Pulley Protocol is a cross-chain DeFi trading system designed to protect traders while giving them access to high-yield opportunities across multiple blockchain networks. Users deposit assets into a trading pool on Kaia Network and receive Pool Tokens representing their share. Those assets are then deployed into two main strategies on Ethereum — real-world asset trading through Nest Protocol vaults and crypto limit order trading through various DEX protocols.
Pulley Protocol operates on Kaia Network as the source chain and deploys funds to Ethereum as the destination chain for executing trading strategies. This cross-chain approach allows users to access opportunities on Ethereum while maintaining their position on Kaia Network.
When users deposit assets (ETH, USDC, Core Token, etc.) into Pulley on Kaia Network, the protocol follows this process:
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Asset Swapping: All deposited assets are first converted to Kaia native USDT using the AssetSwapper contract
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Why USDT?: USDT serves as the standard stable asset for cross-chain operations, providing:
- Price stability during bridging
- Universal acceptance across chains
- Reduced slippage in destination chain operations
- Consistent value representation
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Cross-Chain Bridging: The USDT is then bridged from Kaia Network to Ethereum using LayerZero infrastructure
Once bridged to Ethereum, the Controller allocates funds according to this strategy:
- 10% → Insurance Reserve: Converted to Pulley Tokens for loss protection
- 45% → Nest Protocol Vaults: Real-world asset (RWA) exposure on Ethereum
- 45% → Limit Order Trading: Active trading strategies on Ethereum DEXs
The Pulley Token acts as an insurance reserve for the entire system. When trading strategies generate profits:
- 50% of profits are distributed to insurance providers (PulleyToken holders)
- 50% of profits are reinvested in the trading pool
If trading strategies incur losses, the Pulley Token reserve automatically covers them, ensuring users' deposits remain protected.
- User deposits assets into Pulley's trading vault on Kaia Network
- System checks if total assets exceed minimum threshold for efficiency
- AssetSwapper converts all assets to Kaia native USDT
- CrossChainController initiates bridging to Ethereum via LayerZero
- USDT is transferred to Ethereum destination chain
- Nest Protocol Vaults: 45% deployed to RWA yield-generating strategies
- Limit Order Trading: 45% deployed to active trading strategies
- Insurance Reserve: 10% held as Pulley Tokens for protection
- Profits from Ethereum strategies are bridged back to Kaia Network
- 50% → Insurance providers (PulleyToken holders)
- 50% → Trading pool for reinvestment
- System continuously monitors and rebalances allocations
- Insurance reserve grows stronger over time
- Users benefit from Ethereum opportunities while staying on Kaia Network
- Lower fees for user deposits and withdrawals
- Faster transactions for day-to-day operations
- Native asset support for Core ecosystem tokens
- Largest DeFi ecosystem with highest liquidity
- Best yield opportunities in RWA and trading strategies
- Mature infrastructure for complex financial operations
- Asset diversification across multiple networks
- Risk mitigation through geographic and technical distribution
- Access to best opportunities regardless of chain location
- AssetSwapper: Converts assets to Kaia native USDT
- CrossChainController: Manages fund allocation and cross-chain messaging
- LayerZero: Provides secure cross-chain communication
- Nest Protocol: RWA vaults on Ethereum for yield generation
- Trading Strategies: Active limit order and spot trading on Ethereum DEXs
This architecture ensures users can access the best DeFi opportunities on Ethereum while maintaining the benefits of Kaia Network, all protected by a robust insurance system that grows stronger over time.