DESCRIPTION OF BUSINESS

EXECUTIVE SUMMARY

At the moment, Decentralised Finance (DeFi) is the fastest-growing sector of the Blockchain Industry, with over $11 billion of value locked between various dApps (decentralised applications). This value is either locked in staking pools to provide security to networks, or in liquidity pools, which provide liquidity to decentralised exchanges (DEXs).

Kira Network is a decentralised network (similar to Ethereum) developed by Kira Core. The network seeks to transition to a fully decentralised on-chain governance system, with a built-in contracting system to allow the development of the network by third parties on a freelance basis, using smart contracts. The network uses a new consensus mechanism called multi-bonded Proof-of-Stake (PoS), which enables staked assets to be included in the liquidity pools of the Interchain Exchange Protocol. This protocol is developed by Kira Core to facilitate the trading of tokens originating from independent blockchains without any scaling limitations. 

Kira Core also uses a new crowdfunding mechanism: Using it, investors stake their tokens or assets using one (or many) PoS networks to “interchain-mine” a new token. This methodology replaces the need for users to exchange other assets to acquire new, highly speculative tokens.

The team possess relevant experience in multiple disciplines, including strategy, business development, blockchain, investor relations, analysis and research (technology, business, economics, investment), technology development, programming, business incubation, cybersecurity, data engineering, and consulting.

The project also has a robust set of strategic partners, including backing by several Venture Capital firms. 

Our researchers gave Kira Network a final rating of 65.3%. The breakdown of this rating is available at the end of this report.

PRODUCT & COMPANY DESCRIPTION

Product

The most significant value proposition by Kira Network is that, with the launch of the network and its multi-bonded PoS, any user will be able to stake digital assets through their trusted validators, securing the network and ripping rewards. The system will then creates derivative tokens to reflect the staked assets 1:1. This makes staked assets liquid and tradeable for other derivatives (staked assets) or cryptocurrencies while continuing to secure the network through staking. 

Another unique factor is that users can continue to receive rewards for their staking positions, even after selling the derivatives and hence the right to claim back the underlying assets. This allows for the flexibility of enabling owners to exit their positions without waiting for a grace period of 21 days to claim them. Kira Network hopes that deep and liquid derivatives markets will emerge, while the entirety of the staked liquidity continues to keep the network secure by disincentivizing the creation of forks.  

Mission

Kira’s mission is, succinctly: 

“Powering DeFi with Liquid Staking”.

Objectives

As we could identify, and as Kira advertises them, their objectives are to:

  • Provide non-custodial PoS.
  • Enable 100% liquidity to stackable assets.
  • Create a new paradigm for crowdfunding (Initial Validator Offering) 
  • Overcome the risks that investors face in other fundraising mechanisms (ICOs, locked-drops, etc.) 
  • Be an on-chain tool for decentralised development.
  • Provide exchanges with liquidity through real P2P mechanics.

Success Factors

We identified the factors that are likely to help Kira succeed:

  • Innovative Concept.s (i.e., multi-bond PoS and Initial Validator Offerings)
  • Initial Funding complete through Seed and Private sale phases and institutional backing.
  • Network Contributors with clear responsibilities.
  • Planned Integrations with Cosmos and Polkadot.

MARKET CONDITIONS AND COMPETITION

Market Conditions

The value locked in DeFi apps increased by almost 2200%, from $500 million to $11 billion,  during last year (October 2019 – October 2020) according to DeFiPulse.

The booming De-Fi industry is almost entirely running on the Ethereum blockchain, causing network congestion and an increase in transaction fees. Kira provides an interchain exchange protocol for cross-chain transfers and frictionless trading to solve this issue. The product addresses several current market concerns, as well. 

Interchain mining is an opportunity for holders of different stackable assets to earn passive income. The growth of wBTC is an example of the market’s demand for such a solution. Validators can choose consensus mechanisms, thereby allowing users to choose between them depending on their appetite for regulatory scrutiny. IVOs (Initial Validator Offerings), as crowdfunding resources, enable investors to support promising projects, as well as to reject those they don’t like. Furthermore, an IVO requires no KYC to function, since no sale or exchange of assets for tokens ever takes place.

Competition

Kira’s closest direct competitor is Stafi Protocol. They have progressed closer to their main net launch and currently incorporate 150 validator levels. Besides, several other DeFi platforms could be considered competitors with Kira Protocol. For instance, AAVE and Synthetix, where it is possible to create synthetic tokens similar to staking derivatives on Kira. The concept of wBTC is also (indirectly) a competitor for Kira. wBTC has a market cap above USD 600 million.

How is the project different from its competitors? 

Kira provides a trustless and permissionless exchange platform. MBPoS consensus is unique to Kira Protocol, and asset locking takes place on the Kira network (staking on leverage is also possible, as long as the slashing penalty is lower than 100%). Additionally, ‘Initial Validator Offering’ is licensed by Kira and is a key differentiator.

TECHNOLOGY REVIEW

Product

Kira provides a number of services that allows other projects to build on or make use of its technology.

Its Interchain Exchange Protocol (IXP) is a white-label solution that allows projects to build decentralised exchanges compatible with different blockchains.

IVO Crowdfunding is a unique process for projects to raise capital in such a way that investors can stake their existing tokens or assets through the use of one or many PoS networks to “interchain-mine” a new token. This way, they do not have to liquidate their assets to invest in exchange for risky new tokens.

MBPoS, Kira’s multi-bonded Proof-of-Stake consensus is powered by Tendermint and enables users to generate revenue from staking both cryptocurrencies and real-world assets such as fiat and commodities.

Blockchain

MBPoS allows multiple assets to become stackable. For example, not only the network’s native asset (KEX), but many other foreign assets, can be staked in this system. Each validator has equal voting power. Block rewards will be distributed proportionally, and Fee Rewards will be distributed equally. Entering and leaving validator sets will be permissioned by the current Governance and Code of Conduct (on-chain SLA), which can be found at: 

https://github.com/KiraCore/docs/blob/master/KIRA-Network-Whitepaper.pdf 

The team has not conducted any audits on their code, smart contracts or consensus mechanism. However, for ERC-20 and other contracts on Ethereum, Kira uses templates that have already been audited. They are planning to run a second review of their technology with Quantstamp. A code audit is planned after the launch of their test net.

ROADMAP

TEAM

Kira Core’s Senior team. 

Milana Valmont, CEO: Based in New York, she has seven years of experience in business, including short stints (< 1 year) in business strategy in Israel, and as a blockchain consultant in New York. Her Blockchain experience seems to be of around 2.5 years before her almost two years at Kira Core. She has an academic background and endorsements in Economics, private equity, LBO, and financial modelling, all relevant skills to her current position. 

Mateusz Grzelak, CTO:  Based in Prague, she is a software and full-stack developer with relevant skills in crypto, Web3 technologies Substrate, Tendermint, and Cosmos SDK for five years.

Ethan Frey, Technical Architect:With 20 years of s/w development, many years of experience building websites and APIs, and back-end focus.

Since we first researched Kira Project in January 2020, the team has greatly expanded from three people to ten. 

Advisors

Yuri Papadin – He has more than two decades of experience in the world of finance, and has been a backer of a number of Fintech projects over the years. He appears to have an interest in startups.

Jorge Rodriguez – He has years of experience working on securing Blockchain platforms. According to his LinkedIn bio, he has worked on the likes of Ethereum, Komodo, Patron, Peculium, Cedex, XcelTrip, and many others.

Niki Wiles – He has more than two decades of experience as a data professional, web developer, and software engineer. He is also an entrepreneur with a track record of doing start-up advisory.

Roger Lim – He is a founding partner of NGC Ventures, a Venture Capital firm focused on the blockchain industry. They pride themselves on being hands-on and supportive to their portfolio, which is why Roger is among the advisors to the project. 

Alessio Treglia – He is the Director of Engineering at Tendermint, the company behind the Development of the Cosmos Blockchain.

General Comments on the Team & Advisors

The team possess relevant experience in multiple disciplines, including strategy, business development, blockchain, investor relations, analysis and research (technology, business, economics, investment), technology development, programming, business incubation, cybersecurity, data engineering, and consulting.

Regarding controversies with members and advisors, Jorge Rodriguez was the Project Manager for Patron in the period of Jan 2018 – Aug 2019. The project turned out to be controversial, with the founders suffering legal ramifications in Japan for misleading investors. The project’s token market cap suffered drastically after this, going as low as  $400,000 after raising $40 million from investors. The token was initially listed on HitBTC, but not anymore. It is now listed on CoinBene and a couple other exchanges with no significant volume traded. Jorge may have left the company after discovering these issues.

LEGAL AND COMPLIANCE SPECIFICS

Jurisdiction

We could not find any details regarding the legal status of the company Kira Core or its jurisdiction in any official documentation, whitepaper, their website, or any official resources. The team has informed us that the company carrying out the project is based in the country of Georgia. While the whitepaper provides that the company’s name is Kira Core, in our relevant communication, the team informed us of another company name.  

Kira Core is the company developing the project Kira Network at these early stages. However, the team wants to move on to a decentralised development model where different parties will be ‘contracted’ by the network itself to develop parts of it. This relationship between third parties and the network will be governed by smart contracts, paid from the network’s reserve of its native currency, and approved by the network’s participants through voting. 

The whitepaper describes the way the project is projected to continue at a later stage, using a decentralised model. Specifically, page 13 mentions that ‘The Kira Core team will initially incubate the development process. In the long-term, however, Kira’s network operations need to be self-sufficient and ‘not reliant on the participation of any particular group of actors’. The whitepaper also describes that ‘the Kira Core team will serve as one of the first actors to be employed in this manner, showcasing the future of employment and freelancing.’

Partnerships

The following is a breakdown of Kira’s most significant confirmed partnerships.

Persistence – Listed on the company’s website. Not mentioned in the Kira blog, with very weak acknowledgement of the partnership on Persistence’s part. Persistence will enable real world assets to be staked on the Kira Network ecosystem. 

Sentinel – Not mentioned in blogs of either entities. Only appear on Kira ‘s website. 

Simply VC – Mentioned in Kira’s website. This company intends to be a provider of secure data center facilities.  

Finance Vote – Finance Vote is still in the early stages of business, and have not launched markets on their platform. They received USD 1.4 million in funding. Kira will provide liquid staking to their trading layer.

Math Wallet – Math Wallet’s Google Play account shows 10,000 installs. The partnership between both companies seems strong, and Kira could potentially tap into Math Wallet’s user base.

Swingby – Still running on a testnet. Kira can tap into their customers for staking, which makes this a reliable partnership. Swingby also provides Skybridge, a decentralised cross-chain asset bridge.

Legal Advisors/KYC and AML

No team members have been publicly appointed as responsible for the company’s legal department. No legal advisors are considered, either.

Kira plans to implement a whitelisting period to deal with KYC/AML come its public sale stage. The exact mechanisms have not been announced, as of now. Investor onboarding is not available yet.

Token Classifications

KEX is the native token of the Kira Network and has many roles within the ecosystem. It will act as a reserve currency to value staking and transaction fee payments and pay for said fees. Holders of KEX are required to become part of the validator and governance set, and to be a part of the decision making processes, such as defining the inflation rate of KEX, as well as the interest rates for staking whitelisted tokens. 

KEX is considered by the team to be a utility token.

Legal Risks

Based on the above, we have identified the main areas which present substantial legal risks:

  • The token could be classified as a security, i.e. unregistered security. This creates a risk in case the tokens are viewed and classified, under any applicable regime, and by any competent authority, as securities.   
  • While our team has received a confirmation of the company’s incorporation in Georgia by the Kira team itself, our team has not identified any official resources confirming and offering further details on Kira Core company’s incorporation (including legal status, name), etc.
  • There is a legal risk if the project does not perform a KYC & AML check for the public sale. While KYC is referenced in the whitepaper, there is a lack of information concerning the intended KYC mechanism and processes, especially for investor onboarding. 
  • There is uncertainty about the operation of the project on a decentralised basis, given the regulatory uncertainty of DeFi platforms. This is inherent to such projects. 
  • There are not any identified team members working on the project’s legal matters or any legal advisors to the project.

TOKEN OFFERING

Kira Network has raised a total of $3.6 million so far in two rounds: a seed round and a private one. They managed to raise this capital by selling a portion of the networks’ native tokens, KEX. The initial supply of KEX is of 300,000,000, and it is an ERC20-compliant token built on Ethereum. The ERC-20 KEX is not a native KIRA Network token and will be swapped for the native KEX after the release of the main net.

The project aims to raise an additional $400,000 on a public round, by selling 1.78% of its total initial supply of tokens. The price is of $0.075 per KEX for the public round. The price per KEX for the seed and private rounds was of $0.025 and $0.05 respectively.

Developers & Team funds will be vested over 24 months, with distribution starting 16 months after the main net’s launch. 

Advisors’s funds will be vested over 36 months, with distribution starting 18 months after the main net’s launch. 

Foundation funds will be vested perpetually and diluted over time.

Reserve & Liquidity funds will be vested over 16 months, unlocked at the rate of 4M KEX per month.

After the finalisation of the public round, a total of 12,483,333 KEX tokens, with an initial market cap of $936,250 (based on the public round’s price of $0,075) will be fully liquid on the market.

The project has not released any details regarding the use of raised funds. 

Use of Funds

No details of the use of the raised funds were released by the team.

SOCIAL MEDIA AND VIRALITY

The project’s Twitter account has about 6k followers, and this is sizable enough to have posts go viral. It is an active account with a relatively good rate of engagement.

There is a LinkedIn page named Kira Core, but it is difficult to substantiate if this is an official page for the project since the page is not linked to the project’s website. The description, however, is in tandem with the Kira Core project site. The page has only 71 followers and is very inactive.

The project is active on Telegram. The CEO and CTO actively participate in discussions on this network. The COO is also relatively active on the channel. There are two channels, namely KIRA Network and Kira Announcement:

Kira Core has a YouTube channel. The channel is inactive with only one uploaded video, 9 subscribers, and only 286 views. There is no notable or observable mention of the project on other channels.

RATINGS

Everything you see in this report is the aggregate result of an extensive research process carried out by a distributed team of researchers and crypto enthusiasts around the world. The process consists of 60 questions divided into three phases. Researchers are called to answer these questions about a project, while providing links or screenshots as evidence to support their answers. For every answer, they also provide a rating from zero to five. The average of their ratings is detailed below. 

Our researchers gave Kira Network a final rating of 65.3%.

DISCLAIMER

This Report is for informational purposes only and/or all or any of its content thereof, should not, may not and will not be taken to constitute, either as a whole or in part, any investment advice or recommendation or similar, regulated, or authorized advice, and D-Core by producing, disseminating, giving away, or making available this Report does not, should not, may not and will not be taken to advise on investments, or carry out any similar activity, or any regulated activity or any other authorized activity. D-Core is not authorized by the Financial Conduct Authority or by any other competent EU or elsewhere or otherwise competent authority to carry out any regulated activities and/or any activities within the scope of these authorities’ competence.

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