AMA Recap — Sikka Protocol
The session of AMA ( Ask Me Anything ) with Sikka Protocol was conducted on 4 July 2022 at 4:30 PM IST (11 AM UTC) and lasted for 1 hour.
Raja from Sikka Protocol has joined us for this AMA session.
Please tell us about yourself and the team working on Sikka Money?
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.
We have a very strong team of experienced tradefi individuals and deep tech talent. We are around 15 people who are building this right now.
What is Sikka Protocol and Stablecoin Sikka? Please provide a detailed introduction.
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.
Can you tell us about the features & Usecase of Sikka Protocol?
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 Sikka Revenue Pool distribution and IKKA token rewards. Sikka is an overcollateralized, decentralized, permissionless protocol that uses high multiple digital yields. The yield sustainability of algorithmic stablecoins is low whereas Sikka is as good as a fiat-backed stablecoin. 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.
Can you tell us about Sikka yield farming and where does the rewards come from? Also about your recent partnerships and collaborations?
We are trying to achieve Sustainable Yield Competitive yield Minimizing systemic risk Contribute TVL by using
1. Yield-bearing stablecoin
2. DeFi integrations to boost yield in a more sustainable way
3. User has the ability to add their own leverage
4. Integration with other lending platforms for leverage (Collateralized VAI to borrow USDC)
5. Making MATIC more scarce via liquid staking.
With $SIKKA being the USD-Pegged stable coin,it raises concern when we regard the just recent crash of the LUNA-UST token,how will the team ensure that what happened with LUNA doesn’t occur with the SIKKA project?
We are here to show the industry the better and more efficient way to handle that, we have built a very strong mechanism to maintain the peg.
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 SIKKA’s market price does not perfectly reflect the US Dollar, it must reconcile to reach a state of equilibrium:
Sikka is A sustainable and overcollateralized USD stable coin lending protocol powered by. Polygon. My question is, why have you chosen stablecoins as the crypto lending method for Sikka and what benefits will Polygon’s technology provide to their system?
We are building an ecosystem around the protocol and expanding the base of addressable market size. When the ideation started, we started as a protocol but now we are building a sidechain to enable liquidity solutions on top of polygon. The sidechain will wide open a horizon of opportunities for increasing the token utility, hence the price rise.
What is the @Sikkamoney strategy for increasing its value, liquidity and utility? Is it possible to raise the price of your token. What are your plans for making your project reliable and generating the most profit for your investors in the long run.
No, we are going to stick to only the Polygon chain. Just other networks of ethereum maybe eventually like arbitrem etc.
$SIKKA is very similar to $DAI. How will you solve the capital efficiency of MakerDAO?
The major difference in efficiency is that Ethereum once stake cannot be turned back. That locks the liquidity when the market crashes, where Matic is redeemable. That's the reason we chose Matic in the first place to enable this.
Sikka protocol faces two main liquidity challenges. Maintaining:
1. SIKKA stablecoin liquidity
2. 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.
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 staking liquidity.
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.
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According to the roadmap, what are your most important next priorities? Does your team have enough funds and strong community to achieve those milestones?
Right now we are focusing on building community and awareness about our project. Our testnet is also top priority at the moment for the Sikka team
Where I can get the latest updates or more information about the project?
You can join our social media community for that! https://linktr.ee/sikkamoney
I want to support your project, Tell us more about the Ambassador Program and in what ways can we participate ?
At the moment we have our Sikka Angels which is a closed group for invited people only 🙌🏼
Do you have a AUDIT certificates?
or are you working to AUDIT your project, so that the security of the project becomes more secure and reliable?
We are working on getting audited by the leading companies in the space. As soon as they are available, we will publish them and announce them on social media
What is your top 3 things for priorities in 2022? Could you share some plans for the upcoming year?
Dominate Polygon/Ethereum chain
Do you have a whitepaper? if yes please share it with us and secondly are you working to AUDIT your project, to make its security more secure and reliable?
Our whitepaper is being concluded, feel free to go to our website and read our litepaper
The AMA recorded many great questions from the Crypto Players India community, as well as meticulous answers from our guest Raja from Sikka Protocol AMA Concluded at 5:30 pm IST.
CryptoPlayers is one of the oldest & largest crypto communities in India since early 2017. We are a group of 25000+ telegram members and growing.