Kyber Network Review for 2023
With the emergence of decentralized finance (DeFi), decentralized crypto exchanges have gained popularity among crypto investors. Unlike centralized exchanges, DEXs don’t rely on centralized financial bodies to take part in the transaction processes. Simply put, they rely on blockchain systems and smart contracts to execute trades.
Despite the high level of security, DEXs aren’t completely faultless. One of the biggest stumbling blocks with these types of trading platforms proves to be their liquidity.
In order to address the liquidity issue, programmers have produced many diverse protocols that would help DEXs. One of them is the Kyber Network liquidity hub. So, how does this network work, and what is the mechanism that underpins this on-chain liquidity protocol? We’re here to clear these things up for you.
Table of Contents
About the Kyber Network
The Kyber Network protocol was founded in 2017 in Singapore by Loi Luu, Yaron Velner, and Victor Tran, who had the very Vitalik Buterin as one of their advisors during the development of this project.
The Kyber Network is, in fact, a blockchain-based hub of liquidity protocols, which combines liquidity from many sources to fuel instant and secure cross-chain token swaps in any decentralized application, thus eliminating the need for a middleman.
The Kyber Network is comprised of smart contracts that can be used on any blockchain that can run them, like Ethereum. When Kyber Network users (vendors, decentralized applications, or digital wallets) exchange tokens, there is no need for an intermediary because the smart contracts will safely execute the transaction.
This open-source network is administered by the KyberDAO.
What Is KyberDAO?
The Kyber Network established a decentralized autonomous organization (DAO) by the name of KyberDAO in July 2020 to enable KNC holders to become part of the network’s governance.
KyberDAO is a community-driven technological framework that helps holders of Kyber Network’s native utility token, KNC, partake in the project’s governance. KNC holders can also invest their KNC in KyberDAO and cast votes on critical issues and significant initiatives.
The Kyber Network Crystal Token (KNC)
A utility token based on the ERC-20 standard, Kyber Network Crystal (KNC) is a vital feature of the Kyber Network ecosystem. The KNC token – formerly the KNC Legacy token – is the bridge between the Kyber Network and the trading platforms, digital wallets, and dApps using the liquidity network.
Thanks to the token’s flexibility, the KyberDAO infrastructure can upgrade, issue, or burn it in order to promote both the liquidity and expansion of the platform. To add to that, this cryptocurrency allows KNC token holders to set the incentive structure of this trading platform, developing a broader network of stakeholders and reaping the value generated by the technological novelties of the Kyber Network.
It is possible to use the KNC token to make payments via the Crypto.com MCO app and Visa card, the Monolith wallet app and Visa Debit Card and via vendors who have installed PundiX terminals, and make loans and trade margin on DeFi exchanges.
Because KNC is an ERC-20 token, it may be kept in any of the several Ethereum-compatible wallets available. You can select from the following options: Ledger, Trezor, or MEW. These are just a few of the excellent storage alternatives for your KNC tokens.
KNC Total Supply and Trending Pairings
The KNC tokens went on sale in September 2017 at a value of about 1 USD. The tokens were issued in a limited series, with a total supply of a max supply of 226,000,000 KNC.
The Kyber Network Crystal token is often paired with large market cap coins, like Bitcoin (BTC) and Ethereum (ETH). In this respect, some of the trending trading pairs with this token include KNCL/USDT, KNCL/ETH, KNCL/BTC, and KNCL/USD. You can buy the token on crypto exchanges like Coinbase, Binance, OKEx, KuCoin, Gate.io, and more.
The Kyber Network Liquidity
Kyber Network’s liquidity mechanism is developed upon the basis of three fundamental aspects of the project:
- Straightforward integration – Unlike the off-chain technological solutions in the crypto ecosphere, Kyber Network powers blockchain apps to seamlessly integrate through its diverse protocols. This, in turn, improves their efficiency and saves both time and costs.
- Liquidity aggregation for the best token rates – The Kyber Network hub offers the best pricing for aggregators by obtaining liquidity from numerous liquidity protocols.
- Transparency and authenticity – All processes are entirely transparent and verifiable on the Kyber blockchain.
Because it is a permissionless system, anybody may lend their token resources to various liquidity pools and collect network fees on each trade they make. Various sorts of liquidity providers and market makers, each with their own set of requirements when it comes to liquidity provision, may be accommodated thanks to the Kyber Network technology.
The liquidity takers in particular (these can be clients, dApps, or other interfaces) have the capacity to take liquidity straight from the protocol of their selection or filter out the liquidity suppliers that are of no benefit to them. On the other hand, there are the makers who supply liquidity in whatever method meets their needs: permissionless through retail liquidity providers and token teams, through professional market makers, external sources, etc.
Kyber Network Roles
The Kyber Network works by synchronizing the following roles and functions:
- A user sends and receives tokens on the Kyber Network. This might be a person, a business, or even a smart contract.
- There are also reserve entities that add liquidity to the platform’s liquidity pool.
- The reserve contributors, on the other hand, provide the funds. Their reward is a share of the platform’s reserve.
- The reserve manager manages the reserve, calculates the exchange rates, and uploads them to the network. The person with this role in the Kyber Network ecosystem receives revenue from the transaction spreads on reserves.
- Finally, the Kyber Network operator is the entity tasked with adding or removing reserve entities and regulating token listing.
Kyber Network Functionalities
In order for the Kyber Network to be fully functional, there are three key components: Kyber Swap, Kyber Reserve, and Kyber Developer. Here’s some more information on the functionalities of this liquidity protocol.
KyberSwap is a retail platform that allows users to trade tokens that operate on the Ethereum blockchain. It is one of the fundamental services on the Kyber Network and is available to anybody who wants to use it either as a web platform or a smartphone app, available on Android and iOS.
On KyberSwap, you can place limit orders, which allows you to specify the price for the coin purchase or sell it in advance rather than having to analyze the market fluctuations.
Simply connecting your Ethereum-based wallet will allow you to directly transfer coins without making any deposits. You can acquire ETH with a credit card, ApplePay, wire transfer, MoonPay, or Wyre.
Kyber Reserve is a feature that provides liquidity to the network by having third– parties pool their tokens to be further utilized through any network. The reserve fund is protected by a transparent fund management methodology, which documents all transactions made by the reserve managers.
Kyber Developer is a crucial component for the introduction of new dApps, trading platforms, digital wallets, and other crypto projects to Kyber. This is due to the fact that it provides programmers with all of the paperwork and resources required to integrate any decentralized project into the Kyber Network’s liquidity pool.
Kyber Dynamic Market Maker (KDMM)
The Kyber DMM is the first multi-chain DMM as well as the most recent protocol powered by Kyber to be introduced into the DeFi ecosystem.
The ability to exchange tokens at an optimal price is provided by dynamic trade routing. Various decentralized exchanges pool their liquidities in order to obtain the best possible value for each token on the respective blockchains.
Next, the effect of temporary loss is minimized, and the rewards to liquidity providers are maximized through the use of dynamic fees, which fluctuate in response to market conditions regarding the trade volume and price volatility.
Furthermore, as the amplified liquidity pools have strong capital effectiveness, liquidity providers may secure higher pricing and reduce slippage of the tokens deposited in the liquidity pool.
Finally, the permissionless liquidity contribution feature enables all traders to source liquidity and earn excellent rewards for it by putting their tokens into liquidity pools.
Kyber Network Katalyst Upgrade
Kyber Network Crystal (KNC), as an aggregate on-chain liquidity token, has to meet the liquidity requirements of the customers on a consistent basis. Hence, the Kyber Network’s main aim is to provide the best possible liquidity network to the decentralized exchanges (DEXs).
The introduction of the Katalyst Upgrade is one of the initiatives undertaken by Kyber Network Crystal in order to achieve its mission. In this regard, the Katalyst refers to a technological improvement of the KNC token provisions, which focuses on meeting the liquidity expectations of the DeFi ecosystem.
The Bottom Line
Apart from security, liquidity is probably the second most important aspect of any crypto token exchange, as it supports the platform’s payment flow and the functionality of its decentralized apps. Since the crypto market has become ferociously competitive, developers have worked on a number of technological solutions with the aim of boosting the liquidity of the trading platforms.
The Kyber Network project, built on the Ethereum platform, is one such solution. This project was created with the intent to decentralize the way we exchange cryptocurrencies. Due to the fact that all transactions are stored on the blockchain, the Kyber Network protocol makes these exchanges completely autonomous, in the true spirit of the crypto ideology, and eliminates the need for a middleman.
As decentralized finance requires decentralized liquidity, the Kyber protocol is certainly one of the more superior transactional backbones of the decentralized ecosystem, which helps DEXs become even more prominent.
Kyber Network Compared
|Exchange||Cryptocurrencies||Fiat Currencies||Trading Fees||Deposit Methods||Sign Up|
|More than 320||Australian Dollars, New Zealand Dollars||0.6%||Osko, PayID, Credit Card, Debit Card, Bank Transfer, Cryptocurrency||Visit Swyftx|
|More than 370||Australian Dollars||OTC: 0.1% Market Order: 0.1%* (applies to LTC, BTC, ETH, XRP, POWR, DOGE, TRX, NEO, XLM, GAS, RChain, RFOX, EOS) Instant Buy/Sell: 1%||POLi, PayID, Cash, Cryptocurrency, Bank Transfer, BPAY||Visit CoinSpot|
|More than 600||US Dollars, Australian Dollars, and 8 more||0% to 0.1%||Osko, PayID, Credit Card, Debit Card, Crypto||Visit Binance|
|More than 160||50+||0.1% to 0.6%||Crypto, EFT, wire transfer, bank transfer, debit card or credit card||Visit Bybit|
|27||Australian Dollars, US Dollars, New Zealand Dollars||0.05% to 0.5%||EFT, SWIFT, Osko, PayID, Crypto||Visit Independent Reserve|
|More than 210||Australian Dollars, US Dollars, New Zealand Dollars||Fees Vary||EFT, SWIFT, Osko, PayID, Crypto||Visit Coinbase|
|More than 50+||Australian Dollars, Pound Sterling||Taker: 0.04 to 0.1% Maker: 0.04 to 0.1%||Apple Pay, Google Pay, Credit Card, Debit Card, Bank Transfer, Fiat, Crypto||Visit CoinJar|
|More than 140||Australian Dollars, US Dollars, and 5 more||Taker: 0.10% to 0.26% Maker: 0.00% to 0.16%||Apple Pay, Google Pay, SWIFT, Osko, SEPA, Crypto, Wire Transfer, Bank Transfer||Visit Kraken|
|More than 15||Australian Dollars||Taker Fee (for Bitcoin pairs): 0.20% Maker Fee (for Bitcoin pairs): -0.05% Australian Dollars Market Pairs: 0.10% to 0.85%||Crypto, BPAY, EFT, PayID, Osko||Visit BTC Markets|
|More than 40||Australian Dollars, New Zealand Dollars, South African Rand||1%||P2P, POLi, and Bank Transfers||Visit Easy Crypto|
|More than 140||AUD||Taker fees: 0.85% Maker fees: 0.85%||Cryptocurrency, Bank Transfer, PayID||Visit Coinstash|
|More than 70||Australian Dollars, US Dollars, Euro, and 12 more||Vary||Online Banking, Skrill, Neteller, PayPal, Bank Transfer, Debit Card||Visit eToro|
|More than 645||US Dollars, Euro, Australian Dollars, and 6 more||0.1%||Credit Card, Debit Card, SEPA, PayPal, Wire Transfer, Crypto||Visit KuCoin|