The Kujira Playbook

Polkachu Team | 2022-08-16

[The post is for self-learning / education only. Not Finance Advice]

A typical crypto project uses initial heavy token emission to attract buyers who seek staking/LP yields to bootstrap a network. Such liquidity mining was invented by the Compound project to great success. It has "forced" many projects to copy the same playbook since the DeFi Summer of 2020: first have a token, then introduce high inflation to reward early users, and then reduce inflation as the network matures.

An unfortunate side effect is that the early users are only aligned with the short-term prospect of the token price. When the inflation is reduced, or a copycat project comes up with a higher yield, the capital can turn mercenary and rug-pulls a project.

Kujira Team shows the opposite is possible. And it is thriving with its own playbook.

In just a few months, the team launched an L1 chain and shipped an on-chain order-book application. In the next few months, it will launch a stable coin $USK and a liquidation product called Orca. It has quickly risen to a Top-5 chain in terms of IBC volumes. It has become a darling of interchain degens.

But the most interesting part is that the $KUJI token does not have inflation.

You might ask: why hold a token if it does not have yields? In a way, tokens with heavy inflation emissions are like dividend stocks (think Walmart, Exxon, etc). Investors expect steady cash flow. If the token price appreciates, it is a positive surprise. On the other hand, tokens with no inflation are like growth stocks (think Facebook, Tesla). Investors are willing to forgo short-term cash flow for long-term price appreciation.

Kujira team's ambition to create "DeFi for Adults" and its rapid speed of product shipping has created much confidence among investors that it can eventually capture a large share of the Interchain DeFi market. The lack of inflation aligns both team and investors to focus on the long term.

So here you have it. While many crypto thought leaders come up with innovative tokenomics, the Kujira Playbook does the opposite: Take away distraction from inflation, align investor time horizon, and ship products that users like.