Kyber Network Review 2023
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The most prominent innovation in the crypto industry in recent years is the DeFi or decentralized finance exchanges. Apart from employing stronger security measures and providing a higher level of privacy, it seems as if these platforms have managed to find the solution to the liquidity problem.
The liquidity shows the potential of a crypto token to be quickly turned into cash. Currently, there are many types of digital assets that are used by various liquidity protocols and decentralized applications (dApps) but swapping these tokens to maintain liquidity is still not an easy task.
As mentioned above, several interesting crypto projects address the liquidity question, but one that really stands out from the crowd is Kyber Network. This decentralized platform allows for effortless swaps of different crypto tokens between any type of crypto wallet. The crypto swaps are conducted without any third party or intermediary, as Kyber Network collects liquidity from assorted platforms and dispenses them in a single network.
In our review today, we’ll give more details on the Kyber Network protocol and the features it offers to traders from all walks of life.
About the Kyber Network
The Kyber Network and its token Kyber Network Crystal Legacy represent a crypto project built on the Ethereum (ETH) blockchain, using the Ethereum protocol. The Kyber project was founded by Loi Luu, Yaron Velner, and Victor Tran in Singapore. The project looked so promising that Ethereum’s founder and CEO, Vitalik Buterin, joined the team of Kyber advisors.
The main goal of the Kyber Network is to decentralize the process of exchanging or swapping cryptocurrencies and allow users to instantly convert and exchange any type of cryptocurrency using the network.
The rapid growth of the Kyber Network in the past couple of years proves that the developers have stumbled on something revolutionary. The project was announced in May 2017, and the testnet for the network went live a few months later in August. The testnet was followed by an ICO (initial coin offer) in September of the same year. The project managed to raise more than 200,000 ETH, worth over $60 million USD, in a single day.
The Kyber Network’s live main-net was launched at the beginning of 2018 to selected whitelist participants, and in March 2018, the beta main-net opened. Right after the launch of the beta main-net, the network experienced rapid growth in trading volume, which went north of 500% in just the first half of 2019.
Being a decentralized exchange (DEX), the Kyber Network connects traders through a liquidity pool instead of an order book. The protocol itself is a liquidity provider as it completes transactions on-chain without intermediaries.
The Kyber Network protocol provides mutual benefits among its users. It provides a two-way relationship that enables large liquidity pools to accumulate diverse types of crypto and enables users to effortlessly swap between different coins on the network.
Ease of Use
The Kyber Network was developed as a crypto transfer system. The transferring capabilities of the network allow users to convert different types of crypto tokens on-chain. In plain words, the tokens that are being sent don’t have to match the ones that are being received.
When the network is fully operational, past the beta stage, users will be able to send any type of crypto token and have it instantly converted on-chain through the network into any other token. This conversion is something that the sender and recipient have agreed upon. For instance, you can send BTC and have them converted to DASH at the recipient’s request with instant delivery.
Aside from the trading convenience for individual traders, the Kyber Network provides exchange-grade business tools, as any type of merchant can accept any type of crypto payment and have it automatically converted on the chain to their chosen coin.
The Kyber network has three separate but key features that vouch for its functionality:
- The Kyber Swap feature enables instant exchanges of any type of crypto token while eliminating wrapping (wrapped Bitcoin), order books, and deposits. The instant exchange feature is great for merchants who require transaction confirmation before shipping any goods.
- The Kyber Reserve operates to provide liquidity to the Kyber Network as users contribute tokens to the liquidity pool, and these tokens can be used with any platform. The safety of the reserve fund is maintained with a transparent fund management model that keeps track of every trade completed by reserve managers.
- The Kyber Developer is used to develop dApps, wallets, exchanges, and similar projects on the network and provides developers with the tools and documentation needed to add any decentralized projects into the Kyber liquidity pool.
Network Roles of the Kyber Network
The Kyber Network operates through different network roles and functions:
- Users – The user’s role is to use the Kyber Network in order to send and receive crypto tokens. This role can be filled by individual users, merchants, or a smart contract account.
- Reserve Unit – The role of the reserve units is to add liquidity to the Kyber platform using the dynamic reserve pool. Some reserve units are an internal part of the Kyber Network while others can be third parties registered on the network. Reserve units can be public if part of the public makes a contribution to the reserves they hold. If not, they are considered private. With the allowance of third parties to become reserve units, the network promotes diversity, which, in turn, prevents any type of monopolization and makes sure the exchange rates remain competitive.
- Reserves Contributors – The reserve contributors provide funds to the reserve units and in return, they receive a profit share from the reserve.
- Reserve Managers – The reserve managers maintain the reserves, calculate the exchange rates and chart them onto the network. The reserve managers receive profits from the exchange spread that’s set by them on their designated reserves. They can also generate profits by providing trading volume using the whole Kyber Network.
- Kyber Network Operator – This role is currently filled by the Kyber Network team. This role has the function of adding or removing reserve units and controlling the token listings. As the network develops further, this role will be filled by designated decentralized governance instead of the team.
Kyber Network Crystal (KNC)
The Kyber Network Crystal (KNC) token is the workhorse behind the Kyber Network. It operates by connecting liquidity providers to users who need liquidity and currently operates on three separate principles.
The first one is collecting transaction fees. What’s interesting is that a portion of every transaction fee is discarded,thus keeping the token deflationary. The second principle guarantees the smooth functioning of the reserve system in the Kyber liquidity as reserve units must use intermediaries to purchase KNC and pay for network services.
The third principle behind the KNC token is that it’s the connecting pillar between the Kyber Network and the wallets, exchanges, and dApps that leverage the liquidity on the network. This is a rewarding system as users earn referral fees for guiding other users on the Kyber Network. This helps with the community adoption of the network and also for any users joining the network.
The platform intends to increase the functionalities of the KNC token and turn it into a staking system token and a governance token in the future.
The KNC tokens were released in 2017 at a price of $1, similar to the stablecoin Tether (USDT). For the ICO, around 226 million KNC tokens were mined, and 61% of them were sold to the public. The remaining 39% of the mined tokens are controlled by the company, stakeholders, and advisors in a 50/50 ratio. There is a 2 year vesting period and a 1 year lockup period for the company-controlled coins.
There are 180 million tokens in circulation and the total supply of KNC tokens was reduced to 210.9 million after the company discarded 1 million tokens in 2019 and another million three months later. The total market cap is above $390 million USD.
How to Buy KNC Tokens?
Potential users who want to participate in the Kyber Network can purchase KNC tokens at major crypto exchanges. The safest bets would be Coinbase, Huobi, and Binance, as the former is a US-based exchange, while the latter two can be accessed from anywhere.
The KNC tokens are among the group of ERC-20 tokens, and this means that they can be stored in any wallet that supports ERC-20s. Some of these wallets include MyEtherWallet, MetaMask, Ledger Nano S, and more.
The company behind KNC released their own wallet called the KyberSwap Android mobile wallet in 2019. The wallet enables users to undertake token swaps and supports up to 70 different coins. It also enables users to set alerts for prices and limit orders and functions as a fully-fledged Ethereum wallet.
The Kyber Catalyst protocol upgrade will merit its own native wallet that will support staking and delegating features for KNC, but time will tell if a new wallet app is to be designed.
The Kyber Katalyst Protocol
The Kyber Network team has revealed that they want to become the spearhead of the liquidity layer of the decentralized finance space. The goal is to have the Kyber Network as the only on-chain system used by a majority of liquidity providers and dApps developers.
This will be achieved with the Kyber Katalyst upgrade, which will create a new ecosystem by creating firm alignments for a common goal and reinforcing the incentives for future stakeholders to participate in the ecosystem. The main beneficiaries of the Katalyst upgrade will be the three leading stakeholders in the network. The reserve managers who provide liquidity, dApps that link takers to Kyber, and KNC holders.
In line with this upgrade, reserve managers will be provided with two benefits: an incentive to provide reserves and receive earnings and once Katalys is operational, part of the fees will go to the reserve managers as a reward for providing liquidity.
On the other hand, dApp developers will be free to set their own spread and achieve full control of their business model. The current fee-sharing program of 30% of the 0.25% fee that goes to dApps developers will be eliminated, and they can devise their own spread. The goal of this is to encourage more developers to create dApps on Kyber as they will be in control of the fees.
Finally, KNC token holders will be enabled to take advantage of the new staking mechanism and receive a portion of the network fees by staking their own KNC and taking part in the upcoming KyberDao on and off-chain governance model. The Katalyst upgrade went live in 2020.
Following the utilization of the Katalyst upgrade, KNC tokens holders will be centred right at the core of the Kyber Network. These existing users will now play a crucial role in the further economic development and flow of the network.
The main path that this could be achieved through is KyberDAO. In a way, KyberDAO is an on-chain and off-chain governance system that will situate to ensure communication between the Kyber team, KNC token holders, and market participants.
Currently, the team is discussing three points of consideration about KyberDAO:
- Wide representation, fully transparent governance, and a stable network condition.
- Incentives for KNC holders to maintain their stakes and be actively involved in the network’s governance.
- Maximum participation that’s fueled by a wide range of options for voting.
KNC token holders will be empowered to determine the current network fee and to displace some of the fees to maximum network growth. Moreover, KNC token holders can vote on three different options: Voting rewards, Burning (Discarding) KNC, and Reserve Incentives.
KyberDAO’s design revolves around network transparency and stability. Additionally, the network can adapt to overcome any emergency situations by burning excess KNC. In the initial days of the KyberDAO’s release, the Kyber team will remain as primary maintainers but will leave maintenance in the hands of users further on. The system is created to be highly verifiable while retaining maximum transparency when it comes to the role of maintainer of the KyberDAO system.
KyberDMM is a next-generation Automated Market Maker or AMM. It’s designed to use gained capital to the maximum by providing high capital efficiency and reacting to market conditions to optimize the best returns for liquidity providers.
The nature of regular AMMs is static, but KyberAMM is designed to react to specific token pairs and market conditions to optimise fees to the liquidity providers and rates for takers. This is made possible with two original mechanisms: Amplified Liquidity Pools, based on token pairs, and Dynamic Fees, based on market conditions.
Trading Fees and Limits
There aren’t any special or hidden fees on the Kyber Network. There is only a fixed trading fee of 0.10% and an Ethereum network fee on withdrawals. The Kyber Network is still in a live-beta mode, and currently, things are on the cheap side. How it will fare further remains a mystery.
Bitcoin and Other Supported Cryptocurrencies
The Kyber Network supports all cryptocurrencies and can perform on-chain conversions. If James wants to send ETH to Linda, but Linda wants James to send her BTC, James can comfortably send ETH on Kyber, and it will automatically be converted to BTC when it reaches Linda’s wallet.
The support system on the Kyber Network consists of a support ticket system and an email address for any customer support-related questions. The official email of Kyber is [email protected] The Kyber team is very active on social media platforms and can be reached on Twitter, Facebook, Discord, YouTube.
A Few Words Before You Go...
The Kyber Network appears to be a well-grounded crypto project. It has a large market cap and millions of dollars in native KNC tokens.
The Kyber Network is still in development, and it seems that it brings interesting and fresh ideas to the crypto-table. If you liked what you read, you can easily purchase some KNC tokens and participate, govern, and vote on the protocol without even having to create an account. The network still has a long way to go before it can be considered complete, but it seems that it’s headed in the right direction both as a token exchange and liquidity network.
frequently asked questions
Well in plain terms, yes. The Kyber Network doesn’t store any assets, data, or funds on its database. The network is completely decentralized and doesn’t even require an account. This is one of the safest methods for crypto transactions, as users are in charge of all dealings. Hackers cannot gain access to anything as nothing user-related is stored on any database
First of all, you should purchase some KNC from a crypto exchange. Then you should visit KyberDAO and click on get started. This will connect your Ethereum wallet that holds your KNC. Then simply click on “Stake” and you’re set to go.
Don’t worry, you can stake as little or as much KNC as you want on the Kyber Network.