Kinesis blockchain - how does it reflect interactions outside of the Kinesis vaults?

Introduction
Kinesis stores gold and silver in a number of vaults.

• The gold is represented by KAU on the KAU blockchain.
• The silver is represented by KAG on the KAG blockchain.

Transfers (Send, Kinesis Pay, Mint, Redeem) from one account to another within the Kinesis Monetary System (KMS) are reflected as transactions on the blockchains.

How do the Kinesis blockchains handle interactions with the world outside of the Kinesis vaults?

This article by Jason provides a solid background:
https://forum.kinesis.money/threads/understanding-the-kinesis-blockchain.938

I'll quote from Jason's article and then walk through some details.

To understand how the Kinesis Blockchain works there are a few concepts you need to familiarise yourself with:

1) For native assets on a Stellar blockchain (like KAU and KAG), all the tokens that will ever exist for that token were created and placed into the root account when the blockchain was created. When a client ‘mints’ a token (adding to the coins in circulation) it is transferred to their wallet via a treasury account (the ‘Emission’ account). The Stellar blockchain does not have the capability to ‘burn’ or ‘destroy’ native tokens (when a token is redeemed for physical metal). Kinesis reduces the coins in circulation when a token is redeemed by transferring the token back to the Emission account, which takes it out of circulation.

2) Unlike an ERC-20 token, Stellar is a ledger-based system, and as of version 17 (our current version), it doesn’t support Smart Contracts. Therefore, there are a number of accounts that form part of the Kinesis Blockchain.

3) The Stellar blockchain has a Root account, which is where the specification of the blockchain is defined and all the tokens that will ever be issued are held until distributed.

4) The Root and Emission accounts do not get included in the coins in circulation calculations as they are holding accounts only. For more information on the function of the Root account, please see:

https://github.com/stellar/stellar-core/blob/master/src/ledger/LedgerManagerImpl.cpp#L93

We can see from the above quote that there are a couple of accounts that are outside of the KMS.

• Root account
• Emission account

The Fee Pool account also has a special function. See this thread for further explanation.

Kinesis blockchain - Inflation operation - how are on-chain fees handled?

Introduction Fees are either generated on or off-chain. Many fees are generated off-chain. See also this post which gives a wider view of the sources of fees: https://forum.kinesis.money/threads/what-contributes-to-the-yield-pool-and-how-does-this-happen.510/ This article focuses on the ones...

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Root account
The Root account was the first account created as part of creating the blockchain.
As the quote says, it contained all the coins that will ever exist on the respective blockchains, with an initial value of 100,000,000,000, that's 100 billion.

• In terms of gold, that's 100,000 tonnes.
• In terms of silver, that's ~3.1 million tonnes.

Emission account
We know that

• Minting is the process of bringing gold or silver into the KMS.
• Redemption is the process of removing gold or silver from the KMS.

When gold or silver is moved into the Kinesis vault, there needs to be a corresponding increase in the number of KAU or KAG in the KMS. As the quote says, this is done by a transfer from the Emission account (which is a blockchain account outside of the KMS) to an account inside the KMS.
Minters now usually mint to their KMS account, which results in the minted KAU or KAG ending up in the Hot Wallet account, though the minter can choose to direct it to a wallet account for which they control the keys.


When gold or silver exits the Kinesis vault (physical delivery to a KMS participant or market maker redemption), there needs to be a corresponding decrease in the number of KAU or KAG in the KMS. As the quote says, this is done by a transfer to the Emission account (which is a blockchain account outside of the KMS). This is always done from the Hot Wallet account.

The absolute value of the balance in the Emission account is unimportant and needs only to be sufficient to facilitate net minting into the KMS at any point in time. It can be topped up as needed from the Root account. It does not attempt to track all of the available gold or silver outside of the KMS or even the amount currently available for minting. As an example, the current amount of gold available for minting is ~3.5 million grams, whereas the balance of the KAU Emission account is about half that.



The account numbers
KAU
Root account
GDTYNME5HX3FCFDS4D3R3LTVH3DFLSB5HWVTV3VVL4PBGQ6SCKC7J3PD
Emission account
GDIENNQ3BXCTB74ZYCQAGXCY7KTGFBZGHRMUVF3ZLIW6SMAZIGX2JCCS
Fee Pool account
GCO75U2EVO3HKGYO2PUO2ZO7CEL52JPQL5WYUHHKPEORQSASSKT4MA3B


KAG
Root account
GAUCIFE37F4KQ5F6QPNSZ75QKRQTNRCF32FZNUXMCXUFSKRMWGF76LTI
Emission account
GCGTMT2X6NUV6ABEOAOSDI2YQ7FXQOQYKYA7KVZQ5ID67GQU3C6AIUGU
Fee Pool account
GBBVUAMR3CYNQKMNHVWCMUQVE3XQIL3WM5GSP5D6SCECKIZNNBT6FT7I



These principles were used to build spreadsheet templates to enable anyone, with relatively little effort, to view the

• minting
• redemption
• circulation

numbers after each and every operation that has occurred on the KAU or KAG blockchains.

How you can validate Circulation from the Kinesis blockchains

You can download a CSV file of the KAU or KAG blockchains from the watcher node that Derek has set up. There are two separate blockchains, one for KAU and one for KAG. The explorer that Derek has attached is from a third party, so you will be using independent tools for your analysis. The CSV...

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