DESCRIPTION OF BUSINESS
Kira aims to create a decentralised exchange without sacrificing the performance of a centralised (CEX) one. To achieve this, the Kira team aims to implement a variety of novel technologies, such as a combination of two consensus algorithms (Multi-Bonded Proof of State and Multi-Bonded Proof of Authority). They seek to implement the aforementioned consensus solutions developed from top-in-class firms, like Tendermint, Cosmos, and Polkadot.
In the past, CEXs have had fundamental problems like data breaches and hacks, resulting in billion-dollar losses. A Decentralized Exchange, like Kira, can forever limit such counterparty
Kira’s objectives are to solve the following issues:
- Client-Side Interchain Availability
- Secure Access to the Network
- Market Sharding
- Interchain Validation and Slashing
- Governance and Sustainability
As can be found in the project’s Litepaper:
“Our mission is to support the emerging proof of stake economy in realising its full potential by delivering a gateway for unfettered market access. We believe that all participants should be able to transact free from the whims of gatekeepers who might otherwise govern which projects will (and will not) be permitted to trade. It is this freedom of exchange that is crucial to the security of blockchains operating under proof of stake consensus and must be protected at all costs.”
Kira Exchange has several interesting potential features that can help it stand out. However, the probability of achieving these is limited, especially since the developer team is neither significantly experienced or large enough to handle such a complex workload.
MARKET CONDITIONS AND COMPETITION
Kira is trying to improve the liquidity issues of a Decentralised Exchange (DEX), improving transaction speed and finality while protecting user identity. These features seem to resonate with the crypto industry and, if successful, may create a great market fit with significant growth.
However, the DEX market is still comparatively stagnant due to many unsolved problems in liquidity and user experience (UX/UI). Even if Kira outcompetes all DEXs, its market will be significantly smaller than a Centralised Exchange (CEX), like Binance or OKEx, who will remain as major competition to Kira.
The overall exchange market has decreased in volume since the 2017 Market Boom. This is true for volumes across both CEXs and DEXs. However, a sophisticated DEX without liquidity issues is still in high demand.
The competition of Kira is crypto exchanges, not only decentralised exchanges. Thus, the competition is fierce. The one redeeming factor is that a world-class DEX is yet to be built, and a fully operational Kira along the lines of their whitepaper will outcompete incumbents. Direct competitors include The Kyber Network, Uniswap, OasisDEX, IDEX, EtherDelta and, others.
In theory, the tech differences would allow Kira to be an equally fast, yet safer exchange compared to CEXs and other DEXs. In practice, no such system has been built yet.
Kira is an open-source project, with a public GitHub. However, there is limited code on the profile. Nonetheless, the CTO has contributed to Cosmos SDX GitHub, which is one of the projects that the exchange seeks to use. The project is still in its preliminary stage, and cannot receive a higher grade until more development is made public.
No MVP exists as of yet. The first stage of the project aims to be launched in Q2 of 2020. No security audits will be available until then.
Is the blockchain/platform/technology they are using appropriate for their purposes?
Yes, the technology Kira aims to use would be impressive for a DEX. Many alternatives in the space aim to use many of the features that Kira has already listed in its documents.
The project uses a hybrid of two novel but seemingly untested consensus models: Multi-Bonded Proof of Stake (MBPoS) and Multi-Bonded Proof of Authority (MBPoA). The idea of using such systems makes sense within the context of Kira’s application of the tech. Researchers did not find evidence of whether the consensus mechanism has been peer-reviewed and tested. The majority of the consensus work is developed by top firms, like Cosmos and Tendermint.
The innovation of Kira comes through staking multiple crypto assets, which are also used to offer liquidity onto the exchange.
Milana Valmont is the Co-Founder and CEO of Kira Exchange. She has previously worked as an Advisor and Head of Strategy as well as Business development lead for Knoks, a curated information platform for traders and analysts, providing empirically driven insights and verifiable trading signals. The project is in Beta stage and has an MVP.
Milana also worked as a blockchain consultant for AdCoin, a project that aims to reward for advertising and digital engagement, but the project has a very basic website and not a lot of information, which made the researchers think that it’s a failed abandoned project. She also worked as an Investors Relations Manager at OneMedMarket, New York based company providing business development services to emerging growth companies and identifying investment opportunities for healthcare investors.
Valmont has gained experience from various jobs over the last five years, but Kira Exchange is her first attempt to lead a project, and it is not clear if she has the skills and experience to make it a success.
Mateusz Grzelak is the Founder & Chief Technology Officer of the project. He has previously worked for 4 months as a Product Manager for Bity, a Swiss crypto payment gateway and exchange. Bity seems like a successfully launched product, but there is no information available on how successful it is since researchers couldn’t find statistics about it. Grzelak’s short stay at the company (four months) as a Product Manager does not compliment him.
He has also worked as an Advisor/ Developer/ DevOps at Settle, a web-native operating system for decentralised finance. Settle successfully launched their product. He also works as an R&D Developer at Barclays for 15 months.
Grzelak seems to have a good track record from his past job positions, but it is not clear that he has the necessary skills to lead the technical development of such a technologically demanding project.
Ethan Frey is listed on the website as the Head of Engineering, but on his personal LinkedIn, there is no mention of Kira Exchange, that is what the Researchers call a yellow flag. Anyhow he is a very experienced developer with over 20 years of experience in positions like Senior Software Developer, Technical Advisor, Director of Development and Lead Developer. His most recent position is a full-time job as the Lead Developer of Regen Network, a tech-agriculture company that builds open tools that facilitate ecological regeneration.
Frey seems to be a seasoned professional developer that can respond well with the project’s ambitious goals. It is not clear though how involved with the project he is. In his LinkedIn, he is listing a full-time position at Regen Network and does not mention Kira Exchange at all.
Lawrence Stoican is a junior copywriter and social media manager with only one and a half years of work experience in various projects. He is a freelance copywriter and content creator for Tokenomics Hub, social media and communications assistant for Iomob Technology Services. The projects social media have a very limited amount of followers and posts, and besides, he does not list Kira Exchange on his LinkedIn profile, indicating that he is not working for the project yet.
All four of the core team members have worked on successful projects in the past. The Head of Engineering has 20 years of experience as a software engineer, which makes him very useful for this project; although the degree of his involvement is not clear. Researchers found no evidence of past failed or controversial projects on the team’s track record. The team is very responsive on Telegram.
The management team lacks a person with business management skills that will be responsible for the day-to-day operations, and that has experience doing it. It is a project that demands a certain degree of technical innovation; therefore, they will need an experienced team of developers and an even more experienced Head of Development to lead them.
Niki Wiles is a Lead Data Engineer at a company called Dentsu, a Digital Marketing firm in Japan. He designed and developed a serverless framework for data pipelining, that ships and transforms data from a range of marketing API sources. Previously, he founded a small consultancy practice offering a range of software development and digital marketing services.
Jorge Rodriguez is a self-proclaimed ethical hacker and blockchain and innovation specialist. He is also a security advisor for Komodo Platform, Pledgecamp, CEDEX and others. He has also been an Ethereum developer from 2013 to 2015. He does not list his position on Kira Exchange on his LinkedIn profile.
Kira exchange only has two advisors listed on its website. Researchers concluded that they both are distinguished professionals with no fraudulent or failed projects on their record. Both have knowledge and experience to offer the project in this early stage, but the project will require higher profile advisors that are actively engaged in the project by both advising it and supporting it through social media endorsement.
Kira has not established solid partnerships yet, probably because of its early development stage. Simply VC has already signed up as a node partner, meaning that the team has been able to approach some of the most active miners in Europe. Besides this, researchers have uncovered that well-known projects, like Tedermint and Cosmos, are aware of Kira’s DEX project.
LEGAL AND COMPLIANCE
A private company called Kiracore, registered in Georgia, is developing the project and offers investors private equity and/ or tokens as a gesture, this means that along with equity, investors will receive utility tokens as a gift. Also involved in the project is a Foundation registered in Singapore which owns the tokens and ‘hired’ Kiracore to develop the exchange. It is not clear at this stage how exactly tokens are going to be available to investors. Both Georgia and Singapore are blockchain friendly jurisdictions.
The company is in the process of obtaining an IT license from the Georgian Government. It is not clear at this stage whether this is a special IT licence or what benefits does it grant to the company. No other legal licenses yet. The project does not have any legal advisors yet but the CEO confirmed they would arrange for legal advisors soon.
No legal compliance audit on the jurisdiction yet as the project does not have revenue or investment yet.
The researchers did not identify any significant legal risks since the investors only have the option to invest and get equity from the developing company in Georgia. The only potential risk might be the way the investors will receive tokens along with equity, as a ‘gesture’ as the team calls it. The fact that there is no legal compliance audit on the jurisdiction yet and there are no legal advisors on the project, is concerning.
The KEX token is a utility token. Initial supply is 299,792,458 KEXs, with an inflation-based mining schedule. No finite total supply will exist.
KEX facilitates in creating liquidity while also assisting with the staking-based governance of the platform. The innovation here is not on the token classification but on its use within the platform.
KEX will offer the highest return to miners who use it as a stake compared to a different cryptocurrency. Mining, in the case of Kira, is also a gateway to higher liquidity, since staked assets become tradable within the platform. Miners and stakers can instantly unbind their tokens by exchanging them for liquid tokens within the exchange. Succeeding in delivering this option this is of immense importance to the economic structure and product value offered by Kira.
Multiple incentive variables help prop up the value of KEX. Besides staking, KEX can be used in governance votes, like in new coin listing proposals, and for trading at a discounted fee within the exchange.
Below you will find an operations diagram with all token functions for KEX:
Tokens are staked. Thus the demand for them will follow the growth of the exchange’s volumes. In some cases of miner mismanagement, tokens may be burned or offered to Kira participants and shareholders as a dividend. Burning tokens seems to still be up for debate, but plans for it have been discussed.
The growth of the network will determine the price. Why would an inflationary asset hold value if demand/use for it dwindles? As long as Kira can guarantee constant and high-speed growth, the price of KEX will increase. But there can never be such a guarantee.
For more details on the Tokenomics, please check out Kira’s Tokenomics paper
At this point, Kira is raising 300k for 10% in equity, where tokens are oered as a further incentive. No public vesting period exists, and no public ICO plans exist either. However, the team hopes to equity fundraise first, where token vesting will probably be included in the deal as a requirement.
Instead of an ICO or IEO, Kira seeks to implement the first IDO in the market. IDOs stands for Initial Delegator Offerings – where investors stake their crypto assets in the mining process and gain mining rewards without losing ownership of their assets. For Kira, this process makes sense, since it increases exchange liquidity instantly. High liquidity is a crucial part of their product oering, thus an IDO creates a win-win scenario for all participants in the transaction.
Private documents (Pitch Deck) and the litepaper show an interesting distribution of mined tokens, but no initial distribution information has been presented. The Kira team seeks to currently sell equity and tokens together.
Rewards and vesting of the team are not public, but private documents state that the team and equity holders will receive dividends from collected exchange transaction fees. Also, a small percentage of the mining rewards will be transferred into the Kira Community Fund, a project development fund which will hire specialists to work on the product.
Early investors will receive equity, which will oer them dividend payouts. That is a good incentive for equity holders. Token investors incentives, however, are yet unclear for the long run. Although the tokenomics is structured to create cyclical demand for KEX within the platform, no MVP or Product is launched yet, so long term performance remains speculation.
The system set up is complex, but ecosystem participants are a central focus of the tokenomics and governance structure presented by Kira. Mining rewards, governance rewards and more are presented in the tokenomics paper. A recommended read is the extended tokenomics publications.
The fundraising target for the initial MVP makes sense (300k for 10%) ; however, later-stage investment targets might be too limitedfor the development of such a complex product. (Series A = 1.8m USD, Series B = 3.6m USD). Regardless, at the stage the project is in at the moment, 300k would be more than enough to create an MVP and show progress to investors.
SOCIAL MEDIA / VIRALITY
Kira Exchange’s main social media platform of use is Twitter. It has 171 followers and they mainly retweet posts from others and post photos of the two founders in various conferences. On Medium, the project has only published one article.
The Telegram chat has 310 members and has good activity relative to the size. The team is very responsive on Telegram.
Kira Exchange is a very ambitious project that aims to use innovative protocols and consensus mechanisms to create a decentralised exchange that is fast and will solve the liquidity issues other DEX’s face. The management team is young and largely inexperienced, which casts doubts on their ability to deliver the project successfully. Currently, it seems that the most active members are the CEO and co-founder and the Founder and CTO. They only have two advisors, none of them high profile enough to promote the project.
Kira does not plan to have an ICO, but instead, they instead expect to raise money by selling equity of the private company that is responsible for developing the project. Along with equity they are giving as a ‘gesture’ a certain amount of tokens. The rest of the tokens will be minable by staking assets on the exchange, those assets will serve as liquidity for the exchange.
This is a project that is worth keeping track of their updates as it develops.
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