6.5 Potential DeFi Applications
Application #1: Leveraging unique Volatility Variance
One of the most interesting aspects of Kanon could be its volatility variance due to its recurring and claimable rewards based on AI data usage and composability. Let’s suppose that an on-chain derivative trader is trying to hedge their position with a DeFi asset with an opposite volatility variance profile. Because Kanon is a keyword with an expected claimable residual reward, we can analyze hundreds of thousands of Kanons with different price movement profiles. This will allow custom tailoring of an individual or a basket of unique Kanons that can collectively create the desirable volatility variance profile for a trade. Because of its granularity and diversity, the sheer number of circulating Kanons, and their market price, connected to the digital human knowledge compendia, can create diverse sets of financial instruments. This provides an alternative to most DeFi assets which are highly correlated without adding high transaction cost.
CVI Finance is an early example of how on-chain volatility trading is now a reality in DeFi.
Application #2: Monetizing a Sentiment.
Another example is that many semantically similar Kanons could be aggregated, put into a DeFi index, and added as a collateral to acquire stable tokens for yield farming. These similar keywords can represent a certain sentiment or mood at a given time or season, and we can now monetize collective moods or sentiments in our society in a way that was previously unimaginable.
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