Bolstering On-Chain Security With Hypernative & Fee Structure Update

The following governance proposal introduces two key initiatives: (1) allocate $25,000 sourced from collected burn fees to activate the services of Hypernative, a preventive on-chain security solution; and (2) update the current fee structure for the Kinetix protocol.

Read the governance proposal below for more information on the details, which has been divided into 2 sections.

Next Steps: The Discussion period will end on Thursday, 20th February 2025 at 13:00 UTC, a vote will then be established, which will end on Monday 24th February 2025 at 13:00 UTC.

Part 1 What is Hypernative? Founded in 2022, Hypernative is a comprehensive Web3 smart contract monitoring system that prevents Web3 hacks and exploits.

Hypernative have a number impressive accolades to showcase: Saved over $2 billion in customer and non-customer funds from exploits Detected hacks in 2024 with over 99.5% accuracy Catching 98% of potential threats within 2 minutes or less of when the transaction was to occur.

The platform has received support from big industry names, as they raised a $16 million Series A Round from the likes of Quantstamp, Boldstart Ventures, IBI Tech Fund, Borderless, and more to help them grow.

How Kinetix Will Use Hypernative: Following the implementation of Kinetix’s previous governance proposal, tokenomic modifications voted into effect by the Kinetix community have already removed more than 1% of the total $KAI supply from circulation via Buyback-and-Burn transactions. This proposal builds upon that success, redirecting a portion of these fees toward proactive security measures that will yield immense long-term benefits to the Kinetix DeFi suite, its user base, and community.

Hypernative’s smart contract monitoring solution will assess all of Kinetix's smart contracts, providing real-time alerts and analysis of potential security risks. In addition, Hypernative’s preventative approach to security aligns with Kinetix’s strategic development goals and long-term vision to maintain a robust DeFi ecosystem.

In the event of a detected anomaly or potential threat, Hypernative's system will:

• Generate immediate alerts to the Kinetix security team
• Provide detailed reports on the nature of the threat
• Offer recommendations for mitigation strategies
• Assist in coordinating rapid response efforts

Hypernative also learns and adapts to new threats in the ever-evolving DeFi landscape. By analyzing data from across the blockchain ecosystem, Hypernative can:

• Identify emerging attack patterns and vulnerabilities
• Update its detection algorithms to stay ahead of potential threats
• Provide insights into industry-wide security trends
• Offer recommendations for proactive security enhancements

Allocating $25,000 from burn fees to fund Hypernative's services represents a strategic investment in the long-term security and stability of the Kinetix ecosystem. While this redirection of funds will have a minimal impact on current tokenomics and KAI’s market stability, it stands to generate significant value for Kinetix’s long-term sustainability.

All community members are encouraged to review this proposal and its contents, and to subsequently cast their votes to direct Kinetix accordingly.

Part 2 Fee Structure Update The second part of this governance proposal introduces a suggested update to the fee structure for the Kinetix protocol. A new multisig wallet will be set up that will act as a Treasury, and which will be fully transparent to the community. Additional funds received from fees after paying expenses to this Treasury would serve to build up LPs and capital to flow back to the KAI token.

Moreover, the goal of this new Treasury will also be to generate yield through various mechanisms, such as depositing funds into yield-generating DeFi products. This yield is to be utilised to help pay for costs such as protocol expenses, developer resources, maintenance fees, etc. while also helping expand and grow Kinetix. Because the Foundation does not want to sell KAI tokens to pay for these costs, this alternative solution is the best path forward.

Current Fee Structure: 50% to bribes 40% to burn 10% to the Foundation

New Proposed Fee Structure: 50% to bribes 30% to burn 15% the Foundation 5% to Developer Resources

Voting Options:

• For: Approving the support of the Hypernative Security Services and Fee Structure Update.
• Against: Rejecting the support of the Hypernative Security Services and Fee Structure Update.

Thank you for your consideration and participation in this governance proposal.