Can Katala (KALA) make money?

The developers of Katala (KALA) bet a blockchain can make money by locking in collateral.

The Kalata platform uses a decentralized price oracle to read prices into the blockchain. An oracle is a third-party service that allows smart contracts to receive price data from outside systems.

The prices allow Kalata to lock up the value of assets, including stocks and commodities, in its tokens. Kalata tries to maintain liquidity and solvency by selling assets for cash if collateral levels fall too low.

The Kalata Platform

The Kalata platform uses state-of-the-art cross margining to generate high levels of capital. Margining provides credit traders can use to finance trades. Hence, margining is another term for margin lending. In a margin loan, a trader puts up future trade results as collateral for a loan. Thus, Kalata tokenizes assets and lends money against those assets.

Kalata claims its platform can execute real-time price feeds with zero slippage. The belief is that an over-collateralized liquidity pool allows Kalata’s platform to offer real-time pricing. However, Kalata’s platform will support assets later.

The Kalata developers think they can generate enormous amounts of collateral for margin lending by allowing token holders to mine liquidity. Users mine liquidity by minting synthetic assets. The hope is that people will add liquidity to the system so they can mine more liquidity.

They will reward KALA token holders with additional tokens if inflation increases the Coin Price. KALA token holders could profit from transaction fees for synthetic assets sold through the Kalata Exchange. The KALA token will serve as the governance token on the Kolata token platform.

Asset Tokenization

The purpose of the Kalata (KALA) platform is to make money through asset tokenization.

Asset tokenization is the creation of synthetic assets or digital tokens linked to stocks, commodities, bonds, debt, and other investments. To explain, the synthetic asset token contains a smart contract.

The smart contract is a blockchain algorithm that commands a platform to buy or sell the assets. For example, a Tesla (TSLA) synthetic asset can tell a decentralized exchange to buy or sell shares of Tesla stock.

One advantage of this arrangement is that it increases access to stocks and other assets. For example, an Argentine investor could use Kalata to buy fractional ownership of American stocks such as Disney (DIS).  

Kalata Asset Tokenization

They claim Kalata can increase accessibility to assets by increasing the efficiency of trades and raising asset liquidity. They hope Kalata can increase efficiency and liquidity by removing geographic barriers and reducing reliance on middlemen.

The goal of Kalata is to expand the investor base by allowing anybody, anywhere, to buy synthetic assets.  High levels of liquidity will make trading cheaper and faster.

Note: I see no evidence that Kalata has created any synthetic assets. However, Kalata is offering token trading and liquidity mining.

What Value Does Kalata Have?

Mr. Market assigns some value to Kalata (KALA). He paid a 60.06₵ Coin Price for Kalata on 15 September 2021.

 In addition, CoinMarketCap gave Kalata a Fully Diluted Market Cap of $9.011 million, a Market Capitalization of $120.15 million, and a 24-Hour Market Volume of $1.987 million on 15 September 2021. They base those numbers on a Circulating Supply of 15 million KALA, a Maximum Supply of 200 million KALA and a Total Supply of 200 million KALA.

CoinMarketCap listed Kalata as the 1032nd valuable cryptocurrency and the fourth most trending cryptocurrency on 15 September 2021. In contrast, Coinbase gave Kalata (KALA) a Coin Price of 60₵, a Market Cap of $9 million, a 24 Hour Market Volume of $2 million and Circulating Supply of 15 million KALA on 15 September 2021.

I think Kalata offers no value  because I see no evidence they are trading synthetic assets. Hence, I think Kalata is an interesting idea for a decentralized exchange and not a cryptocurrency. Speculators need to stay away from Kalata until actual people use it to trade genuine assets in the real world.

 Originally published at https://marketmadhouse.com on September 15, 2021.