In our newsletter two weeks ago, we already mentioned the possible implementations of different DeFi protocols in a short story. Today we want to have a closer look at the first protocol and analyze it: Kyber Network.
The Problem in the Crypto Space and Kyber's Approach
Since 2015, the crypto space has been confronted with particularly one problem. Since this year, the number of different tokens has increased significantly. Many tokens created from this time are often limited to only one or very few applications. However, this makes it difficult to establish the usage of crypto-currencies in society, as it is far too cumbersome to deal with them. Imagine you would have to exchange a token once or twice on different exchanges, back and forth, until you receive the desired token with which you could make your purchase at the desired store or website.
But this is exactly the problem that Kyber Network wants to solve! Kyber Network is a protocol on the Ethereum blockchain that acts as an integrated and automated "exchange office" for shops, websites, and users. Due to the integration of the Kyber protocol in stores and on websites, users will be able to pay with every imaginable token because the protocol exchanges any token automatically into the desired one. This would make today's exchange offices at airports completely superfluous because in most places in the world there would be no need to exchange currencies manually anymore. The aim of Kyber Network is to give all token holders the opportunity to use their tokens for every single application. All in all, Kyber Network forms a new connection between the multitude of DApps and Tokens.
How Kyber Network works
The way Kyber works is quite easy to explain: On the one hand, there are so-called reserve managers. They provide liquidity to the network by making their tokens available in the liquidity pool. They receive a return on this in the form of Ether. On the other hand, users of Kyber Network can exchange tokens easily and smoothly when they make a payment. This concept could revolutionize not only the crypto space, but also the global market, as it makes currency trading much easier.
However, the development of Kyber does not stand still as the Katalyst Upgrade went live on 07/07/2020. Three groups in particular benefited from this upgrade in the Kyber network: the Kyber token (KNC) holders, Reserve Managers, and DApps Integrators.
On the one hand, the Kyber Holders were given more opportunities for participation in the network. Now they can have a say in how network fees are used. The KyberDAO made the participation in the network possible because it is the democratic element in the network. By participating in votings, shares of the network fees are paid out to holders.
In addition, the reserve managers, who provide the liquidity of tokens in the network, benefit because from now on they also receive network fees for providing reserves. The amount of this reward depends on the volume of the reserves and the amount of liquidity, which the reserve adds to the network. This could tempt future reserve managers to provide even more liquidity to the network in the future. It is also interesting to note that Kyber tokens are now burnt continuously during each trade.
Besides the holders and the reserve managers, the DApp integrators also benefit from the upgrade. They can now decide completely independently how to set the network fees. They are granted more freedom and independence. The network will also be made more customizable as integrators can now focus on the preferences of their users.
If you have a Metamask Wallet, you can connect directly to Kyber's platform (Kyberswap) and exchange Ether (ETH) into Kyber (KNC). Recently, Kraken also offers the possibility to trade Kyber tokens on their exchange.
Kyber Network is a kind of digital and decentralized exchange office that can be integrated in any application and runs automatically. The goal of Kyber is nothing less than to make the exchange of countless tokens easier, and thus, to be an important part of the DeFi revolution. The development of Kyber Network is taking shape, especially through the Katalyst Upgrade, which is why the blockchain space can look forward to its future!
Kyber could fundamentally improve currency trading internationally.
Considering the ambitious goals, the market capitalization of 286 Million dollars (as of 07/28/2020) is currently still moderate, as the P/E ratio is currently around 60, which is why investors in the field of crypto currencies should take a closer look at Kyber!