The Great Capital Unlock: Bootstrapping Kaia’s Credit Layer with Feather, Morpho and Merkl

The stablecoin market is currently experiencing record-breaking settlement volumes, with millions in USDT circulating on Kaia for various use cases. However, a large portion of that capital currently sits idle.

Stablecoins are designed to move. A mature blockchain requires them to be productive.

To achieve this, we are launching the first phase of our DeFi Summer campaign. By subsidizing early liquidity, we are actively bootstrapping an institutional-grade credit layer for the Kaia ecosystem.

30-Day Incentive Campaign with Boosted Rewards

Incentives are the fuel for onchain growth. Throughout the month of July, we are deploying an incentive campaign directly to users who supply and borrow capital on the network.

The campaign utilizes a capped reward rate system to ensure sustainable, predictable yields. By participating, users gain access to boosted APYs.

The initial campaign focuses on three core actions:

• Deepening the Base: Supply USDT to Feather’s curated USDT vault.
• Unlocking Native Utility: Borrow USDT using KAIA as collateral.
• Testing Retention: Borrow KAIA using stKAIA as collateral.

An Institutional-Grade Lending and Borrowing Stack

To securely handle this influx of liquidity, Kaia has integrated a robust, battle-tested DeFi stack. We are utilizing a highly resilient, isolated architecture to protect users and capital.

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• Base Layer (Morpho): Every lending pair exists as an independent, isolated market. Risk is contained to prevent systemic contagion.
• Curator (Feather): Feather actively manages the risk parameters of these isolated markets, rigorously screening assets and configuring Liquidation Loan-to-Value (LLTV) ratios and supply caps.
• Oracle (RedStone): High-frequency, reliable price feeds ensure that liquidations execute precisely when required, safeguarding the protocol's solvency.
• Distributor (Merkl): Rewards are pushed directly to your lending and borrowing positions. Users can participate without staking or interacting with new smart contracts. You simply claim your batched rewards with minimal gas.

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Strategic Vision

This incentive campaign represents a structural upgrade to the Kaia network.

By establishing a deep USDT supply base, we are enabling native yield routes like SuperEarn to source borrower liquidity directly on Kaia. This allows users to keep assets natively on Kaia, avoiding cross-chain vulnerabilities and the latency of complex vault rebalancing.

Furthermore, by allowing users to post KAIA and stKAIA as collateral, we are giving the native token immediate, tangible utility. Holders can unlock stablecoin liquidity while maintaining their underlying positions, freeing up capital to deploy elsewhere in the ecosystem.

Earn More on Kaia

The 30-day window is currently active. To capture your share of the campaign rewards:

1. Navigate to the Feather Earn interface.
2. Connect your wallet and supply USDT, or post collateral to borrow.
3. Watch your rewards accumulate automatically, claimable at any time through the Merkl integration.

This is the start of Kaia's credit layer. The collateral and supply base will only grow from here.