Keiko Finance

Keiko Finance is a permissionless collateralized debt position (CDP) protocol on the Hyperliquid network that lets users deposit Hyperliquid ecosystem tokens (HYPER, PURR, wHLP, HFUN) as collateral to mint the KEI stablecoin. Borrowers benefit from predictable interest rates that adjust dynamically based on their vault's collateral ratio, with a base rate starting as low as 2.5%. The protocol is designed for users who want to unlock liquidity from their Hyperliquid assets while maintaining exposure to potential upside.

Keiko Finance earns yield primarily from interest paid by people who borrow the KEI stablecoin.

When someone takes out a KEI loan against their crypto collateral (HYPER, PURR, wHLP, or HFUN), they pay a variable interest rate. That rate depends on how well their loan is backed. If the vault has plenty of collateral relative to the loan (a healthy "collateral ratio"), the borrower pays the lowest rate — starting as low as 2.5%. If the loan gets riskier (collateral ratio drops toward a minimum threshold), the interest rate climbs up to a maximum fee. So safer borrowers pay less, and the interest they all pay becomes yield for the protocol.

Where does that borrowed KEI go? The borrower can use it for trading, providing liquidity, or everyday spending — while their original deposited collateral still sits in the vault, potentially gaining value. This is the core trade: unlock cash-like KEI without selling your tokens.

The redemption system keeps KEI stable around $1. Anyone can swap 1 KEI for $1 worth of the underlying collateral from any vault (for a small fee). A formula decides which vault gets redeemed first — it targets the riskiest one. This creates a price floor for KEI: if it ever dips below $1, people can profit by redeeming it, pushing the price back up.

Liquidations happen when a vault's collateral gets too thin. When that occurs, the vault's collateral is seized and sold. Some of that discounted collateral goes to a Stability Pool — a reserve where users deposit KEI in advance. Stability Pool depositors earn those liquidation rewards plus weekly Keiko Points.

Beyond lending and liquidations, there is a Points Program that distributes 24 million points across two seasons (12 weeks each, 1 million points per week). Three groups earn points:

• Vault holders — based on how long they keep an active vault and how much KEI they borrowed
• Stability Pool depositors — proportional to their deposit size
• Liquidity providers on partner exchanges (Kittenswap, HyperSwapX)

At the Token Generation Event (TGE), those points convert into KEIKO tokens as a Genesis Distribution reward.

What the protocol does NOT generate: There are no trading fees or swap fees from the protocol itself. All yield comes purely from loan interest and redemption fees. There is also no ongoing inflation from newly created tokens on the lending side — the points are a one-time pre-TGE incentive, not a permanent emission.

Keiko Finance's official documentation states that the protocol was "developed entirely through self-funding by the team, deliberately avoiding privileged actors like venture capital firms in private seed rounds." No institutional investors, venture capital firms, or named backers have been disclosed. The team conducted a public raise (7.5% of token supply allocated for this purpose) to fund Keiko V2 development, audits, and infrastructure, maintaining what they describe as a "fair launch environment" without disproportionate influence from any single entity.