Redemption
Exiting K1
In the previous page we described how treasury will increase allocation to energy projects as it grows. Here we will outline how we ensure smooth functioning of K1 as a stablecoin while having portion of its treasury backed by inherently illiquid assets.
Our goal here is to be able to strike a balance between a smooth functioning of the stable and avoiding a bank run scenario. Hence we will not be manadating stakers of K1 get into a queue everytime they wish to unstake and exit, however the queue will be triggered automatically under the following circumstances -
If the liquid portion of the treasury is redeemed above 30% in a rolling 10 day window
Daily redemptions exceed 7% for 3 consecutive days
Daily redemption exceeds 10% in a single day
In all these scenarios, exits from K1 to its liquid stable will be done via - https://docs.usd.ai/3.-qev-redeem Of all the exit queue mechanisms out there we have found this to be the most sound/fair in theory. It presents a necessary evolution in Defi liquidity design for inherently illiquid assets. This treats redemption liquidity as an auction-based resource rather than a fixed discount function, ensuring that exits are dynamically priced according to real-time liquidity availability. This prevents reflexive depegging, ensures fair pricing, and eliminates the need for unsustainable liquidity incentives. Unlike utilization-based models, which work for short-term money markets but fail for fixed-duration assets, QEV directly prices liquidity at the protocol level, making redemptions predictable, fair, and resistant to shock events.
Once redemption queue is triggered, all exits will be honored by 80% of incoming cash flows of the liquid/illquid treasury allocations.
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