Introduction
Introducing KNOX Dollar, a yield-bearing RWA-backed stablecoin built on DeFi markets deployed on Arbitrum. KNOX is a fully asset-backed currency (“RToken”) created on the Reserve protocol. RTokens feature onchain asset-backing, revenue sharing, overcollateralization and mint/redemptions, governed by stakers.
KNOX Dollar is a fortified, RWA-backed stablecoin locking up to 10% APY for KNOX holders
KNOX is 1:1 asset backed by a basket of yield-bearing tokens. Given the unique design and current market conditions, it is estimated to yield up to 10% APY from the most reputable protocols using the most established assets. KNOX is overcollateralized with auditable proof of reserves available on-chain 24/7.
This RFC is an overview of KNOX. The community is encouraged to ask questions and share their suggestions: any help in growing the RToken is likewise appreciated.
If you want to help bring this product to success, please do reach out to me on Twitter: 0xTomSawyer and Telegram: TomSawyer0x
Mandate
What is the mandate?
A permissionless, yield-bearing stablecoin designed to be a reliable store of value. Governance should prioritize safety, stability, and diversity, seeking highly-rated stables and liquid assets.
Why is that the mandate?
I want the mandate to convey the idea of experimentation but within the bounds of liquid and highly-rated assets. This will allow for diversity into the collateral basket.
Arbitrum is a rich ecosystem for DeFi and RWAs. I think KNOX is the first RToken that can really leverage the power of the Reserve Protocol to experiment with different types of collateral assets on Arbitrum.
Deployer
Who is the deployer?
My name is Tom Sawyer and I go by 0xTomSawyer online. I have been a professional software engineer for over 5 years, including work at NASA JPL, my background is in Computer Engineering and Math. I have been involved in crypto since 2018 and worked for Chainwave in 2022 before working on my first RToken in Q1 of 2023. I am passionate about all things DeFi and am fascinated by the sovereignty that crypto provides.
Why did I decide to deploy KNOX?
I enjoy deploying and building RToken brands. I am very passionate about DeFi and all things crypto.
In the short term, the goal is to provide a resilient yield bearing stablecoin on Arbitrum, accessible by anyone.
Thinking longer term, we need asset-backed currencies because the fiat standard might not last forever.
This is where experimentation is needed in the fight against inflation. I believe that RTokens can play a role in this battle, and ultimately, I would like to be a part of this revolution.
Collateral Asset Backing
What does the initial collateral backing for KNOX look like?
RTokens utilize yield bearing USDC receipt tokens from Aave and Compound.
66% Aave USDC V3
33% Compound USDC V3
Why was this collateral backing chosen?
This collateral basket was chosen because of liquidity constraints with Compound USDC and other plugins being in audit and not ready.
Should governance keep the collateral backing as it is or update it whenever it can?
Governors should continuously update and iterate the basket. Arbitrum offers a unique DeFi experience and governors should take advantage of low transaction fees and different collateral assets that fall within the mandate.
What will the initial revenue distribution look like?
90% to KNOX holders
5% to RSR stakers
2.5% KNOX Treasury
2.5% Arb Treasury
Why was this particular distribution chosen?
The distribution was chosen to maximize yield to KNOX holders while balancing overcollateralization incentives
The reward distribution for RSR stakers must also be attractive so that they have the incentive to stake and risk their tokens, while also providing governance.
The revenue going to the KNOX treasury will be directed towards the continued success and growth of KNOX. I’d like to develop a frontend for minting and redeeming, and look to have KNOX sponsor crypto youtube channel.
The revenue going to the Arbitrum’s DAO is to show alignment and gratitude for the opportunities presented by Arbitrum’s network.
Product Differentiation
What makes KNOX unique from competitors?
We believe that the value proposition that KNOX offers is quite different from most other products on the market.
- Dynamic basket management by RSR stakers, who are incentivized to manage it properly.
- This means that governors can continue improving the collateral assets as we see fit to continuously adapt to market conditions
- RSR overcollateralization shielding up to a certain amount.
- In case any of the underlying assets default, RSR will be sold off to ensure that KNOX holders remain whole.
Why will people use KNOX?
- Stability: KNOX will be initially pegged to 1$ USD providing stability to holders.
- Passive Yield Exposure: Users can earn passive income on their capital by simply holding KNOX in their wallet.
- RSR Staking Protection: RSR tokens that have been staked on KNOX, will be sold off in the event of a de-peg by any of the underlying assets in the basket.
- Simplified DeFi Exposure: Holders gain exposure to Defi through the underlying basket of assets.
Go To Market Plan
What is the initial strategy to grow KNOX?
The strategy is outlined in 4 key components and how we plan to achieve success for KNOX.
1) Strategic Liquidity Partners
The goal is to attract quality Strategic Liquidity Partners, ranging from whales, hedge funds and yield farmers who are seeking safe, stable and market outperforming yield in a permissionless store of value on Arbitrum. Strategic Liquidity Partners or SLP’s are an important bedrock for bootstrapping a stablecoin.
2) DeFi/CeFi Integrations
The goal is to be highly liquid and usable within DeFi, this will allow KNOX to be brought to the masses. The strategy is simple: first we launch on DEXs, then integrate with lending markets, CDPs and leverage apps, and then move into fintech apps and potentially CEXs.
3) DAO Treasuries
The goal is to attract DAO Treasuries, a next step in the strategy, onboarding more users into KNOX. Treasuries need to see sustainable performance and liquidity before moving into an asset. The value proposition to them is that KNOX is a better alternative to USDC and will provide more yield then bond exposure and the DeFi savings rate. It is a better alternative than USDC because it is diversified and overcollateralized by RSR stakers. In case any of the underlying assets default, the staked RSR will be sold off to ensure that KNOX holders remain whole. This safety mechanism was already market stress tested in the eUSD RToken during the Mar 2023 USDC depeg event. Through eUSD’s decentralized ‘self-healing’ capability, eUSD was able to autonomously recapitalize and return to $1 peg without the need for regulator or bank backstops.
4) Content and Community
The goal here is to develop a content calendar that can support and highlight all the accomplishments along the way. Telling a story and bringing in believers into the brand, and growing a community.
Community members are invited to create novel strategies and tactics to raise awareness for KNOX and improve its positive impact on the wider crypto community. If you have go-to-market ideas and would like to contribute please leave comments and suggestions.
What does success look like for this RToken?
Success can be measured in TVL and within the first 180 days, a goal of $12m TVL would be a force multiplier for growth. We believe this is a good benchmark of initial success on the Arbitrum Network.
Branding
Why was this RToken name chosen?
This RToken name was chosen to be unique and different. And when you hear it, to stand out from other “flatcoin” names.
What does the token monogram look like?
Why was this logo chosen?
The style is a play on the X logo, and the “K” is for the first letter of “KNOX”
What does the brand represent?
Safe and reliable store of value.
About Reserve Protocol
Reserve is a free, permissionless platform on Ethereum mainnet, Base and Arbitrum to build, deploy and govern asset-backed currencies referred to as “RTokens.” RTokens are always 1:1 asset-backed, allowing for permissionless minting and redeeming onchain. Over X RTokens have been created on the reserve protocol accounting for $100 million in TVL as of April 2024.
- 8 audits: Reserve Protocol Docs | Security
- $5M bug bounty: Reserve Bug Bounties | Immunefi
- Revelo Intel April 2024 report
Call To Action
What is expected from the KNOX governors?
I invite RToken governors to see KNOX’s vision and align themselves with its continued success — governing with safety in mind while mindful of conservative yield opportunities.
Follow on Twitter/X
Join the Discord
What can the community do to make KNOX a success?
Get involved! If you ever wanted to be “early” to a project, now’s the time
Please share any thoughts you have about this RToken in the comments below.