Kyber Network is a system that allows, among other things, the exchange and conversion of cryptocurrencies, without using a ‘pivot currency’. Every transaction is secured thanks to a smart contract registered on a blockchain. The execution of this contract is decentralized and therefore does not require the intervention of a trusted third party.
We are happy to explain more about it in this article, so that you know exactly what Kyber Network is and how it works. We do this of course with enough practical examples, so that it is also easy to understand.
- 1 What is the Kyber Network? (KNC)
- 2 Team, Partners and Competitors
- 3 How does the Kyber Network work?
- 4 Kyber’s Reserve Model
- 5 The dynamic reserve pool
- 6 The Kyber Network Crystal (KNC) Token
- 7 How do you use KyberSwap?
- 8 Advantages
- 9 Cons
- 10 How do I store my KNCs?
- 11 Kyber Network (KNC) Comments & Reviews
- 12 Kyber Network (KNC) Price and Forecast
- 13 How do I buy Kyber Network (KNC) tokens?
What is the Kyber Network? (KNC)
Kyber Network is one of several DeFi cryptocurrencies looking to build an alternative exchange to traditional exchanges where users can buy and sell cryptocurrencies.
This means that Kyber Network wants to offer a service similar to Kraken. The difference is that instead of being operated by one company, the exchange is powered solely by code: a distributed network of software users and the Ethereum blockchain .
To do this, the Kyber team built three tools designed to run on Ethereum: a decentralized exchange protocol, an application program interface (API) for asset conversions, and the KNC cryptocurrency (which helps users manage their maintenance). and exploitation).
Together, these tools have already helped launch KyberSwap. This is a decentralized exchange application that allows users to trade cryptocurrencies without a backlog or central operator (intermediary).
Instead, conversion rates for available cryptocurrencies are built right into the protocol, meaning users only pay an ether (ETH) fee to transact, which are then settled on Ethereum.
The Kyber Network’s cryptocurrency is called Kyber Network Crystal (KNC) and is used to pay for important transactions outside of this exchange, including voting on software rule updates.
As of July 2020, the Kyber Network has recorded a total volume of over $1 billion from over 1 million user transactions. Users who want to stay informed about the current development status of Kyber Network can follow the official blog for updated information. See below where Kyber Network is explained
Team, Partners and Competitors
Kyber Network was founded by 3 people who have interesting backgrounds in the world of cryptocurrencies. On top of that, they have a great advisor in the person of the founder of Ethereum.
Here are the core members of the team:
- Loi Luu (CEO and co-founder). Loi is the creator of Oyente, the first open-source program to analyze Ethereum smart contracts, and co-founder of SmartPool, a decentralized mining pool project.
- Yaron Velner (CTO and co-founder). Yaron was active in Ethereum’s bug bounty program.
- Victor Tran (Chief Engineer and Co-Founder). Victor is also the lead developer of SmartPool.
- Vitalik Buterin (Advisor). You probably know Vitalik Buterin, as he is the founder of the Ethereum network.
The team has worked together with various companies. Here are the most iconic partners in the crypto asset world they have a deal with:
- Request Network (REQ)
- ICON (ICX)
- Wanchain (WAN)
- MyEtherWallet (MEW)
Today, the partnership with Kyber Network has grown tremendously. See below who else Kyber Network works with.
What Kyber Network does is not entirely unique. There are several projects that have the same goal as Kyber Network. When we analyze Kyber Network’s competition, we see that Kyber Network has a few heavyweights ahead of it:
- The 0x project, which also wants to impose itself on the market of decentralized exchanges. However, 0x has kept the use of an order book to allow for off-chain matches, while KNC only works via blockchain technology (on-chain).
- When it comes to exchanges, Kyber Network is up against ShapeShift and Changelly.
How does the Kyber Network work?
To understand how the Kyber network works, it is important to look at the components of the network that together help provide an exchange service.
These components include the following:
- Smart contracts – provide the infrastructure for token exchange.
- Reserves – Provide liquidity to the network.
- Takers – Execute trades and withdraw liquidity from the network. (Examples: dApps, merchants and wallets).
Kyber’s Reserve Model
The Kyber Network relies on reserves to provide liquidity. This means that when a user initiates a transaction, the network searches the available reserves to find the best available rate offered by providers.
There are three main types of reserves that allow to instantly convert tokens at the most competitive price:
- Price Feed Reserves (PFRs) – PFRs are the protocol’s alternative to market rates, using price feeds to calculate conversion rates and store this data in smart contracts. The reserves then refer to the smart contract to calculate the token conversion rate.
- Automated Price Reserves (APRS) – APRs serve as liquidity for the network and rely on smart contracts to provide available token prices. All APR transactions are conducted on the Kyber Network. Smart contracts are used to store tokens and trade them with other users.
- Bridge reserves – Bridge reserves are responsible for increasing liquidity by accessing other decentralized exchanges (e.g. Uniswap ).
In the past, Kyber Network reserves had to hold KNCs to pay the network fees. However, a network upgrade removed this feature, removing the friction for reserves.
The Kyber Network collects the fees on ETH, part of which goes to these reserves, which collect based on the amount of money they provide.
The dynamic reserve pool
The Kyber Network manages its liquidity through what is called the “dynamic reserve pool”. This pool contains all spare entities that are active on the network. This is a place where cryptocurrencies are ready to be exchanged or converted.
Having several entities in this pool brings two benefits:
- This prevents one player from placing himself in a monopoly position on the network.
- Due to the competition between the different entities, the exchange rate offered will remain competitive.
When a user who owns a crypto X wants to make a transfer to another user who wants a crypto Y, a smart contract will automatically choose the “reserve entity” that offers the best exchange rate for the user.
The Kyber Network Crystal (KNC) Token
The KNC is an ERC20 token that a reserve manager must purchase if he wants to manage a reserve on the network. Whenever a token is traded, the network charges a KNC fee to the reserve.
These fees are used to:
- To cover the operating costs of the network.
- To reward third parties who bring trading volume to the network.
What remains is burned through a symbolic combustion (burning). After the ICO , Kyber Network decided to create a total of 226 million KNCs. About 60% was distributed among buyers. The remaining 40% will be unlocked over a period of two years and will go to the team and advisors.
How do you use KyberSwap?
KyberSwap is the name given to the system that allows you to convert tokens. However, you must first have access to your Ethereum address, which must also contain money. If that is not the case yet, it is important that you take care of this. Otherwise you will not be able to use KyberSwap yet.
When you are logged in to KyberSwap, first make sure that you accept the terms. Only then can you proceed with the practical use of KyberSwap. It is possible to access KyberSwap in the following ways:
- JSON file
- private key
- promo code
At the top you can click on “TRANSFER” to go to the page where you can transfer tokens.
- Wallet address : This varies depending on the connection type. It is indicated as a Metamask address when you connect to Metamask.
- Balance : the value of your portfolio.
- Search bar . You use the search bar to find your tokens.
- Advanced : to choose the minimum acceptable rate to make the transaction.
You can indicate how much you want to exchange. You do this by moving the button to the left or right, after which the number will change. Or you can enter how much you would like to convert. Then click on the button to exchange the currencies. You will get a short summary after this so that you can check everything again. If everything is correct, you confirm the transaction and the exchange is put into effect. See a short video Tutorial on how to work with Kyber Network below!
- Ability to send the crypto coins of your choice to a person who will receive the crypto coins of your choice without having to convert his tokens first on an exchange site.
- There is competition between different reserves to offer users the most advantageous exchange rate.
- The number of KNCs will decrease over time through a token burn after each transaction. Thus, the token should increase in value as the project becomes more popular.
- The founders are skilled in creating the project. In addition, they also have a lot of experience in this field, so there is a lot of confidence in the future.
- Many partnerships have been formed with other cryptocurrency projects.
- The user who wants to send crypto coins does not need to own any KNC tokens.
- The number of tokens reserved for the team and advisors is different. Only 60% of the tokens go to the people who funded the project.
- Kyber Network has serious competitors, who have built a very good platform themselves.
- The management of the network will first be centralized and managed by the development team.
- It will not be possible to send all cryptocurrencies. Only those authorized by the network will be usable. This can hinder the development of the project.
- The network must have good reserves to be able to guarantee a maximum number of transactions. If users cannot transact with the cryptocurrencies of their choice when they need them, they will turn to more traditional exchanges.
- Only ERC20 tokens are available.
How do I store my KNCs?
The safest way to store Kyber Network tokens is to use a hardware wallet . These are electronic wallets in the form of USB sticks. The 2 best known are the Ledger Nano S and the TREZOR. When you store them on a cold wallet, it is impossible for hackers to get to your tokens, once the wallet is not connected to the internet. Therefore, it is the safest choice to store KNC.
Since the Kyber Network is an ERC-20 token, it is possible to store KNC in almost all wallets. Also hot wallets can always store KNC. That’s the advantage of tokens using the ERC-20 token!
However, if you want to be a “backup administrator”, you will need to store at least some of your KNC tokens on the Kyber Network. If you don’t, you can’t claim this status . If you want to know exactly what that looks like, it’s best to read the Kyber Network documentation.
Kyber Network (KNC) Comments & Reviews
Kyber Network is an interesting protocol that can provide fluidity, security and liquidity to make crypto asset exchanges. The project combines a smart ‘store of value’ system with an on-chain trading system that enables easy inter-crypto transfers.
Numerous partnerships have been formed with several cryptocurrency projects that are among the most popular at the moment, which is a sure testament to the seriousness of the Kyber Network project.
However, one should not neglect the black points of the project. Kyber Network is facing serious competitors, some of which already have a working product.
In addition, the distribution of the tokens is disastrous. Only 60% of this is distributed among investors. Even if the average user doesn’t need the token to use the service offered by Kyber Network, people who want to join the network by receiving rewards might be tempted to go elsewhere.
Kyber Network (KNC) Price and Forecast
How do I buy Kyber Network (KNC) tokens?
To buy KNC, you have to go to a crypto exchange like Binance or Gate.io . It is also possible to buy KNC on, for example, ByBit, but also on a decentralized exchange (DEX) such as Sushiswap or Uniswap.
Thanh Lanh Tran(1989) is Chief Editor from BitcoinUSD.com