Kyber Network – Transforming the exchange of Crypto Assets

Kyber network is a decentralized on-change exchange. The network does not have an order book.  Thus, secure exchange of crypto assets is posibble at a minimal cost. The platform is ideal for p2p transfers and ICOs. The giver’s token need not match the receiver’s tokens. Kyber exchanges the tokens during the transfer.

Centralized exchanges continue to face slack due to several instances of hacks. Moreover, withdrawal of funds can take several days. On-chain decentralized exchanges are gradually gaining importance. Although, these concepts are in the initial stages of development. Kyber aims to eliminate all plausible vulnerabilities in the system. Additionally, there is no issue of identity theft as there is no information to be stolen.

The biggest competitor to Kyber Network is the 0x project. The teams are competing fiercely to make a mark in the decentralized market. The key difference is that Kyber keeps the entire exchange process on-chain. Whereas, 0x performs the order book matching off-chain.

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Kyber Network Crystal (KNC) Token

KNC is an ERC20 token. The Reserve managers need to purchase these tokens to operate a reserve on the network. In the event of a trade, a small fraction of the trade volume is paid to the network in KNC tokens.

The fee fulfills the operational costs and is also used to reward third-parties bringing trade volume to the network. If in case any tokens remain, they are burned. Thus, the burning of tokens can possibly increase the value of other KNC tokens as total supply reduces.

Total KNC tokens– 226,000,000 KNC

Coins in circulation– 134,000,000

Market Capitalization( at time of writing) – $55,698,318

24- Hour Trading Volume- $2,376,028

Different Roles in the Kyber Network

Exchanges listing Kyber Network

The Kyber Network Markets include-

• Binance
• CPDAX
• Bithumb
• Huobi
• OKEx

Transfers on Kyber Network

Suppose, Alex owes Alan 0.03 ETH. Much to Alan’s misfortune Alex only has XRP. Thus, they use the Kyber protocol to settle the debt.

First, Alex checks the conversion rate for transferring 1 ETH. Second, he enters a request to convert 0.03 ETH worth of XRP. Third, the contract verifies if Alex included enough XRP  in the contract for conversion. Lastly, the contract sends the 0.03 ETH to Alan.

It will appear to Alan that the funds came directly from Alex’s address. Later, Alex’s fee and a small fee is added to the reserve pool storing ETH.

How does Kyber Network maintain liquidity?

The Kyber network maintains liquidity with its dynamic reserve pool. The pool consists of all the Reserve Entities in the system. Thus, the existence of multiple entities, in turn, prevent monopolization and keeps the exchange rates competitive.

Kyber prevents centralization by allowing external reserve entities. This opens the door to low-volume token listings. In order to prevent malicious actors in the pool, the network has the following safeguards-

• It flags any exchange rate which is greatly outside the norm.
• Makes all exchanges through a transparent fund management model.

Storing KNC ( Kyber Network ) tokens

Since KNC is an ERC token, the user can store it in any wallet with ERC20 support. The wallets include-

• Trezor
• MyEtherWallet
• Ledger Nano S
• MetaMask

Latest Developments on Kyber Network

Melon, a decentralized, public infrastructure for on-chain asset management on the Ethereum blockchain and Kyber Network, an ecosystem for decentralized token swaps recently announced the successful integration of Kyber’s on-chain liquidity protocol with Melon’s on-chain asset management protocol.

By tapping into the Kyber Network (KNC), Melon users will now be able to access a wider pool of crypto assets as they will now trade on Kyber,  OasisDex and 0x. The integration between platforms will help in improving liquidity for crypto fund managers.

Mona El Isa, CEO of Melonport said, “It’s exciting to see the larger on-chain financial ecosystem starting to fit together. We all started off focusing on our little niches. Almost two years later, bridges are being built to link complimenting technologies making the ecosystem stronger, more robust and more valuable.”

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Loi Luu, CEO of Kyber Network said.“The integration between Melon and Kyber is a strong example of how on-chain protocols can naturally work with each other to enable a decentralized yet connected financial ecosystem. The fact that both protocols are built on-chain allows seamless integration without much technical and security overhead. Moving forward, we welcome other applications to leverage on our liquidity protocol to enable various combinations of decentralized value exchanges within their own application that are otherwise impossible.”

How will Melon realize its vision?

Melon has a modular architecture, so it can integrate a new exchange with an exchange adapter.  An exchange adapter is a smart contract which acts as a bridge between the Melon fund and the exchange. To integrate a new exchange an adapter contract should contain the code of logic for handling orders. Since Kyber does not have an order book Melon had to aggregate prices from Kyber to create an artificial order book.

Conclusion

Kyber network brings forth speed, transparency, liquidity to the exchange process. The project has combined the best of both worlds to provide the best user experience. If the network continues to build on its blockchain with the present speed, it would soon reach higher echelons of success.