Kyber Network Crystal

Kyber Network Crystal is a blockchain-based liquidity hub that connects liquidity from various sources and enables the exchange of tokens without an intermediary.

What is the Kyber Network?

Kyber Network was created to provide an alternative to traditional centralized exchanges, whereby users can quickly and easily trade crypto assets. Kyber Network isn’t operated by a single entity. Instead, it’s powered simply by code, a grapevine of software users, and Ethereum. To achieve this, the Kyber team developed a trio of tools fueled by Ethereum. These tools included:

  • a decentralized exchange protocol
  • an application programming interface (API) for converting assets
  • the Kyber Network CrystalCyrstal currency for user governance

Kyber Network is a liquidity protocol that aims to facilitate decentralized exchanges and provide opportunities for decentralized finance applications for liquidity. It differs from other protocols (i.e. Bancor) as it is fully built on-chain and allows instant settlement of token to token transactions.

Kyber Network is an implementation of the Kyber protocol on Ethereum. However, the Kyber protocol has been deployed in alternative blockchains like EOS (YOLOswap) and TomoChain (TomoSwap). In addition, the project team has been working on cross-chain protocols like Waterloo to allow EOS/Ethereum token swaps.

Key Metrics

Token NameKyber Network Crystal
Token Type/ProtocolERC-20
Total Token Supply173,494,734
Current Circulating Supply See Coingecko
Market CapitalisationSee Coingecko
Token Creation DateSeptember 2017
Can it be mined?Yes

The people behind it

Loi Luu and Victor Tran are the co-founders of Kyber. They raised $52 million from their initial offering of Kyber Network Crystal in September 2017. During this time, 226 million KNC were created (most of which were procured). The maximum supply was later reduced by Kyber Network, in October 2017, to 215 million. In early 2018, the network became official on the Ethereum blockchain. The team behind the Kyber has a common goal: to protect users from hacking and fraud by providing a secure way for converting coins and tokens.

How does Kyber Network work?

The native currency of this protocol is KNC, which plays a vital part in the Kyber Network’s maintenance and operations. KNC is a utility token that allows token holders to participate in Kyber’s ecosystem. KNC holders can stake KNC in KyberDao and vote to receive rewards and other benefits from protocols in the network. Moreover, KNC can be upgraded, generated, and burned by KyberDao to better support liquidity and growth.

The network is heavily reliant on reserves to provide liquidity, searching available resources for the best available rate on offer by any takes when a user initiates a trade. There are three main types of reserves:

  1. Price Feed Reserves: work with an off-chain component
  2. Automated Price Reserves: built on automatic algorithms within a smart contract
  3. Bridge Reserves: permission without third parties such as Uniswap and Bancor

Previously, reserves of the Kyber Network needed to pay network fees in KNC, though recent network upgrades eradicated this feature along with the friction that came with it. The network now collects its fees in ETH.

Key insights

Kyber Network is a liquidity pool that aggregates liquidity from diverse sources, including token holders, market makers, and decentralized exchanges into a single network. This means that anyone can provide liquidity to the network. The network enables decentralized applications (dApps), vendors, and crypto-wallets for takers to execute instant token swaps without a third party. 

Kyber’s key features include on-chain settlement, trustless transactions, and straightforward integration with dApps. Using this protocol, developers can build innovative payment flows and applications including:

  • Decentralized token swaps: users can conduct decentralized token swaps on websites or within their wallets.
  • Payments: users can pay for goods and services with any ERC-20 token Kyber supports.
  • Decentralized Finance (DeFi): dApps can leverage Kyber protocol to liquidate or rebalance their portfolio in a seamless, verifiable and transparent way.
  • KyberDao: a community that allows KNC holders to participate in the governance of Kyber Network. KNC holders can vote on proposals and also can stake KNC to earn rewards from network fees collected from trading.
  • KNC is a deflationary staking token: this means that KNC is burned to reduce the overall token supply. KNC will be implemented on other blockchains and Kyber Network is developing technologies that will enable it to transfer KNC across blockchains.
  • The first of its kind: Kyber Dynamic Market Maker (DMM) is the first automated DMM in DeFi that provides high capital efficiency via amplified pools and reduces the impact of impermanent loss via dynamic fees.
  • KyberSwap: a secure token swap platform where users can instantly convert ERC-20 tokens without deposits or order books.

Key risks

Below we discuss some of the key risks of the Kyber liquidity hub:

  • No instant confirmation: Instant confirmation for transactions is not sent from on-chain entities immediately, such as smart contracts.
  • No custodian: Kyber does not have a custodian or user’s fund controller, which might present risks to users’ funds. Therefore, all operations that occur on the Kyber protocol should be publicly verified on the blockchain.

KNC news and updates

Below we discuss some of the latest news and updates surrounding Kyber:

  • Partnership with Polygon Network: Kyber Network partnered with the Polygon network to enhance the DeFi liquidity by launching Rainmaker. The launch was to bring more liquidity to Ethereum and Polygon-based decentralized finance ecosystems by incentivizing Kyber DMM liquidity providers with $30 million in rewards over three months.
  • Grayscale announcement: Grayscale has announced 13 more crypto assets that are currently under consideration for its trusts. The prospective assets mainly are in the DeFi sector and Kyber is one on the list.
  • Launch of the new Dynamic Market Maker (DMM): Kyber launched the DMM which allows liquidity pool creators to customize pricing through an amplification factor based on the nature of the relationship between two tokens. Tokens have a lower deviation from their prices which allows the liquidity to increase without needing more tokens in the pool.

Looking forward

Kyber intends to concrete its position as the solution for fueling liquidity and token swaps on Ethereum over the coming years. With recent concerns about Ethereum’s gas prices, a different protocol consisting of two layers is being explored by Kyber to assist with facilitating a more cost-effective and efficient platform. However, it’s still early days. 

In the meantime, Kyber aims to make use of the reverse routing technique to minimize gas costs. They are also investigating options for a listing structure for tokens that requires no permissions.

All investment is speculative and involves substantial risk and uncertainty. Investors should understand the nature of digital assets, including the terms of return and the risk of assets. We encourage investors to fully understand the assets and the risk associated with them prior to making any investment.  

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