KEI Stablecoin

KEI Stablecoin is an over-collateralized debt token issued by the Keiko Protocol. KEI can be minted by depositing collateral into a vault.

Hard Price Ceiling

The KEI Protocol sets a natural price ceiling for KEI at $1.10, based on its policy of a 90% maximum Loan-to-Value (LTV) ratio for some assets. Should the KEI exchange rate rise above this mark, borrowers have the opportunity to immediately benefit by taking out the maximum loan possible against their collateral and then selling their KEI for over $1.10 in the marketplace. For instance, if 1 KEI is valued at $1.20, an individual could secure $2200 worth of their chosen collateral, borrow 2000 KEI, and sell it for $2400. This action results in a guaranteed arbitrage profit of $200, even if the collateral is eventually liquidated.

Hard Price Floor

The ability to redeem KEI for collateral enforces a hard price floor, below which arbitrage opportunities become profitable.

These mechanisms are referred to as "hard peg mechanisms" since they rely on direct intervention processes. You can learn more about the Keiko's redemption mechanism on the Redemption Page.