Being able to instantly swap and convert crypto currencies independently from centralized exchanges is a goal several projects have attempted to address. While the slow processing times and security vulnerabilities regular DEX services offer do not satisfy, most decentralized solutions have their own sets of drawbacks. Liquidity, for instance, has been an issue and has prevented the networks from sustaining active trading on-chain without having to rely on an order book to operate expensive trade changes.
Kyber Network (KNC)’s objective is therefore to provide an order book-free, on-chain, decentralized exchange to facilitate instantaneous, secure and inexpensive movements. Our Kyber Network guide tells you everything there is to know.
The Kyber Network Cryptocurrency: Introduction and Definition
Most crypto projects involve a proprietary token without which the protocol cannot be used. The coins in question can often be obtained through mining, or the user needs to find an exchange that happens to offer the currency in question, which they may have the possibility to swap for tokens they already own. This is if they don’t have to go through the process of exchanging those tokens for, say, Bitcoin, before being able to purchase the actual currency they are after. It is essentially this cumbersome procedure that Kyber does away with.
Kyber Network (KNC) provides a decentralized means of exchanging ETH and other ERC20 tokens with no registration or waiting period necessary, through an instantaneous process. This is achieved by keeping a reserve of various liquidity pools, spanning a wide range of crypto assets. These crypto fund reserves, in the form of smart contracts, cover 70 ERC20 tokens. The reserves are controlled by several parties, all with their specific funding levels and prices. What the Kyber protocol does is identify the cheapest offer. As for the reserves, they capitalize on the discrepancy between purchasing and selling prices.
Focused on compatibility and developer-friendliness, Kyber Network’s technology can be integrated within any blockchain powered by smart contracts thanks to an architecture that supports a great diversity of protocols. This means that the Kyber infrastructure can be used by wallets, vendors and dapps alike. Even other exchanges can incorporate this technology.
How Does Kyber Network (KNC) Work?
While it can be used as an exchange, the main advantage of Kyber Network (KNC) is that it serves as true peer-to-peer transfer solution. What makes its strength is that, thanks to its reserve system, one person can send specific tokens and the other receive a completely different token. Kyber takes care of the exchange as the funds move from one wallet to the other.
More specifically, Kyber Network (KNC) starts by making sure the sender has placed enough of their own currency (for instance ETH) in the contract for the conversion to go through. Once approved, the contract releases the corresponding amount in the currency the recipient expects (for instance REP) by utilizing a reserve pool. Kyber effectively uses liquidity present on the platform to send REP and fills its ETH liquidity pool at the same time, charging a small fee as it does so. It appears as though the sender made an instant transfer to the recipient, but, in fact, their original funds are not the same funds as those received on the other end.
Kyber Network (KNC) depends on several entities fulfilling various roles to achieve this. The users are the individuals, merchants or other organizations that send and receive funds. Liquidity is brought to the platform by “reserve entities” that can either be hosted by a third party or internal. They are considered public if the funds are provided by “reserve contributors”, or private if they are not. This is an efficient way to prevent centralization. Exchange rates are calculated and entered into the network by a “reserve manager” in charge of maintaining the reserve. Finally, the Kyber Network “operator’s” role is to add or remove reserve entities and to control the list of supported tokens.
The entire Kyber Network (KNC) system hinges on a Dynamic Reserve Pool, which it uses to maintain its liquidity by containing all the reserve entities the system holds, ensuring the absence of monopoly.
The KNC Token
Kyber Network Crystal – also known as KNC – is the network’s own ERC20 token. It is mainly used by the reserve manager who purchases it to operate the reserves. For every exchange, a small fee is charged to the reserve in the form of KNC to cover operational costs and reward the third parties that provide the network with trade volume. Kyber Network (KNC) being a deflationary currency, any tokens left over are burned, which will gradually decrease the supply.
During Kyber’s ICO, 226,000,000 KNC were created, 60% of which were shared between the participants. At the time of writing, Kyber Network (KNC) occupies rank 41 at the market cap, and the circulating supply is a little over 180,000,000 KNC.
Why Use Kyber Network?
A typical scenario involving Kyber Network would be a merchant allowing their customer to pay in the currency of their choice, knowing that they will receive whatever token their business functions with. No registration, no account necessary: a compatible wallet is entirely sufficient.
Dapp users may also rely on Kyber to interact with Dapps they don’t possess the tokens for, swapping their own currency for the coins in question the instant they need them. Kyber Network (KNC) is built on the Ethereum blockchain, which many are familiar with, and offers transparent, verifiable transactions so that both parties can rest assured all is happening the way it should.
How to Buy (KNC) on Bitit?
While holding KNC tokens is not required to use the network, it is mandatory for those who want to participate in it and take on a role. You may also decide to purchase KNC as an investment or to trade it as an asset in its own right.
Though KNC is a trading pair with Bitcoin on some exchanges and Ethereum (to a lesser extent) can be traded for it, the process is often cumbersome and time-consuming. This is where Bitit comes in, as it provides a simple interface from which to purchase Kyber Network (KNC) tokens with no strings attached.
Bitit works like any e-commerce website. You can check the current exchange rate for KNC against your own fiat currency and indicate how much you wish to spend. Place your order and proceed to payment: Bitit supports credit or debit cards, cash and bank transfers.
Your KNC tokens are then transferred to the wallet of your choice automatically within a few minutes.
How to Store KNC?
As any other cryptocurrency, Kyber Network (KNC) coins require a secure storage solution, whether you plan on using your tokens or storing them long-term.
Being an ERC20 token, KNC can be kept on practically any wallet that supports ETH. MyEtherWallet is often cited as a reliable option if you are comfortable with storing your assets online.
In any case, the safest choice is always hardware wallets, such as the Ledger Nano S or the Trezor, though a paper wallet may be a good (and much less costly) alternative.
Kyber Network news indicates that, since its initial launch, this on-chain liquidity protocol has started to pick up some speed. One of the main drawbacks of Kyber Network, which may be a lack of growth opportunities and incentives within its own ecosystem, are currently being addressed by the Katalyst upgrade, which will create new use cases for KNC. Its partnerships with various blockchain companies are also cementing the status of Kyber Network (KNC). In time, it could become a one-stop token-swapping solution.