Kyber Network: Complete Guide
Kyber Network is a type of protocol that allows users to exchange Ethereum-based assets in a decentralized, low-fee, instant, and automated way. It works with Ethereum and ERC20 tokens.
In this guide to Kyber Network you will know everything about its history, how it works, staking, and technology.
What Is Kyber Network (KNC)?
Kyber Network is an Ethereum-based protocol that lets you instantly convert and exchange digital assets and cryptocurrencies along with high liquidity. Kyber Network aims to overcome challenges faced by both centralized and decentralized exchanges, such as delays or security flaws and lack of liquidity, respectively.
Kyber has multiple functions, as you can use it as a decentralized exchange or to avoid having to use an exchange via its ability to connect token ecosystems. If a given token ecosystem is part of the Kyber Network, the Kyber smart contracts can automatically convert between cryptocurrencies for you. This lets you purchase in one currency despite holding crypto in another.
Because Kyber is decentralized, there is no need to trust a third party with your funds. The smart contracts take care of everything.
Kyber Network Crystal (KNC) is the token behind Kyber Network. KNC is used by reserve managers to pay trade fees and operate the network reserves.
Kyber Network began with an ICO to raise funding in September 2017. The mainnet launched in February 2018. 2017 was known for its ICO boom, and Kyber Network is among the few projects that are still active and continuing to grow. The CEO of Kyber, Loi Luu, is a researcher investigating smart contract security, distributed consensus algorithms, and cryptocurrencies. The CTO, Victor Tran, is a Linux system administrator and senior backend engineer. The CFO is Myra Loh.
How Does Kyber Work?
To understand how Kyber works, consider that the protocol refers to users, exchanges, wallets, and decentralized applications as “takers.” Kyber has token reserves that feature assets that you or another “taker” can exchange for. The assets for those token reserves come from liquidity pools, market makers, token projects, and token holders.
If you initiate a payment with the Kyber Network or KNC to a company that only accepts another type of cryptocurrency, the payment triggers the Kyber smart contracts to exchange the tokens. The smart contracts use those reserves to swap out the tokens. Because Kyber Network also plans to unite with other ERC20 tokens, it dramatically expands the day-to-day utility of Ethereum and ERC20 tokens.
How KNC Works
The Kyber Network Crystal serves a few important roles in the ecosystem:
- Reserve Contributors Pay Fees for Transactions: To participate in the network, the reserve contributors must pay fees for all transactions. This fee is designed to provide assets for the reserves. It also prevents fake buying and selling activity and wash trading.
Reserve contributors are incentivized to participate thanks to the ability to profit from the spread, which is the difference between selling and buying prices. At the same time, Kyber delivers competitive spreads by matching takers with the ideal rates.
- Integrations Earn KNC for Transactions: Of those transaction fees paid by reserve contributors, 30% goes to the integrations, including exchanges, wallets, Dapps, and businesses. This means that these integrations earn KNC for all transactions that they facilitate. This encourages participation in the network.
- KNC Is Burned: The remaining 70% of the transaction fees get burned. This means they are sent to a random wallet address that is not usable. This results in fewer KNC in the total supply following every transaction. Based on supply and demand principles, this should increase the price of KNC.
Kyber Network Technology
The Kyber Network makes use of a few key technology features and traits that it prides itself on:
- Transparency: All transactions in the Kyber Network are recorded via the Ethereum blockchain. This lets you see everything, including the exchange rates that reserves offer, so you can confirm you get a good rate.
- No Partial Executions: It is typical for centralized, and some decentralized exchanges to only partially fill buy or sell orders. Kyber overcomes this thanks to its vast liquidity pool, instead of making you rely on just one buyer or seller.
- Simple Integration: Kyber and you as a user both benefit when more wallets, Dapps, and crypto entities integrate with the network, so Kyber makes it easy to do so.
When the Katalyst update takes place in the second quarter of 2020, Kyber will also incorporate staking. This provides an incentive for participation for all parties. Reserve contributors receive staking rewards, incentivizing them to grow the trading volume and trade quantity. That results in greater liquidity for takers as well as more trading opportunities.
Kyber DAO & KNC Staking
Kyber plans to enhance the utility of KNC tokens via staking with the Katalyst upgrade that was announced on July 7. The incorporation of staking will offer more ways of using KNC and in, addition, join KyberDAO; which will empower the Kyber and DeFi community directly contributing to the development of the network.
Without staking, it is less appealing to buy a lot of KNC and join the network since reserve contributors just earn KNC from spreads. Now staking will provide the necessary incentive by paying those who participate in the governance of the Kyber Network. Stakers will have a say in such decisions as listing tokens, how to use portions of transaction fees, and the transaction fees themselves.
If you stake more, you will earn more. However, Kyber Network will not require a minimum balance. This allows nearly anyone to join the network and participate.
Atomic Wallet users can import their ETH private keys to MetaMask (instructions on how to add MetaMask with your AW keys) and stake KNC. Soon, the stakers will be able to stake KNC and manage Kyber DAO via Wallet Connect with Atomic.
Kyber Network Partnerships & Integrations
Kyber Network is building partnerships with wallets, token projects, wallets, and Dapps as part of its growth strategy. For example, Atomic Wallet is one of the many partners and integrations with the network, providing convenient access to hundreds of assets.
Those who build Dapps will be able to choose their spread for the transaction fees. The predetermined spread is currently 30 percent of the 0.25 percent transaction fee. However, this is not necessarily enough for all Dapps, which is why the Katalyst upgrade will allow Dapps to adjust that.
Perspectives and Takeaways
Kyber Network provides the potential to facilitate the use of all Ethereum tokens thanks to its technology and functionality. Currently, it is incredibly challenging to sell or buy large quantities of certain Ethereum tokens. In some cases, you are forced to visit centralized exchanges or those that are less reputable. Kyber and the Katalyst update have the potential to change this.
Kyber has the liquidity to allow for secure and instant exchanges, despite large quantities of less-used Ethereum tokens. Once the Katalyst upgrade launches, the ecosystem will become even more liquid, enhancing its value.
At the same time, those who invest in KNC should experience an increase in the token’s value due to the burning mechanism. This should increase as the network grows.
For the ultimate source of information, visit Kyber’s Official Website.
Join Kyber’s subreddit r/Kybernetwork to discuss the currency with the rest of the community.
Follow @KyberNetwork on Twitter to keep up with the latest updates.
How to Store and Manage Kyber Network
As with any other digital currency or token, you need a wallet that can let you store and manage your Kyber Network Crystals. Atomic Wallet is one of these options, giving you a simple way to store KNC. Because Atomic Wallet supports more than 300 assets, you do not even need a separate wallet for your KNC, so all your crypto assets are easily accessible in the same place. In fact, you can exchange KNC directly in Atomic Wallet, doing so anonymously with more than 60 other assets.
Atomic Wallet is a highly appealing option for storing your KNC due to its decentralization. You remain in full control of your private keys, as you should be. Atomic Wallet never stores data on its servers, which maximizes its safety and security for managing your funds and any personal information.
Kyber Network aims to connect the tokenized world, which is currently fragmented, by allowing for instant, seamless transactions across ecosystems and platforms, as well as with other use cases. It is an on-chain liquidity protocol that also provides a decentralized method of exchanging tokens. The design of Kyber allows for deep liquidity while providing incentives for the reserve contributors and those who “take” from the reserves by taking advantage of the liquidity. With the Katalyst upgrade, Kyber also will allow for staking and should experience network growth.