Why should you develop your next app with Kima?
In this article, our CTO, Guy Vider describes the Kima protocol, what problems it solves, and why it is a strong foundation for developing your next dApp.
What is Kima?
Kima (formerly known as DiversiFi) enables the building of chain-agnostic Web3 apps.
The Kima protocol provides a solution to the multi-chain liquidity fragmentation problem. It offers developers a seamless, safe and frictionless way to build solutions that utilize all of the user’s liquidity sources, regardless of their current chain.
What is “liquidity fragmentation”?
In the beginning, there was Bitcoin – the first and arguably most famous blockchain. There were earlier blockchains, but Satoshi’s vision, coupled with Bitcoin’s critical user mass, made Bitcoin stand out. A few other chains followed that were largely forks of Bitcoin. More than five years later, Ethereum joined the fray, and suddenly concepts like “smart contracts” and “dApps” were in the spotlight.
As more chains joined the crypto universe, each with its own set of projects, protocols and attractions, a major issue arose: clients had liquidity stored on different platforms and chains. If they wanted to utilize a nifty new DeFi protocol, they needed to send their crypto to a central exchange and move it to the target chain, a task that required time, money and sometimes, taxes.
With that, a new breed of application was born, one designed to solve liquidity fragmentation once and for all: “the Bridge”. You can read more about what a crypto bridge is and potential issues arising from using bridges in my article “What is a crypto bridge?”. Due to their design, bridges have inherent challenges and insecurities (read about some of “My Bridge Misadventures” here), and so we built Kima to offer an alternative.
What is Kima
Kima takes a different approach to value transfer between chains: a settlement layer.
Kima’s L1 blockchain manages liquidity pools on every supported chain. When users initiate a transfer operation between chains, they give Kima approval to debit their address on Chain A. The funds are transferred to the A pool. Once the chain confirms the transfer, it initiates a credit.
Every operation incurs a dynamically calculated fee based on pool levels and network traffic (gas). The collected fees are divided between liquidity providers, validator operators, and stakers in the Kima token on the Kima chain.
The maintained pools contain the same token. For example, with stable pools, you can transfer USDC and USDT between every chain that supports them. If a chain does not support either, another local stablecoin will be used, and any arbitrage, if it exists, will be considered in the transfer operation.
Using same-token pools also eliminates permanent loss typical for AMMs with dual-token pools.
In essence, if you want to transfer USDC from Ethereum to Solana, it will be a single atomic operation on the Kima blockchain.
Developing with Kima
No matter what type of Web3 application you’re building, it’s safe to say that it can benefit from more liquidity. Rather than build and maintain different versions of your dApp on different chains, you can now build a single version and utilize Kima to transfer liquidity to where it’s needed, when it’s needed. Whether explicitly (user engaged) or implicitly (the dApp moves funds automatically for the user), Kima will provide the most frictionless way to accomplish the transfer.
Kima has a set of SDKs and APIs that make utilizing the protocol on- and off-chain easy and effective.
What kind of applications can I build with Kima?
- Wallets: If you’re developing a multi-chain wallet, Kima can help your users transfer funds seamlessly between their accounts.
- DeFi protocols: Whether you’re building a lending protocol or a staking application, you can utilize Kima to broaden your users’ access to liquidity sources. For example, you could accept funds on one chain and provide the yield on another.
- Bridges: Kima is not a bridge itself, but you can build secure, fast bridges using the power of Kima.
- Hybrid dApps: Apps that live on several chains that take advantage of each chain’s protocols can easily transfer liquidity around as needed, remaining as frictionless as possible.
What else will you build?
How much will it cost?
End users pay a small fee, as well as gas cost, for each liquidity transfer.
As a developer, you will maintain an account on Kima blockchain, and pay a tiny fraction of Kima tokens for every operation.
The Kima account is there to make sure the network is secure, and to allow Kima to compensate developers for their support.
Kima tokens will be made available on centralized exchanges, and on DeFi AMMs at launch.
In this article, we discussed:
- The multi-chain fragmentation problem.
- Bridges and their shortcomings.
- Kima’s unique solution to cross-chain liquidity transfer.
- Why building Web3 apps on Kima makes sense.
Next time we’ll start diving into the Kima technology stack, discussing its diverse use cases and applications.