Kyber Network and Decentralized Exchange

There are over 2,000 cryptocurrencies in existence now and the truth is that many of these projects will cease to exist in ten years. In fact, some crypto projects have failed and many will fail. On the other hand, some of these blockchain projects have also survived incredible odds and many have gone ahead to retain a spot among the top-performing cryptocurrencies in existence.

One of such projects is Kyber Network. The network is focused on drastically changing the way we see the decentralized crypto exchange. Most communities and projects in the crypto space have their native tokens. To use the protocol of any blockchain project, you would need to use their native token.

Well, if you don’t have the token, then the only way to get it is by visiting a crypto exchange where you can exchange your token or fiat for the token you need. You would agree with me that this whole process is quite cumbersome. Apart from the stress involved in the entire process, most of the exchanges users would visit to exchange their tokens have become centralized.

As a result of the centralized structure of the exchanges, users have been exposed to several security challenges as a good number of exchanges have been hacked. Another challenge with centralized exchanges is that it has led to an increase in fees and costs in addition to slow transfer times. There are also instances where users’ wallets get locked and they are prevented from withdrawing their coins.

These challenges have led to an increase in the number of decentralized exchanges trying to fix the issues. But these decentralized exchanges also have their challenges and one of such challenges is the lack of liquidity. They also have the issue of high costs of modifying trades in their on-chain order books.

This is the major issue that Kyber Network is trying to solve — enable every token holder to convert their token to any other one of their choice easily with less stress.

Understanding the Kyber Network

The Kyber Network offers users a decentralized way to instantly exchange ETH and other ERC-20 without the need to register or wait. To achieve this, the network makes use of a reserve system instead of the order book, which helps to provide high liquidity all the time. Here are the three guiding design philosophies of the Kyber Network:

· Ease of integration is a major priority for the Kyber Network. This explains why everything runs fully transparent and fully on-chain. The network isn’t just developer-friendly but also very compatible with several systems.

· The Kyber Network was created to become the most useful network and to achieve this; it needs to be platform-agnostic. This would provide any protocol or application the ability to leverage the liquidity provided by the network without affecting innovation.

· It is a network that is designed to ensure that real-world commerce as well as decentralized financial products are feasible. To achieve this, the network permits users to exchange their tokens across several tokens without facing any settlement risk.

Why is Kyber Network Special?

Since one of their mission is to integrate with other protocols, the Kyber Network has placed more emphasis on making its platform developer-friendly. They made this possible by providing an architecture that would allow others to add the technology to any smart contract powered blockchain. So, there are several vendors, wallets and DApps currently using their infrastructure such as bZx, Coinbase wallet and Set Protocol. In addition to vendors, wallets and DApps that use their infrastructure, the network also integrates with exchanges like Uniswap to share liquidity pool between two different protocols.

I earlier mentioned that the Kyber protocol uses pools of crypto funds known as “reserves.” Currently, the protocol supports more than 70 different ERC-20 tokens. So, what are reserves? They are simply smart contracts with a pool of funds that are controlled by different parties with different levels of funding and prices.
While centralized exchanges use their order books, the Kyber protocol checks all the reserves and returns with the best price from all the reserves checked. These reserves earn their profit from the difference between the buying and selling price or the “spread.”

Things you can do with Kyber Network

First, the Kyber Network is primarily used for swapping tokens instantly without the need to create an account. Anyone can easily do this on an Ethereum wallet like MetaMask. Another way to get involved with the network is to create your reserves and contribute your funds. However, this process is a bit technical, but the team of developers behind the network is making efforts to ensure that it is straightforward for users in the future.

Just like most blockchain projects, the Kyber Network has its native token known as Kyber Network Crystal (KNC). It’s actually the backbone of the network and serves to connect liquidity providers and individuals in need of liquidity. The token serves as the connection between the network and the wallets, DApps, and exchanges that leverage the liquidity network.

Also, the token ensures the smooth functioning of the reserve system in the Kyber liquidity. This is because entities are required to buy KNC (that’s used to pay for their operations on the network) with third party tokens. There are future plans to make KNC a staking token that will help participants to generate passive income.

If you’re interested in buying KNC tokens, check out some major exchanges like Binance and Coinbase Pro. Since KNC is an ERC-20 token, you can easily store the token in any wallet that supports ERC-20 tokens like MetaMask and MyEtherWallet. In August 2019, the Kyber Network released its KyberSwap Android mobile app.

The app allows users to swap their tokens instantly and currently supports more than 70 altcoins. Users can also set their price alerts and limit orders. The book “The Digital World of Crypto Riches” contains summaries of over 100 top cryptocurrencies in the world. So, if you would like to learn more about these digital currencies, go ahead and get the book.