Kairo
KAIRO Finance

Not yet independently audited. You could lose funds. Deposits and new financing are currently closed.

Risks and liquidation

Read this before you borrow or lend. These rules are enforced by the contracts.

Liquidation

  • Your position can be liquidated when its loan-to-value reaches 75%. This can happen even if every monthly payment is on time — a falling BTC price alone is enough.
  • Liquidation is a direct sale: part of your BTC (enough to repay up to 50% of the debt per call, or all of it after a payment default) is sold for USDC on Arc in a single transaction. Nobody buys your BTC at a discount and no KAIRO wallet ever handles it.
  • A sale only happens if it returns at least the oracle value minus 2%. If the market can't pay that (thin liquidity, a cirBTC depeg or a price-feed outage), nothing is sold, the attempt is recorded on-chain and it is retried later — the BTC stays locked and a default stays in place.
  • You can lower your risk by repaying principal early or adding BTC at any time.
  • If you repay in full, your BTC is yours to withdraw. After a liquidation sale, any USDC left over is yours to claim.

Missed payments and maturity

  • Each payment is due every 30 days from purchase, at the exact time recorded in your agreement. There is no grace period.
  • From one second after the due time until 72 hours late (inclusive), the penalty is 2% of the overdue installment. After 72 hours it becomes 4%. At exactly 168 hours it becomes 5% — the maximum — and the position can be liquidated by anyone.
  • Penalties are totals, not additions: a $3,000 installment owes $60 on Day 1, $120 from Day 4 and $150 from Day 8. They never compound and are never charged on your principal, BTC value or deposit.
  • You can bring the position current only BEFORE 168 hours, by paying the overdue installment plus its penalty. If several installments are overdue, each carries its own penalty.
  • At exactly 168 hours the agreement is permanently defaulted by the contract itself. It cannot be reinstated, extended or reversed by anyone, payments are no longer accepted (even a full payoff), the remaining balance is accelerated and the BTC stays locked until liquidation. This holds even if liquidation bots are delayed.
  • Defaulted means the agreement has ended; Pending liquidation means the collateral has not been sold yet; Liquidated means settlement is complete.
  • On a payment default the full debt becomes due and all pledged BTC is sold for USDC. The USDC received pays interest, then principal, then the 5% penalty; anything left is yours to claim in USDC. Your deposit is never forfeited to KAIRO.
  • Collected penalties are split 50% to lenders, 30% to the risk reserve and 20% to KAIRO. Uncollected penalties are never credited to anyone.
  • If anything is still owed 168 hours after the final due date, the position can be liquidated in full.
  • These rules are fixed in each agreement at origination. No administrator can change due dates, penalties, thresholds or your collateral. Their enforceability is subject to legal review in each jurisdiction before launch.

Your Bitcoin

  • Collateral is Circle Wrapped Bitcoin (cirBTC) on Arc, a token issued by Circle and backed by BTC it holds. It is not native Bitcoin. Its value depends on the issuer, its custody and redemption process, and Arc itself. It may depeg or be frozen by the issuer.
  • Your BTC is pledged and cannot be withdrawn until all principal and interest are repaid.
  • Purchases are executed at market on Arc and may receive up to 2% less BTC than the oracle price; otherwise the whole transaction reverts.

For lenders

  • Target yields are not guaranteed. You earn only interest borrowers actually pay.
  • USDC lent to borrowers cannot be withdrawn instantly; it returns as loans are repaid or liquidated.
  • If liquidation proceeds don't cover a loan, the risk reserve pays first and the rest is a loss shared by all lenders in that pool.
  • Price-feed outages, a cirBTC reserve shortfall or a cirBTC depeg pause new loans and liquidation sales; during that time losses can grow. No one can set a price manually.
  • Each pool has a risk reserve holding real USDC. It covers part of a loss only after the collateral is sold, and pays at most 50% of its balance per loss. It cannot cover every loss: our stress tests show lender losses when BTC falls about 50% or more before a sale.

Smart contracts

  • The contracts are not yet independently audited. They have no owner, no upgrade mechanism and no function that lets anyone withdraw your funds, but bugs may still exist and tests passing does not prove their absence.
  • The only special role (guardian) can pause new loans. It cannot pause repayments, liquidations or withdrawals, change terms, or move funds.