HKR Token
(main content from Makerdao Docs)

HKR as a governance token

As a governance token, HKR is used by its holders to vote on a number of different things. Voting is used to execute changes to parameters inside of the Haker Protocol like Stability Fees, the DSR, Debt Ceilings, and many others. Voting is also used to make decisions on the non-technical aspects of the protocol like asset priority lists, governance processes, role mandates, and even electing individuals to fill specific roles.

HKR as a recapitalization source

The token also acts as a source of recapitalization when the Hayker Protocol runs at a deficit. The possibility of HKR token supply Dilution gives holders a strong incentive to govern the system well. Inversely, the destruction of HKR through the auctioning of Hai from the system’s excess surplus further incentivizes holders to govern the system well.
How are HKR tokens created or destroyed?
HaykerDAO launched with 1,000,000 HKR tokens at its inception. The tokens are created and destroyed under different circumstances. HKR is destroyed when the Hayker Protocol’s system surplus exceeds a minimum threshold, resulting in excess Hai being auctioned for HKR that is then destroyed. Inversely, when the Hayker Protocol is running a deficit and the system debt exceeds a maximum threshold, HKR is created and auctioned for Hai in order to recapitalize the system.
What responsibilities do HKR holders have?
The primary responsibility of HKR holders is to ensure the stability of the Hai Peg and the overall health of the hayker Protocol. It is also in HKR holders’ interest to focus on improving and growing the Hayker Protocol by building out the governance processes and infrastructure that enable the effective management of the system. This includes, but is not limited to, establishing risk assessment standards for onboarding new Collateral and Vault types, ratifying role mandates and electing appropriate parties, establishing standards around vote types, and much more.
Another important responsibility for HKR holders is to communicate publicly about their views on the various issues that Hayker governance is addressing at any given time. Participating seriously in forum discussions and voicing opinions, and the reasoning behind them, is important because of the public and decentralized nature of the protocol and its governance.
What voting rights do HKR holders have?
HKR holders have the ability to enact technical changes to the Hayker Protocol itself and also to ratify decisions on-chain about non-technical matters. Whether that be a change to the system parameters, or a decision to accept a new governing philosophy, HKR voters have ultimate control.
Can HKR be used as a collateral type?
Although HKR could technically be implemented as a collateral type, it would be inadvisable to do so.
Will HKR token Dilution be able to cover all Hai if the value of their backing Collateral goes to zero?
The event of a Collateral asset losing all value is considered a Black Swan, which is defined as unprecedented, unexpected, and catastrophic. This makes it very difficult to predict the likelihood and severity of existential threats to the system. There is no guarantee that HKR Dilution will always be sufficient.
HKR Dilution can recapitalize the system to a certain limit. The severity of the situation is important to consider. If the severity of the situation is high enough, then it may be viable for HKR holders to execute an Emergency Shutdown which would result in Hai being a pro-rata claim on the Hayker Protocols Collateral portfolio.
What happens to HKR in the event of an Emergency Shutdown?
In the case of an Emergency Shutdown the system would need to be redeployed. The redeployed version of the hayker Protocol still requires HKR for voting the same as it did before.
Emergency Shutdown is not necessarily indicative of an HKR Dilution event. HKR Dilution occurs when the system is running a deficit and needs to be recapitalized. If the system is going through Emergency Shutdown, the price feeds and state of the system will be frozen at a particular moment in time. HKR Dilution might occur in the moments preceding that if the Emergency Shutdown is due to a severe market failure that would cause many Vaults to default.
There are no guarantees whatsoever relating to the future value of HKR, in particular, if Emergency Shutdown happens. Additionally, HKR holders are not responsible if Hai holders take a haircut during Emergency Shutdown.
How much HKR is there?
There were a total of 1,000,000 HKR at the inception of the Hayker Protocol.
The total number of HKR in existence can fluctuate based on how the system runs. For instance, the total supply of HKR can increase if the system is running a deficit and needs to dilute HKR as a recapitalization source. If the system is governed well, the total amount of HKR will decrease as HKR is destroyed in exchange for excess Hai from the system’s surplus.