Kyoko Goes Big With DAO-to-DAO Lending. Here’s the Trillion Dollar Idea.

5 min readJan 12, 2022

When we first launched Kyoko, we dared to dream. We envisioned a platform that solved the most pressing issues challenging the GameFi market, including the rising cost of entry and siloed in-game assets across different blockchains.

And then, one day at the office hammering away over code and coffee, we stopped to ask ourselves: ‘can we be thinking bigger?’ The answer was a resounding ‘yes,’ and the question dawned on us — ‘if guilds are at the heart of GameFi, what’s driving the future of blockchain?’

In our answer, Kyoko’s newest solution was born. We’re excited to formally announce that Kyoko will expand its guild-to-guild lending into DAO-to-DAO lending.

From Guild-to-Guild to DAO-to-DAO Lending

The Original Vision: Guild-to-Guild Lending

As play-to-earn gaming explodes in popularity, so too has the cost of entry. Prospective players now find themselves looking at $350+ price tags just to purchase a starter team in Axie Infinity. Legacy players that have amassed collections of strong in-game assets are frustrated by the inability to transfer this value across blockchains. Meanwhile, unused assets sit idly by without generating value. Guilds have been critical in addressing all of these challenges.

However, guilds require a substantial amount of cash to maintain operations and grow their capabilities. In our original vision, guilds that needed additional liquidity could come to Kyoko’s guild-to-guild lending platform and receive credit loans. These loans could be used to purchase ERC-20 tokens or GameFi assets across different blockchains, and larger more established guilds could lock tokens into the Kyoko Vault as collateral for higher credit lines. Emerging guilds could also come to Kyoko and apply for the financial and other incubatory resources they needed to take their game to the next level.

Our Vision Gets an Upgrade: DAO-to-DAO Lending

It then dawned on us: if guilds — who are typically governed by DAOs — need liquidity, wouldn’t other DAOs also have a use for credit? Why limit Kyoko’s lending services to DAOs within GameFi? After all, the world discovered the strong demand for DAO-to-DAO loans when C.R.E.A.M. Finance provided a $3.5 million collateralized credit line from the Iron Bank to PleasrDAO.

It was this realization that got us bouncing in our chairs. After all, in just the US alone, the corporate credit bond market was valued at approximately $8.5 trillion in the middle of 2021. Bringing this service into blockchain represents a huge market with robust demand and enormous opportunity. This was our new trillion-dollar idea.

How Does Kyoko’s DAO-to-DAO Lending Work?

DAOs that need additional liquidity can come to Kyoko’s DAO-to-DAO lending platform to apply for whitelist access and receive unsecured credit loans. The credit can be used to borrow USDT, and DAOs that require higher credit limits can lock ERC-20 tokens, $KYOKO tokens, or NFTs into the Kyoko Vault as collateral. The amount of credit would then be based upon the creditworthiness of the organization, the amount of collateral provided, and the amount of liquidity in Kyoko’s DAO-to-DAO lending liquidity pool.

In addition, early-stage DAOs that are full of potential but need additional resources can apply for credit loans. Upon passing Kyoko’s due diligence evaluation process, whitelisted DAOs can then acquire the resources they need to grow their operations.

Credit loans will be drawn from a liquidity pool, and liquidity providers will earn interest income from borrowers’ interest payments, while also mining $KYOKO tokens. This liquidity pool will be semi-decentralized upon launch, though we plan to establish a fully decentralized investment pool in the future.

Lastly, liquidity providers and $KYOKO token holders may also be eligible for airdrops from DAOs that borrow from Kyoko’s credit bank. If every DAO that borrows from our credit bank distributes an airdrop, we anticipate that this could be a very substantial source of income.

Kyoko’s DAO-to-DAO lending platform will be released in Q1 of 2022.

DAO-to-DAO Lending: A Uniswap Example

Let’s imagine for a moment that the DAO that governs Uniswap desires additional liquidity. Perhaps the DAO required short-term liquidity to launch on a new protocol. Or, perhaps, it simply calculated that the cost of borrowed capital from Kyoko was lower than the return that it could generate through investment.

In either situation, Uniswap could apply to join the whitelist for access to Kyoko’s DAO-to-DAO lending platform. Once approved, Uniswap would be eligible for a certain amount of unsecured credit — in this case, let’s say $500,000. Should the organization need additional liquidity, Uniswap could lock $15 million worth of UNI tokens in the Kyoko Vault in exchange for an additional collateralized credit line of $5 million in USDT. The DAO governing Uniswap could then take this USDT and employ it however it deems most appropriate.

Upon loan maturity, Uniswap would then repay the loan principal amount plus interest.

Kyoko Enters Web3 Through DAO-to-DAO Lending

Some consider web3 to be the newest fad to pass through the cryptosphere. We certainly don’t.

The world has already begun to realize the perils that come with too much concentration of power in the hands of Big Tech. From data leaks to concerns over the promotion of disinformation, internet giants and the power they yield are slowly being questioned.

The answer is decentralization, and the world is beginning to uncover the power of a fully decentralized internet through web3 technology and infrastructure. As the industry continues to see huge investment and talent propel it forward, it’ll be the DAOs that provide the backbone behind this new online world. It’s our vision — Kyoko’s vision — to support this transition and help usher in a new era of decentralization.

About Kyoko

Kyoko.Finance is a DAO-to-DAO and cross-chain GameFi NFT lending market for guilds and players. Kyoko’s DAO-to-DAO lending offers liquidity to promote web3 development, while its guild-to-guild lending, P2P NFT lending, and cross-chain asset lending platforms aim to solve the most pressing issues challenging the GameFi market, including the rising cost of entry and siloed in-game assets across different blockchains. Kyoko’s metaverse will also allow Guilds to display their history, progress, and other accomplishments, while players can connect with others in a world that can be built in, developed, and sold off.

Follow Kyoko at the links below to stay up to date on upcoming events, releases, and news.