Decentralized Finance Innovator Mimo is launching “KUMA Protocol”: the first DeFi protocol issuing tokens backed by regulated NFTs, themselves backed by sovereign bonds. This launch comes as the FMA (Financial Market Authority Liechtenstein) has approved Mimo for providing blockchain-related services since January 2022.
KUMA tokens, built as a smart contract compatible with most blockchains, are designed to provide holders with a reliable source of passive income through the accrual of interest on their holdings.
KUMA Tokens are NFTs representing bonds that KUMA Generator (a decentralized product owned by KUMA DAO and governed by the MIMO tokenholders) can accept as a backing to issue KUMA Interest-Bearing Tokens, a form of synthetic stablecoins that automatically accrue interest. The balance of these tokens grows in users’ wallets without any action required, matching the interest rate paid by the bond backing them, minus commission. Apart from the interest, the tokens behave like regular stablecoins, allowing them to be integrated freely into the broader crypto ecosystem, like DeFi, GameFi, and NFTs platforms.
The launch of this protocol also has the potential to revolutionize the way bondholders receive interest. Traditional bonds typically pay out interest semi-annually, annually, or even when reaching maturation. However, because KUMA Interest-Bearing Tokens use smart contracts, interest can be paid out to holders regularly, every 4 hours by default, providing a more consistent income stream for investors while not involving any claim process.
In the background, Mimo Capital AG handles the bonds and offers simple redemption to the users. Moreover, a smart contract managed by the KUMA DAO provides infrastructure for its community to swap or roll the NFT bonds over, ensuring smooth operation when a bond reaches its maturity date or the issuing authority publishes an updated rate.
To date, a few other efforts of bond tokenization have started. However, Mimo has the advantage of being the first regulated in the European Economic Area (EEA), providing tokens allowing its users to earn interest while benefiting from the safety of their favorite custody solution and the peace of mind coming with a fully regulated product.
Furthermore, KUMA DAO’s approach naturally provides fractionalized access to the benefits of bonds, lowering the entry barrier to investment and opening the door to 24/7 settlement, trading, and global liquidity. Example applications include savings accounts, protocol treasuries, and individual wallets.
Following the tokenization of sovereign bonds, Mimo will leverage KUMA to provide other assets, such as corporate debt and funds.
So far, all of the Mimo partners, including Polygon, Fantom, Swissborg, SingularityDAO and Akt.io have indicated their intention to use KUMA.