🪙Tokenomics

The core objective of the KSP economic model is to build an adaptive, anti-volatility, and long-term sustainable DeFAI ecosystem. Through dynamic liquidity management and intelligent incentive mechanisms, it ensures efficient capital utilization, empowers long-term participants, and suppresses market imbalances caused by speculative actions. Real-time data analysis from AI oracles is used to dynamically adjust reward distributions, inflation/deflation strategies, and optimize governance structure while enhancing protocol resilience and promoting cross-chain asset liquidity integration.

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Token System

KLK Sync Protocol adopts a dual-token economic model, separating functional tokens from governance tokens to ensure efficient capital allocation and robust protocol governance for long-term sustainability.

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KSP (Utility Token)

KSP serves as the native asset of the protocol, enabling core internal functions including liquidity mining, reward distribution, transaction medium, and incentive mechanisms. It follows a deflationary economic design to reduce supply and increase scarcity.

🔧 Functional Utilities:

• Rewards for liquidity providers (LPs) to incentivize capital lock-up.

• Used for staking, lending, hedging, and other financial tools within the protocol.

• Serves as the payment token for protocol fees such as transaction tax, liquidation fees, and cross-chain transaction fees.

🔥 Deflation Mechanism:

• 2% Transaction Tax:

  • 50% is permanently burned.

  • 50% is injected into the DCP liquidity pool.

• 20% of DCP yield is used for KSP buyback and burn to stabilize token value.

• Implements a dynamic burn mechanism where buyback/burn ratio adjusts based on supply-demand metrics to optimize circulation.

🛡 Protocol Safety Fund:

• 5% of protocol revenue is allocated to the Protocol Safety Reserve (PSR) to protect protocol stability during extreme market volatility.

• Uses a dynamic reserve adjustment algorithm that adjusts PSR allocation based on market volatility σ.

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vcKSP (Governance Token)

vcKSP is the governance token of the protocol, designed to empower long-term holders and ensure fair and decentralized governance. vcKSP can only be obtained by long-term staking of KSP, forming a time-locked system that reduces governance manipulation by short-term actors.

🗳 Governance Rights:

• Holders of vcKSP can vote on critical protocol parameters (e.g., DCP fund allocation, PoTP adjustments, reward distribution).

• Implements Quadratic Voting to reduce whale dominance.

• Governance voting data is stored using Merkle Tree structures for transparency and immutability.

💸 Protocol Dividend Mechanism:

• vcKSP holders can share protocol revenues in proportion to their holdings.

• Revenue sources include:

  • Arbitrage profits captured by AI oracles

  • DCP daily yield redistribution

  • A portion of KSP transaction tax

Dividend Formula:

🔒 Locking Mechanism:

• After converting to vcKSP, tokens must be held for at least 30 days to participate in reward distribution.

• 14-day linear unlock period is enforced upon exit to prevent market shocks.

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Economic Flywheel Models

💎 Loyalty Flywheel

Long-term KSP staking → Increased PoTP score → Higher APY + Governance Power → More capital lock-up → Deflation mechanism boosts token value

Users who stake KSP long-term accumulate Proof of Time Power (PoTP) points. These points determine both reward weight and governance influence. As PoTP grows, users receive higher APYs and governance privileges, attracting further long-term staking and increasing total value locked (TVL). The rise in TVL triggers KSP’s deflation mechanisms, boosting market value and reinforcing a positive loop of value growth.

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🛡 Anti-Arbitrage Flywheel

Long-term KSP staking → Increased PoTP score → Higher APY + Governance Power → More capital lock-up → Deflation mechanism boosts token value

AI oracles continuously monitor on-chain transaction behavior to identify short-term arbitrage. Once it exceeds the set threshold, the protocol adjusts arbitrage tax rates and injects penalty fees directly into the DCP pool. This reduces arbitrage returns while increasing loyal user rewards, strengthening the long-term incentive mechanism. This adaptive governance method reshapes the reward curve, suppresses speculative volatility, and ensures long-term protocol stability.

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🌍 Expansion Flywheel

RWA tokenization attracts institutions → Protocol revenue increases → vcKSP dividends rise → Strengthened community governance → Regulatory adoption accelerates

RWA (Real-World Asset) integration allows traditional institutions to enter the DeFi ecosystem, generating new income streams. Part of RWA revenue is allocated to enhance vcKSP dividends, attracting more long-term investors and strengthening governance consensus. Institutional involvement matures the governance framework and accelerates regulatory-compliant DeFi adoption, enabling steady and sustainable growth of the ecosystem.