The Kyber Network is a decentralized, open-source exchange that works as a proxy payment service. The protocol is built to support instant conversion and exchange of cryptocurrencies and digital assets with high liquidity. It is a trustless, instant, secure, and compatible platform for the exchange of crypto assets. KNC is the token used on the Kyber Network. It is an ERC-20 token used by Reserve Managers on the network to operate their reserves.
This guide will explain what Kyber Network is all about, the purpose it is designed for, the team behind it, the way it works, and the various uses and applications.
What Is Kyber Network Designed For?
With the abundance of ERC-20 tokens in the market, many crypto enthusiasts are struggling with exchanging their newly purchased tokens. A major dilemma is the lack of centralized exchange that lists their particular tokens. The Kyber Network is hoping to solve this problem by being one of the new decentralized exchanges that offer crypto solutions.
The Kyber Network can also be used to purchase rare tokens that may not be listed on other centralized exchanges. One of the reasons centralized exchanges are unable to list all tokens is because of regulatory pressure on cryptos. This pressure manifests itself the maximum on centralized exchanges through a delayed listing and poor liquidity.
Who Is The Team Behind Kyber Network?
Loi Luu, who is also the CEO of Kyber Network created the platform, along with Yaron Velner, who is CTO, and Victor Tran, who is the Lead Engineer. Luu is a notable researcher working in the field of smart contract security, cryptocurrencies, and distributed consensus algorithms.
Velner is the co-founder of the SmartPool project. He is also a researcher focusing on formal verification of smart contracts and aspects of game theory incentives in blockchain protocols.
Tran is a Linux system administrator and a senior backend engineer. He developed and built the infrastructure for multiple advertising networks and social marketing platforms.
The team also enjoys a well-rounded advisory board with Vitalik Buterin (founder of Ethereum) being the most notable member.
How Does Kyber Network Work?
Kyber Network works by running on-chain and is made accessible for all user accounts. This includes all normal accounts and the ones with smart contracts. The platform allows smart contracts to directly interact with the decentralized exchange without involving any type of third-party, which would be in a position to receive payments or funds. This function allows the Kyber Network to function as an on-chain proxy payment platform for smart contracts and users.
Kyber Network is primarily used as an exchange where values of cryptocurrency can be exchanged and transferred. However, it can also work as a medium to transfer tokens from one person to the other. This is one of the reasons why Kyber Network is said to be a P2P transfer platform.
The tokens that are sent by a user do not necessarily have to match the kind of tokens the receiver wants. During the transfer, Kyber Network shall make the exchange. This is one of the unique selling points of this platform.
Liquidity is maintained in the Kyber Network through a dynamic reserve pool, which contains all of the Reserve Entities in the system. Monopolization is prevented by having multiple entities in the pool. This also helps keep exchange rates competitive. The smart contracts help in making the exchange when a user requests for an exchange through the Reserve Entity.
What Are Current and Future Applications of Kyber Network?
KNC is primarily used by Reserve Managers on the Kyber Network to operate their reserves. A small percentage of trade volume gets paid by the reserves to the platform in every trade. This payment is in the form of KNC tokens. The network charges a small amount of KNC tokens as a fee whenever an exchange occurs.
The fee charged in KNC tokens is applied partly towards operational costs and rewarding third parties who help the network by bringing trade. Any remaining token after paying for these two payments is taken out of circulation by token burning.
It is expected that diligent token burning in the Kyber Network could increase the token’s appreciation since the total supply shall inevitably reduce.
Decentralized Exchanges (DEX) are thought to be the future of cryptocurrency trading with the rising number of hacks in centralized exchanges. The Kyber Network is assumed to have the potential to become one of the largest decentralized exchanges in the world.