Kyber Ecosystem Report #26 Apr-May ‘21

Published in

Kyber Network

7 min readMay 18, 2021

Hello fellow Kyberians!

Lets jump right into another packed ecosystem update. The most exciting announcement from our side this month was the proposal to establish the Kyber Network Ecosystem Growth Fund. We believe this new fund is going to turbo-charge liquidity on Kyber and really showcase the benefits of the Kyber Dynamic Market Maker to liquidity providers. This fund will not only bring more liquidity providers onboard, but also attract more DeFi participants and more new community members to the Kyber ecosystem. Let’s explore what this proposal is and what it can achieve.

Ecosystem Growth Fund

There are two components to KIP-8, we are proposing that the KyberDMM protocol gets added as a new liquidity protocol on Kyber’s liquidity hub, and in parallel, the KyberDAO is allocated a to-be-minted 42M KNC to distribute as part of the 12 month Kyber Ecosystem Growth Fund. These two components are connected as currently the DMM is not part of Kyber’s liquidity protocol and therefore does not accrue trading fees to the KyberDAO. Once the DMM is added as a new liquidity protocol on Kyber, it establishes a link to the KyberDAO and this opens a path to the KyberDAO to not only collect fees, but in turn, also distribute incentive rewards to the DMM.

Liquidity Mining and Ecosystem Collaborations

With the 42M KNC at its disposal, the KyberDAO can use part of this KNC in the Ecosystem Fund to incentivize liquidity by implementing a liquidity mining program which, as we have seen from other large DeFi projects like Aave and SushiSwap, is an incredibly powerful tool to bootstrap and increase liquidity. This program will showcase the DMM as the most capital efficient venue to provide liquidity from in DeFi. Liquidity providers attracted by the incentives provided by this fund will gain first hand experience on the benefits of amplification factors and dynamic fees and how these two combine to reduce impermanent loss and improve profits.

After extensive feedback from you, our community, and deliberation from and a diverse group of stakeholders ranging from KNC holders to liquidity providers to other DeFi dapps, the tl/dr of the parameters we are proposing are as follows:

Mint 42M KNC for the Ecosystem Fund
Use 30% of this (ie 12.6M KNC) in an initial 3 month liquidity mining program
For the liquidity mining program, target the amplified pools which best demonstrate the value gained from the DMM (ie. USDT/USDC with 200x amplification, WBTC/ETH with 2x amplification + 3 other pools)
Leave it in the hands of the KyberDAO to decide how else it wishes to use the remaining minted KNC in line with our mission to make Kyber Network the best place in DeFi to provide to, and take liquidity from.

You can read the full details of our proposal on the KIP-8 Github page and please make sure to vote on this through the KyberDAO.

KNC Legacy to KNC Migration

Speaking of voting, to expand the KyberDAO’s responsibilities and enable the extra functionality required by a mintable and upgradable KNC, the KyberDAO had recently voted on KIP6 and KIP7. With both KIPs passing with overwhelming majority, the team have deployed the various new smart contracts and it now falls on you, the hundred thousand KNC holders out there, to migrate from the old KNC (which we are now calling KNC Legacy) to the new KNC. We’ve already seen a good number of exchanges and other ecosystem partners migrate and if you’re wondering how you can do this yourself, we’ve created a Token Migration Guide together with a video to go along with it, it’s an extremely easy process!

Token Migration Guide: https://blog.kyber.network/knc-token-migration-guide-fda08bfe62c2

KNC Migration Portal: https://kyber.org/migrate

Insuring KyberDMM Users

We’ve been watching DeFi Insurance protocols make strong progress in their products in the last twelve months and the adoption of these products by mainstream DeFi users has been very encouraging. Now that these have matured, the Kyber team has decided to purchase bulk insurance for the DMM to cover all LPs and market makers. The insurance is focused on smart-contract risk and will cover losses up to $20M resulting from any technical issues with smart contracts including code vulnerabilities and implementation errors that lead to losing access to funds. You can read our full blog explaining the details here.

KyberDMM Audit Results — All Good!

Although we now have insurance on the DMM, we’re also highly confident of the quality of the codebase and have put the DMM through multiple audits by both external auditors as well as the internal team. For transparency and our community’s peace of mind, we’re linking below the DMM audit report by Chainsecurity, an extremely reputable smart contract auditor that is familiar with Kyber code having audited its previous contracts stretching all the way back to our 2018 mainnet deployment.

We were pleased to see no Critical or High Severity findings and have worked diligently to correct and address the Low and Medium Severity findings. Full Report

Mercurial x Kyber Network

In April we had the pleasure of unveiling our cooperation with Mercurial Finance. Built on Solana, Mercurial Finance is “building DeFi’s first dynamic vaults for stable assets, providing the technical tools for users to easily deposit and mint stable assets, generating liquidity for their own requirements or offering them to ecosystem participants with such demands.”

Many of you will know Solana as the high-performant, censorship-resistant blockchain that supports multiple complex actions in a single transaction and “allows for on-chain algorithms that execute based on on-chain logic while performing operational roles like interest collection with high frequency”

The Kyber team will be lending its expertise to help on technical research, development and marketing and we look forward to Mercurial Finance’s deployment and future growth. You can read more here.

KyberDAO Community Call #4

End of April saw the 4th KyberDAO Community Call take place. Hosted by DeFi Dude, the community calls are an opportunity for the community to get together, ask questions, and discuss the latest news and developments coming out of Kyber.

In the 4th call, we covered topics ranging from the DMM integrating with 1inch and Matcha, to the connection between Krystal, KyberSwap, and Kyber Network. We also answered questions on why LPs receive DMM fees, whether the KyberDAO will receive fees in the future, and details on the KNC token migration. You can watch the call below or read the summary here

Kyber Network Stats

April saw volumes mostly down although some dapps like Fulcrum and a few other anonymous integrations saw 20%+ growth over March.

As in times of high volatility, we saw the Uniswap/Curve bridge reserve increase its volumes while the Kyber Fed Price Reserve was lower than March.

We continue to gain attention for the launch of Kyber 3.0’s different components and this month you could have caught us in the following publications:

AltcoinBuzz, BitAcademy, Blockonomi, Coindesk, Yahoo Finance, CryptoNinjas, CoinGape, CryptoDaily, CryptoNewsZ, Blockfolio, CryptoCoinNews, CryptoTelegram, DeFiReport, DeFiNoticias, DenHive, Intrado, SwissBorg, SmartLiquidity, U.Today, Via.News

We also wanted to highlight a highly interesting panel Loi attended with Sam Bankman-Fried from FTX, Joseph Delong from SushiSwap, Anton from 1inch and Kevin from Ava Labs. The panel focused on ‘What’s Next for Automated Market Makers

Conclusion

As we wrap up another ecosystem update, we’d again like to encourage you to migrate your KNC to the new KNC contract, participate in the KIP8 discussions on our discord and forum, and vote for your preference on the KyberDAO vote. Your participation and active voting in the Kyber governance process is key to the growth of the decentralized financial future we are all striving towards and on behalf of the whole Kyber team, thank you for your ongoing support and contribution to this mission.

About Kyber Network

Kyber Network is delivering a sustainable liquidity infrastructure for DeFi. As a liquidity hub, Kyber connects liquidity from various protocols and sources to provide the best token rates to Dapps, aggregators, DeFi platforms, and traders.

Through Kyber, anyone can provide or access liquidity, and developers can build innovative applications, including token swap services, decentralized payments, and financial Dapps — helping to build a world where any token is usable anywhere. Kyber is powering more than 100 integrated projects and has facilitated over US$7 billion worth of transactions for thousands of users since its inception.

KyberDMM DEX, the latest protocol in the liquidity hub, provides the best rates for traders and maximizes returns for liquidity providers.