What is Kyber Network?
Kyber Network is one of the most high-profile protocols for tokens in the DeFi world today, with a current TVL of about $130 million, an increase of more than 5 times compared to the same period last year. KyberSwap, the most integrated multi-chain DEX available, is one of the most popular projects where DeFi investors can exchange assets.
Kyber Network bridges up to 11 different public blockchains and is emerging as the go-to transit point for DeFi users who move different interchain assets from one network to another. Since different blockchains can provide their own unique platforms and incentives for staking tokens and liquidity mining, there are many users who need such a swap platform.
With the continuous development of the cross-chain network, Kyber Network has gained a reputation as a transaction transfer station by providing the best prices and an aggregation method that generates passive income in DeFi. Due to the recent joint marketing of the Kyber team with other popular projects, the return rate of the platform has also risen sharply, and the return rate of trading pairs in multiple liquidity pools has exceeded 100%. In the meantime, the ongoing integration with different public chains and liquidity mining rewards with high APR keep driving investors' interest in Kyber Network.
Exchange at the best price, then earn more
KyberSwap is the portal product of Kyber Network. KyberSwap is currently conducting decentralized transactions and making money on mainstream public chains such as Ethereum, Polygon, Binance Smart Chain (BSC), Avalanche and Fantom, earning more income with the most favorable token asset prices. This growth is largely due to their cross-chain expansion efforts on new public chains such as Avalanche. KyberSwap has quickly become DeFi’s liquidity infrastructure through a model of multi-chain deployment to continue to accumulate liquidity.
The KyberSwap ecosystem consists of 3 types of participants: liquidity providers, traders and developers. Flexible fee methods help reduce the impact of impermanent losses, while different pricing curve settings tailored specifically for token pairs in the pool can improve capital efficiency. Anyone can create a pool or become a Liquidity Provider (LP) by depositing an equal amount of each base token in exchange for LP tokens. These tokens represent a proportional LP share of the total reserve and can be redeemed for the underlying asset at any time. This approach has greatly stimulated liquidity.
Kyber 3.0 introduces KyberDMM, an improved automated market maker (AMM) mechanism. Unlike the static/fixed nature of typical AMMs/DEXs and other liquidity platforms in the space, KyberSwap’s core improvements are its flexible fee adjustments and programmable pricing curve settings. Under an efficient dynamic rate adjustment model, KyberSwap aims to optimize returns for liquidity providers by enabling the aggregation of liquidity for optimal interest rates, extremely high capital efficiency, and responsiveness to market conditions.
For the past half-year, Kyber’s network has been very strong. Its ability to aggregate liquidity across chains is obvious while establishing a liquidity source with a huge project library and the number of users it can access through the existing application ecosystem has led to the need to build KyberDAO to integrate governance of these cross-chain requirements.
DAO has assumed an important role in proposing to establish a cross-chain liquidity pool. Once there is a clear market demand for community-approved cross-chain assets, KyberDAO will immediately initiate a proposal to aggregate liquidity. Persistent network effects make DAOs initiate access to more and more applications.
In 2019, the Kyber development team realised the importance of handing over governance to the DAO. Voting cannot directly empower the project, but it can bring changes to the project as quickly as possible. In addition to deciding which more popular protocols to access, DAO can also decide which popular assets to list. KyberDAO will launch strong liquidity incentives, often accompanied by high APR around these assets and trading pairs. KyberDAO also has a vault managed by token holders to fund the ecosystem’s endowment program and development fund.
Value Capture Capability of KNC
Multichain Liquidity Aggregators
Liquidity is the engine of the DeFi market. As more and more liquidity aggregators begin to deploy on multiple chains, there is competition in terms of capital efficiency across chains. This is a very good opportunity for users, and only those projects with better user experience and better prices can stand out. Kyber Network attracts a lot of liquidity through this strategy.
Kyber is compatible with many other protocols, including SetProtocol, InstaDApp, AAVE, MetaMask and other projects. With the completion of the Polygon and BSC deployments, KyberDAO has also deployed KyberDMM with the EVM-compatible Avalanche blockchain. The new liquidity bootstrapping has led to higher adoption of native DEX liquidity aggregators like Kyber Network. Users can always get the best deals on tokens at low cost.
At the same time, Kyber Network also expanded to Arbitrum Network, a Layer-2 scaling solution that enables near-instant transactions and low fees without sacrificing security. The goal of accessing the L2 cross-chain infrastructure is to seamlessly transfer Ethereum assets across chains in an efficient and decentralized manner. One thing is for sure, the multi-chain narratives that started to explode in 2021 are not going away anytime soon, and the competition in this space will only heat up. This means that Kyber Network’s growth narrative will not pause.
Liquidity Mining Incentives
Liquidity is an important part of the success of cross-chain bridge protocols. LPs are subsidized through incentives. The market share of Kyber Network in the liquidity field is inseparable from the influence of the liquidity mining plan. Considering the advantages of liquidity mining, it is a win-win for Kyber Network users as it increases the revenue stream and also improves capital efficiency.
By launching the Avalanche Rush Phase 2 liquidity mining plan with public chain ecosystems like Avalanche Network, it will provide more than one million dollars in rewards. Avalanche is one of the fastest-growing EVM-compliant networks in the cryptocurrency ecosystem right now. DMM is an innovative means of providing liquidity on DeFi. The liquidity attracted by the incentives provided by the Kyber Ecological Fund can amplify the advantages of dynamic fees.
With a multi-chain narrative taking shape in 2022, Kyber is well-positioned to expand its entire addressable market to all cross-chain protocols in addition to its massive KyberSwap user base. From a capital efficiency perspective, KyberSwap’s liquidity is very competitive. Of course, innovating and integrating faster than the competition is critical to Kyber. In the future, if Kyber can continue to introduce innovative features in revenue aggregation, asset intelligent discovery, and user experience, we can expect to see it continue to be a leader in the increasingly fierce aggregator landscape.