARB collateral, the higher your LTV will be, and hence the higher the risk of liquidation.

In this case, we will be depositing 1 ARB token to mint 0.5 USK, at a 48.67% LTV.

After successfully approving the transactions required, we can now see how our positions are doing, track our risk, and rebalance or close our position if needed.

And we now have successfully minted 0.5 USK!

Important note: Under your position, you’ll see a Self-liquidate button. If you can’t repay your loan and you predict the price will fall and cause your loan to be liquidated, you can self-liquidate earlier, getting more back for your collateral than you would if you waited to be liquidated.

DO NOT CLICK THIS WITHOUT UNDERSTANDING WHAT IT DOES!

Lending USK on GHOST

Kujira’s decentralized money market, GHOST, enables you to deposit your tokens and earn rewards as a liquidity provider for borrowers. As these tokens are loaned to borrowers, they accrue various APRs.

Now, you can deposit your minted USK and earn a 5% APR (at the time of writing) by clicking on the ‘Lend’ button. You can always manage and track both your lending and borrowing positions in the GHOST dashboard.

The APR usually fluctuates between 5–15% APR, correlating to the demand for USK from borrowers.

Main GHOST dashboard showing borrowing and lending

Why GHOST?

GHOST operates as a decentralized money market, ensuring that suppliers are protected even in cases where borrowers are unable to repay their loans.

Since all loans on GHOST are overcollateralized, opening or closing a loan and supplying or redeeming supplied assets is a near-instant process that can be done at nearly any time.

Here’s how GHOST compares to other money markets:

Article summary

This article provides a comprehensive guide on minting USK (US Kujira), a decentralized stablecoin pegged to the US dollar, and lending it on GHOST, Kujira’s decentralized money market.

To summarize:

USK

USK is a decentralized stablecoin backed by various collateral including ATOM, wBTC, wETH, wBNB, LUNA, MNTA, DOT, and gPAXG.
It is overcollateralized, ensuring stability and reducing the risk of liquidation.

How to mint

To mint USK, navigate to https://blue.kujira.network/mint
Select the different USK markets available to lock your assets and mint USK.
You can monitor your positions, track your risk, rebalance, or close your position if needed.

Lending USK on GHOST

GHOST allows you to deposit your minted USK and earn rewards as a liquidity provider for borrowers.
Navigate your borrowing/lending positions through the GHOST dashboard, scaling in/out of your positions when necessary.

Thanks for reading!

Useful Links

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Written by Ocelot