How Kujira Works

To understand Kujira, you must first understand how anchor protocol works, and the option to use bluna as collateral to borrow UST with 60% of the value of your bLuna. I leave a guide to anchor protocol for you to consult if you need it.

Kujira is built primarily for the settlements that occur in Anchor Protocol. Therefore, it is important to understand the mechanism to understand what kujira does. “Settlement” sounds intimidating, but it is a simple concept and an essential part of maintaining a healthy lending system.

Liquidators ensure that funders are not put out of business by the loss of capital due to bad debts, and by maintaining the solvency of lenders, liquidators ensure that capital is available for potential borrowers. They keep the gears of the system running.

When a loan is at risk, a liquidator may choose to liquidate it. In effect, they step in to pay the difference between the total value of the collateral and the total value of the required minimum percentage of the amount borrowed, in order to keep the system running. Kujira acts as a liquidator, where you can provide liquidity in UST to buy bLuna when a liquidation occurs at a Premium, for example, with a 5% discount.

In this way, an auction is created, where the first liquidations are allocated to the people who have indicated a smaller Premium, 1%, 2%, 3%, 4%, etc.

If you have placed a bid of say 100 UST at a 5% Premium, after the bluna have been sold at the lower Premiums, you are going to get the bluna at a 5% discount off the market price when your order is executed. So you will be buying 5% cheaper than the market price of bluna.

Previously to kujira, when an anchor position was liquidated, the person had a 30% loss, since that is the anchor liquidation ratio. But with kujira, because there is this auction system, the person who is liquidated, has a smaller loss, if let’s assume that the 5% premium bids are executed, because instead of 30%, he is only going to lose 5% by liquidation. In addition, the person who made the offer on kujira, just got bluna at a 5% discount from the market price.

Although kujira mainly focuses on bluna, you can also place offers for Beth, as it is found as a collateral within anchor.

Placing an offer

Before we look at the two main uses kujira can have, let’s take a look at how you can place an offer on the platform.

But first, let’s take a look at the main panel. Go to orca.kujira.app, and click on connect at the top right, and connect your wallet.

What we will notice before placing an offer, is the pool value in UST graph with the Premium at the bottom. You will be able to see the amount of UST placed in each Premium level, and see where there are more UST accumulated in a certain % of Premium. Keep in mind that for the offers to be executed, the bluna value, which is equivalent to the moon value, has to drop.

I recommend you to look at where there are more UST, because, if you place an offer at 15% for example, and the majority of UST is between 1-10%, the price of Luna has to fall a lot for your order to be executed. So, the ideal is to place a Premium where there is enough UST if you want your bid to be executed when the price falls. As it stands now, 5-8% is where there is the most UST, and Luna’s price has to drop a lot to get above a 10% premium.

With this in mind, we look at the right side, where we will indicate in place a bid the Premium we want to use. In bid amount the amount of UST, click on place a bid and confirm in our wallet.

In this simple way, we only need one more step to have our bid done. If we go down to my bids, we will have to wait 10 minutes to activate our bid. You will be able to see it in bid status, and after 10 minutes, an activate button, click there, and confirm in your wallet. This way, you will have your bid active and you will only need to wait for Luna’s price to go down for your bid to be executed.

To withdraw the offer, it is as simple as clicking on cancel. If the order is executed, in available for withdrawal, you will be able to see the amount of Luna that has been bought and click on withdraw. Note that the platform has a commission of about 0.02 bluna for withdrawal.

It is also interesting to look at the bottom left, the activity of users on the platform. Where you can see in blue the new offers, in red the offers that are cancelled and in green the amount of bluna that is withdrawn.

How to take advantage of Kujira

Now that you know how it works and how to make an offer, kujira has two main uses that we are going to look at. These two uses are:

Accumulate more Luna: Basically one of the main uses is to be able to buy more Luna at a discounted price, and when its value is falling. So in addition to buying at a premium over the market price, you will be buying when its value is falling, and not when it is at its highest price. It really is a way to accumulate Luna if you believe in this cryptocurrency and want to invest in the long term. A better option than just going and buying at any time, with Kujira you will have more economical purchases of Luna.

Note that you will receive bluna, but it can be exchanged for Luna at a 1:1 ratio at any time. Although taking into account the 21-day waiting period. You can also exchange bluna for Luna instantly, but the ratio is no longer 1:1 and you will receive a smaller amount of Luna. If you want to accumulate Moon for the long term, I recommend you to wait 21 days.

Get a quick return: Even if you don’t want to accumulate Luna, you can also use Kujira to get a quick return with a lot of security. Although you will need to keep the page open to receive notifications when your offer is executed.

Basically, by buying Luna at a discounted price, when your order is executed, you can claim your bluna, exchange your bluna for luna and get a good margin. Although be aware of commissions and the exchange of bluna to luna, which if instant, is not a 1:1 ratio. Even so, if you manage to buy with a Premium of 10%, you can perform the steps mentioned above and get 8-9% profitability when selling your Luna for UST. The 1-2% difference is taking into account the withdrawal commissions, going from bluna to luna and from luna to UST. Although keep in mind that if you do this with a capita of less than 1.000$, the commissions can mean a higher %.

Even so, it is a way to get a quick profitability and in a quite safe way. The only aspect, is to be attentive to when your kujira offer is executed. Because if you are sleeping or several hours pass, it is possible that the price of Luna has fallen and you do not have that profitability for buying Luna at a discount.

I hope it has helped you to know in more detail how kujira works, and how you can buy Luna at a discounted price. Remember that if you don’t have an account with binance, you can create one just below.