Coin Spotlight: Kyber Network (KNC)
Kyber aggregates liquidity from diverse token reserves and enables instant and secure token exchange in any decentralized application.
What is Kyber Network?
Kyber’s on-chain liquidity protocol allows decentralized token swaps to be integrated into any application. Using this protocol, developers can build innovative payment flows and applications, including instant token swap services, ERC20 payments, and financial DApps — helping to build a world where any token is usable anywhere.
Kyber’s protocol can aggregate liquidity from a wide range of reserves, powering instant and secure token exchange in any application.
Key features of the protocol include:
- On-chain settlement — both atomic and immediate on-chain
- Trustless transactions — trustless and transparent transactions
- Ease of use — bundling of multiple value exchanges into a single step for users
- Seamless integration — straightforward integration with dApps, no need for interaction with off-chain components and minimal security and development overhead
Kyber Network Crystal (KNC)
KNC, an ERC20 token, is an integral part of Kyber Network. KNC is used by reserves to pay transaction fees required to process trades (operating a reserve). The tokens are pre-purchased and stored by these reserves.
A small KNC fee is charged to the reserve with every exchange on the network and represents the reserve’s right to be able to operate and earn spreads from trading activities within the Kyber ecosystem. The fees are partially used for operational costs and rewarding third-parties that bring trade volume to the network.
KNC is also used for network fees. In each transaction, a portion of the collected fees (in KNC) on Kyber Network is taken out of circulation forever. This information can be viewed on the Kyber Network tracker.
KNC will also be used in the context of community governance and treasury for the implementation of Kyber’s protocol on smart contract-enabled blockchains. Firstly, KNC will be utilized for DAO (Decentralized Autonomous Organization) governance. Secondly, on top of the economics and governance usage of KNC, there will be a KNC-based treasury where the network maintainers and DAO members can leverage as a source of funds to fund development, marketing and growth of the Kyber protocol via open grant programs and proposals.
How does Kyber Network work?
Kyber operates differently from a traditional, centralized exchange. It facilitates decentralized token swaps and payments by aggregating liquidity from diverse token reserves (liquidity providers) and providing the best available rate to Kyber-integrated applications and platforms.
The tokens that are being sent also do not need to specifically match the token that the receiver wants to receive. Kyber handles the token swap and the exchange during the transfer.
Example of a Simple Kyber Transaction:
Mary wants to buy a dress from an online store called Nice Dress. Nice Dress only accepts DAI, a stablecoin pegged to the US dollar. However, Mary only has Ether available for payments. As the Nice Dress store has already integrated Kyber’s Protocol, Mary’s Ether payment would automatically be swapped to DAI and sent directly to Nice Dress in a single transaction.
When Mary pays in ETH, Kyber converts ETH to DAI and sends it to Nice Dress. In this process, the Kyber contract iterates through all registered token reserves to obtain the reserve offering the best ETH to DAI conversion rate.
After aggregating liquidity from these reserves and getting the best available rate from them, the swap is executed — the ETH gets sent from Mary to the reserve, and the DAI tokens are sent from the reserve to Nice Dresses, the desired recipient.
Overview of Kyber’s protocol
Takers send and receive digital assets to and from the network. These can be individuals, merchants, DApps, or smart contract accounts.
Reserves are liquidity providers in the network that contribute liquidity for Kyber-integrated applications and platforms. Anyone can operate as a Kyber reserve to earn spreads on transactions and make their tokens available and liquid for users, DApps, and financial platforms in the ecosystem.
Reserves could be projects that are building a decentralized liquidity pool or exchange and want to mirror their liquidity on Kyber. Token holders such as fund managers and token teams can also easily become reserves by contributing their idle token assets and listing on Kyber.
Kyber maintains multiple reserves that house a wide range of digital assets for the purpose of maintaining exchange liquidity. The reserve has the ability to determine the conversion rate for each digital asset pair through various methods, such as using price oracles on-chain, or from other exchanges and data providers.
Maintainers refer to anyone who helps manage the functions for adding/removing of reserves and token pairs, such as a DAO or the team behind the protocol implementation.
KyberSwap
KyberSwap is one of the Ethereum DApps powered by Kyber Network’s protocol. KyberSwap is a simple and secure token swap platform that allows users to instantly swap ERC20 tokens such as WBTC (Wrapped Bitcoin), ETH, DAI, TUSD, etc. This is all done in about three steps without deposits or order books and users enjoy competitive spreads.
The platform currently supports over 70 tokens.
Coinplan is very excited to feature Kyber Network because they are connecting a fragmented tokenized world by enabling instant and seamless transactions between platforms and ecosystems. They are integrated with some of the most popular Ethereum wallets in the world, including MyEtherWallet, imToken, Trust Wallet, and Enjin, as well as websites such as CoinGecko, and crypto platforms such as Etheremon, Melonport, and now Coinplan.
These platforms have the ability to access and convert tokens directly and easily without having to go to third-party sites.
2019 is setting up to be a big year for Kyber and they’ve outlined 3 long term objectives that are summarized below:
- Expanding the scope of Kyber, by moving towards a permissionless liquidity protocol that can be implemented on any smart contract-enabled blockchain.
- Supporting the growth of the decentralized economy in 5 key areas: end-user swaps, NFT and commerce payments, exchanges and trading, decentralized finance and liquidity provision.
- Establishing the technical, communication and governance framework to grow a community with passion, expertise, and incentive to build Kyber together. They are expecting protocol direction, implementation, and treasury decisions to eventually be made by the community.
Recent Updates
March 2019: Coinplan integrated KyberWidget to allow convenient token swaps within their platform.
Feb 2019: Introduced Project Waterloo — Decentralized practical bridge between Ethereum and EOS.
Jan 2019: Helped launch WBTC (Wrapped Bitcoin) — a community-led initiative to bring Bitcoin liquidity to Ethereum.
Jan 2019: Enjin Wallet integrated Kyber for in-wallet token swaps.
Dec 2018: Developed a permissionless orderbook reserve, allowing both the deployment of token reserves and contribution of liquidity in a permissionless manner.
Oct 2018: Introduced the KyberWidget, a simple way to buy and sell tokens directly within DApps and websites.
Coinplan is glad to be a part of Kyber’s mission to make any token usable anywhere and become the transaction layer for the decentralized economy.
To read more about Kyber’s Key Objectives, see the link here.
You can view Kyber Network inside Coinplan’s Alliance Portfolio here or see the KyberWidget in action inside the Maker Platform Portfolio here.
To learn more about Kyber, please take a look at these helpful links:
