The SIKKA protocol uses a rebase mechanism to keep the marketprice (mp) of 1 SIKKA equal to the target price (tp).
MaticNews x SikkaMoney AMA Recap and Transcript
MaticNews: Which are your past experiences and roles? How many members currently work on SIKKA Money?
SikkaMoney: We are majorly india based team, all of us have been into crypto for more than 4 years now. The team is very proficient in what they are building and have decent exposure to tadefi and defi. We are more than 15 members team right now working on to make Sikka the no.1 platform for liquid staking on Polygon.
MaticNews: Out of curiosity, why did you choose this name? Is there any background story?
SikkaMoney: The founding team is natively Indian, Sikka in Hindi means coin and it is also an old significance with money. We wanted people to resemble our core values and heritage that's why we chose this name.
MaticNews: What is SIKKA Money? Please give us a brief introduction!
SikkaMoney: Sikka is essentially a way to do MATIC staking + SIKKA, a liquid staking token that allows users to participate in MakerDAO style lending + a new lending governance token (IKKA) to incentivize usage and offset the costs of lending. Sikka is an enhanced Collateralized Debt Position (CDP) protocol similar to MakerDAO. Unlike MakerDAO, where the collateral generally does not generate yield for the protocol, Sikka will use collateralized assets to generate yield for SIKKA’s stablecoin users, enabling sustainable yield and fixing de-pegging risks.
MaticNews: How does SIKKA Money compares to other stablecoins?
SikkaMoney: Sikka is an overcollateralized, decentralised, permissionless protocol which uses high multiple digital yields. The yield sustainability of algorithmic stable coins is low whereas Sikka is as good as a fiat-backed stable coin.
It has been proven that over-collateralized stablecoins are the most sustainable. Until Sikka and SIKKA stablecoin, there were no DeFi stablecoins that were inclusive to users within the entire spectrum of capital power. Its non-algorithmic architecture protects peg and enables staking rewards and composability with other PoS protocols adding utility to SIKKA and Sikka as well as other DeFi protocols with low risk and sustainable yields.
MaticNews: Which are the use-cases of your two native tokens SIKKA and IKKA?
SikkaMoney: SIKKA is the USD-pegged stablecoin used to pay out loans on
the SIKKA protocol. At any time it can be redeemed against the
underlying MATIC collateral at face value.
IKKA is the secondary token issued by SIKKA. IKKA token is the Sikka Protocol's
governance token, managing Sika Revenue Pool distribution and
IKKA token rewards.
MaticNews: Will they both be available since the launch?
SikkaMoney: Yes, they will be available according to the TVL liquidity being created.
MaticNews: Speaking about your borrowing mechanisms, please tell us more about them!
SikkaMoney: We are trying to achieve Sustainable Yield Competitive yield Minimizing systemic risk Contribute TVL by using
- Yield bearing stable coin
- DeFi integrations to boost yield in a more sustainable way
- User has the ability to add their own leverage
- Integration with other lending platforms for leverage (Collateralized VAI to borrow USDC)
- Making MATIC more scarce via liquid staking
MaticNews: How will you ensure the liquidity?
SikkaMoney: Sikka protocol faces two main liquidity challenges. Maintaining:
- SIKKA stablecoin liquidity
- MATIC Liquid Staking liquidity
Maintaining liquidity for both tokens is important to keep the
peg of SIKKA stablecoin with USD and the MATIC Liquid Staking
peg with MATIC token.
MaticNews: Furthermore, how do you think these integrations can help to create the perfect sustainability mix?
SikkaMoney: To ensure SIKKA stablecoin liquidity, most of Sikka's revenue pool
will be composed of SIKKA borrowing interest collected from
borrowers. MATIC staking rewards from MATIC collateral will be
redistributed to SIKKA liquidity providers, and in a second phase
to SIKKA stakers. One of the main benefits of SIKKA is the ability
to earn Sikka staking rewards from the Sikka revenue pool,
whereas the buying pressure will require a sufficient amount of
liquidity to avoid SIKKA trading at a premium for a prolonged period of time.
To ensure MATIC collateral liquidation and collateral withdrawal,
users will face an unbonding time of 3-4 days similar to MATIC
liquid staking, or receive a MATIC Liquid Staking token
immediately after the withdrawal and rely on MATIC liquid
With MATIC liquid staking the unbonding period is 3-4 days, and
the peg is expected to remain strong due to market makers'
willingness to get MATIC liquid staking tokens at a discount and
cash out their profits after the unbonding period.
To contribute to maintaining the MATIC liquid staking liquidity,
the Sikka team will upgrade its yield converter to allow for
deposited MATIC staking into MATIC Liquid Staking (e.g. 80%
MATIC Liquid Staking / 20% MATIC). This will permit MATIC
collateral withdrawals or liquidation in MATIC tokens. It might
reduce the amount of revenues in the Sikka revenue pool, but it
expect to benefit the protocol in the long run by significantly
increasing MATIC liquidity.
The SIKKA protocol uses a rebase mechanism to keep the market
price (mp) of 1 SIKKA equal to the target price (tp). When
experiencing disruption, and SIKA's market price does not
perfectly reflect the US Dollar, it must reconcile to reach a state
When SIKKA exceeds $1, the supply of SIKKA must be expanded. y
• Borrowers are driven to borrow more SIKKA to sell for other
assets since SIKKA is at a premium.
Sikka will cut SIKKA farming benefits by lowering SIKKA
borrowing interest to lessen demand for SIKKA farming.
When SIKKA reaches $1, the supply of SIKKA must be limited.
Borrowers are motivated to purchase SIKA from the market
to repay the loan since it is at a discount.
• Sikka will raise SIKKA borrowing interest to reduce SIKKA
borrowing demand, which will improve SIKKA farming rewards.
MaticNews: Now that the protocol is clear, please tell us everything on how can we join the launch! Will be any presale or how will you launch?
SikkaMoney: Right now we are in private sale mode with Private investors who are Matic whales to help us bootstrap the liquidity on launch. We will inform the community when we move to the presale stage. Stay tuned with our announcement channel and social media handles.
MaticNews: Next is tokenomics! Which is yours and why did you choose it?
SikkaMoney: We have attributed 55% of the token supply to borrower incentivization, 10% to sikka staking and LP rewards, 20% to community, 10% for the team and 5% for marketing. We arrived at these metrics to sustainably run the network and provide incentives according to market situations.
MaticNews: Besides this, how is revenue being generated for the project itself that could be used on future development?
SikkaMoney: Initially the main revenue sources would be - Interest received on borrowing Sikka and Liquidity Pool Transaction Fees.
MaticNews: I don’t know if you already thought about it but which is the starting emission rate?
SikkaMoney: 8.5% of token supply is released on day 1 and 7.24% of total token supply is released per quarter for the first year, and then the quarterly release will decrease.
MaticNews: Talking about the security side, the clichè question that we ask in all AMAs: are there any audits or KYC planned?
SikkaMoney: We have already got our audits done by top security firms in the industry. We are launching our testnet on Friday with the audited smart contracts.
MaticNews: What is the marketing plan to attract more investors in the future?
SikkaMoney: We are collaborating very closely with partners to enable a Sikka sidechain where gas fees would be paid in SIKKA’s stablecoin, enabling as such SIKKA stakers to earn additional layer of reward by delegate staking to Sikka sidechain’s validators.
MaticNews: What do you think about the current market moment?
SikkaMoney: We are very confident about the innovation that we are bring to the market. Fundraising in current market conditions is not ideal, but we see strong interest in supporting our vision to enable sustainable yield to stablecoin token holders.
MaticNews: Thank you for joining the MaticNews AMA!
SikkaMoney: Thank you for hosting us, this was cool, and don't forget to follow us on Twitter for details on the next phase! https://twitter.com/Sikkamoney
Jun 30, 2022