I was scrolling through Coingecko yesterday and Kyber Network KNC caught my eye - it had a significant pump. I looked into it and here’s what I found out.
In their Protocol Paper, they begin by stating that Kyber is a fully on-chain liquidity protocol for implementing instant cryptocurrency token swaps in a decentralized manner on any smart contract enabled blockchain.
Basically, it aggregates various liquidity sources into one pool, so you can find the best exchange rate in one function call.
The protocol aims to provide the following properties for token trades:
Instant - trade is matched and settled in one transaction;
Atomicity - trade is either executed or reversed;
Public rate verification - anyone can verify the rates by querying Smart Contracts;
Ease of integration - enables multiple trades in a Smart Contract function.
This is the overview of players in Kyber protocol:
This picture shows nicely how Kyber gets the best rate:
Currently, Kyber is fully developed on Ethereum. However, they aim to deploy Kyber also on other blockchains, thus providing even more liquidity.
This would be possible through Relay Network. At this point, they mention Waterloo for EOS and Peace Relay for Ethereum Classic.
KNC, the token of Kyber, serves following purposes:
Economic - fees for transactions are paid in KNC.
Governance - significant stakeholders of KNC have a vote on development questions.
Treasury funds - contributors gain leverage and interest for bringing value to Kyber.
KNC supply is unified, but aims to be interchangeable between chains.
What the paper doesn’t explain, though, is how exactly is KNC mined and what determines the supply. I personally don’t feel comfortable to invest without understanding this.
From users side, the site looks like this:
You can connect your MetaMask, swap tokens, transfer to a wallet, place limit orders. What I find comfortable is that you can buy ETH with fiat through Moonpay or Wyre on the same platform.
As I understand, it is basically an exchange. You cannot lend or borrow.
I am new to DeFi. This writing is how I understand Kyber at the moment. Please correct me if I’m wrong and do your own research before investing.
Cheers!