Liquidity has been one of the biggest challenges in blockchain, impeding the seamless flow of assets and hindering the growth of the ecosystem. These problems are due to the fragmented nature of the blockchain industry, where different tokens and assets are scattered across many different exchanges and platforms.
With its innovative features, Kyber Network aims to alleviate liquidity issues by making cross-border and cross-platform transactions seamless. In this article, we look at what is Kyber Network, how it works, its tokenomics, and more.
What Is Kyber Network
Kyber Network is a decentralized liquidity protocol that facilitates the exchange of cryptocurrencies and tokens without an intermediary. The project, founded in 2017 by Loi Luu and Victor Tran, aims to solve the liquidity issues in the blockchain ecosystem by aggregating liquidity from different sources to provide users with the best rates.
Kyber Network, built on the Ethereum blockchain, can be integrated into decentralized applications (dApps), decentralized exchanges (DEXs), and crypto wallets.
One of Kyber Network’s unique features is its dynamic Liquidity Provider (LP) fee model. The model adjusts the Automated Market Maker (AMM) LP fee according to market conditions. During low-volatility market conditions, fees are lowered to encourage users to trade more. On the other hand, higher fees are charged during periods of high volatility. Unlike many other AMMs that use a fixed percentage of the trade value model, the Kyber Network with its dynamic fee model helps encourage stability in the markets.
How Does Kyber Network Work
As a decentralized liquidity protocol, Kyber Network utilizes smart contracts to execute transactions.
Here’s a breakdown of the key components of the Kyber Network and how it works:
Kyber Network relies on a network of liquidity reserves from individual token holders, market makers, and decentralized exchanges. Ether (ETH) is the core asset of the Kyber Network so each reserve holds a certain amount of ETH and another token to enable trading.
2. User Request
When a user wants to initiate a token swap, he or she will specify the tokens they want to trade via a smart contract on the Kyber Network.
3. Exchange Rate Determination
The smart contract in the Kyber Network searches for the best exchange rate available across the reserves in the network.
4. Smart Contract Execution
After the best exchange rate is determined, the Kyber Network executes the trade through a series of smart contracts.
5. Token Swap
The user’s tokens are swapped directly within the smart contract, and the selected tokens are sent to the user’s wallet.
Let’s say a user wants to trade ETH for MATIC. The user will send ETH from their wallets to the smart contract on the Kyber Network. The smart contract will look for the best ETH to MATIC exchange rate on the network’s reserves. After which, MATIC from the reserves will be sent to the user.
What Is Kyber Network Crystal (KNC)
Kyber Network Crystal (KNC) is the native token of the Kyber Network and functions both as a utility and governance token. KNC is an ERC-20 token built on the Ethereum blockchain.
To participate in the benefits of the KNC token, token holders have to stake their KNC. Token holders who stake their KNC can earn KNC rewards from transactions conducted on the network. In addition, they can also vote on proposals to shape Kyber network’s future such as the network’s rebates for reserves and fee model through KyberDao, a Decentralized Autonomous Organization that governs the network.
As of the writing of this article, Kyber Network has a total supply of 228,015,060 KNC tokens of which 170,458,605 are in circulation. KNC token is deflationary in nature which means that its supply will decrease over time.
— Kyber Network (@KyberNetwork) February 20, 2020
How To Trade KNC On The Flipster App
To trade KNC on Flipster:
- Download the Flipster app and complete the account set-up process
- Go to [Trade]
- Click on [Search] at the top of the page and type in KNC
- Click on KNC
- In the [Amount] field, type in the amount of KNC you wish to buy or sell. Alternatively, you can select the percentages below to choose how much of your available cash you want to use for your order.
- Click [Preview order] to preview your order
- Once you have confirmed the details, click on [Buy KNC – Long] button or [Sell KNC – Short] if you are opening a short position.
Disclaimer: Any opinion shared in this article is strictly the views and opinions of the author and should not be construed as financial advice. Flipster makes no judgment on the projects or the content uploaded.