2key is proud to announce its strategic and operational partnership with Kyber Network.
Kyber Network will play an important role in the functioning of 2key’s Exchange Contract. Kyber is a decentralized liquidity protocol built on the Ethereum blockchain. It enables a user to make payments in any cryptocurrency even if a recipient only accepts payments in a particular Crypto; Kyber Network converts the sent funds into the Crypto that the recipient is willing to accept.
Additionally, Kyber Network includes public funding pools which operate as decentralized market makers. This allows illiquid tokens to access liquidity as Kyber allows anyone to charge a risk-adjusted rate for tokens; thus, entities with a high risk appetite use Kyber Network to offer liquidity to unpopular tokens.
The exchange contract’s integration of Kyber offers an important solution in both 2key Protocol and 2key Network.
Kyber Network x 2key Protocol
2key Protocol is the most advanced layer-two scalability solution for the Ethereum blockchain.
DApp developers can retain the decentralized state of their project, a benefit of developing on Ethereum, and utilize 2key Protocol to achieve the throughput capacity needed to support a high user base. Various aspects of 2key Protocol offer other benefits to DApp developers; for example, integrators can help DApps offer supplementary services under a single platform, and the Exchange Contract can ease user acquisition, improve the UX, and offer liquidity to DApp tokens.
Far too many DApps have already issued their own native token and these tokens either lack liquidity or are simply too difficult to acquire due to their lack of presence on popular exchanges. DApps on 2key Protocol can take advantage of the Exchange Contract which offers a seamless connection with Kyber Network.
In short, all decentralized applications on 2key Protocol will be able to allow users to access the DApp with any currency and then the Exchange Contract will automatically relay the funds to Kyber Network. Kyber will then convert the funds to the DApp’s native token, and then the Exchange Contract will deliver the native token to the DApp’s smart contract.
This offers several benefits:
I. Liquidity: For DApps with illiquid tokens, the Exchange Contract will allow developers to deposit native tokens within the Contract. User funds will be converted by the Exchange Contract itself; DApp developers may choose a spread (profit margin) on the seamless currency conversions the Exchange Contract will offer to users.
II. Interoperability: In cases where developers do not deposit native tokens into the Exchange Contract, DApps will still be able to support users with any Crypto as the Exchange Contract will acquire DApp tokens, through Kyber Network, in the backend.
III. Hedging: DApps that involve some form of reward, like lottery rewards, will be able to use the Exchange Contract to hedge any user payments into DAI stablecoins through Kyber Network. This will ensure the reward does not lose value due to market volatility.
The Exchange Contract is designed to make DApps more accessible as users won’t need native utility tokens to use the decentralized application. This significantly lowers the barrier to accessing DApps. Whenever a DApp will need a degree of liquidity that the Exchange Contract cannot fulfill, the Contract will tap into Kyber Network.
Kyber Network x 2key Network
2key Network is the first DApp on 2key Protocol. 2key Network creates Smart Links, which allow contract creators to launch the most advanced referral networks to date. This is a resource anyone can use to draw attention to virtually anything.
2key Network’s Smart Links are designed to work for the masses — contractable by any business and usable by any person.
For a contractor to start a referral campaign, it is necessary to deposit the campaign’s reward pool. This reward pool can be in any cryptocurrency. However, if the deposit is not in 2KEY, the Exchange Contract will hedge the deposited funds for DAI stablecoins. The purpose of this facilitation is that 2KEY, a utility token, may not be as accessible as Ether, which is a widely accessible cryptocurrency. Most businesses can easily buy Ether on mainstream platforms like Coinbase, deposit the Ether as a referral reward, and then launch their campaign.
The Exchange Contract automatically hedges the Ether into DAI to ensure campaign rewards do not depreciate. Once the referral campaign is complete and the successful referrer want to claim their remuneration, they may do so in DAI or 2KEY.
- If the contractor had deposited 2KEY and referrers want DAI, the Exchange Contract will use Kyber Network to liquidate the 2KEY for DAI.
- If the contractor had deposited anything other than 2KEY, it would be hedged with DAI. Then, if the referrers want 2KEY, the Exchange Contract will use the DAI to buy 2KEY on the secondary market.
As explained in the Token Economy article, it is in the best interest of referrers to withdraw their rewards in 2KEY.
Summary
2key Network’s use of the Exchange Contract demonstrates how DApps on 2key Protocol can support users who do not have access to utility tokens, thereby growing the net capitalization of the DApp market.
An upcoming announcement will reveal a 2key integrator that will enable fiat-to-ETH transactions within the 2key ecosystem. So, DApps on 2key Protocol will be able to reach the masses without having to first divert them to a fiat exchange like Coinbase.
This is the tenth article in 2key’s 1-Month of Content.
Article 1: 2key in 150- and 300-Word Descriptions
Article 2: 2KEY Token Economy Explained
Article 6: $3,000 2KEY Competition: Make Your Token and Tell the World!
We invite you to have a firsthand experience of our breakthrough solution — Smart Links — on our testnet (https://test.2key.io/); you can be the pioneering drive in the first feasible solution in the scramble to decentralize the web.
