The decentralized finance (DeFi) space has, in recent time, caught the attention of crypto enthusiasts worldwide. In actual fact, 2020 has been dubbed the year of DeFi.
In line with this, on-chain liquidity platform Kyber Network has released details of its flexible reserve network and how it can be beneficial to DeFi protocols and their developers. Interestingly, the Kyber Network aims to provide liquidity for DeFi projects and their numerous use cases. With this in mind, Kyber has disclosed plans to launch a reserve program. The program will consist of a pool of $100,000 that will subsequently be distributed to chosen DeFi projects.
In an official blog post, the network disclosed that it is on the lookout for seasoned DeFi developers.
Kyber's flexible reserve system enables developers to create new reserve models to be deployed to provide liquidity for a wide range of unique #DeFi use cases.
We're launching a Reserve Innovation Program with up to 💰100K in grants for selected projects! https://t.co/KwC9XXDieK
— Kyber Network (@KyberNetwork) November 30, 2020
Details on the Reserve System
Reserve systems are sources of liquidity on the Kyber Network. They furnish DeFi projects with much-needed liquidity with regards to prices on their smart contracts.
Known for its unique operations, reserve models, simply put, are smart contracts that can be easily launched on the Kyber Network. Different reserve models have been created for different use cases. Once launched on the network, all of the platform’s over 100 dApps will have access to the reserve model. An example of a Kyber reserve model is the Fed Price Reserve (FPR), which allows “professional market makers to perform on-chain market making by feeding in prices in a highly gas and capital efficient manner.”
Reserve models tend to be designed either for a one-time deployment (Uniswap V2 Bridge) or to be deployed at any time (Kyber FPR or APR).
How To Create New Reserve Models
Reserve models are not that difficult to create. Any developer with adequate know-how can easily create one from scratch. This means that developers can design reserve models to meet specific requirements. The potential embedded in reserve models cannot be over-emphasized. Interestingly, they are sure to improve DeFi liquidity as well as drive more use cases for the DeFi sector.
Advantages of New Reserve Models on Kyber
There are so many reasons why creating new reserve models on Kyber is a positive step. Some of them include:
1. A reserve system that is on-chain and flexible
The Kyber Network boasts of a highly advanced rigidity system able to support a wide range of DeFi use cases.
Unlike other off-chain reserve systems, the Kyber on-chain technique facilitates transparency and interoperability. Simply put, it facilitates easy interaction with smart contracts. Therefore, making it suitable for complex DeFi projects.
2. Liquidity for the decentralized ecosystem
According to the official blog post, Kyber currently stands as one of the most widely used DeFi protocols worldwide. Creating a new reserve on the network will expose tokens to Kyber’s over 100 dApps. Over time, the on-chain DeFi protocol has supported at least $2 billion and over 1.5 million trades on Ethereum.
3. Better market profits
Making profits from trades is another major reason for launching a new reserve model. Reserves function by purchasing tokens at lower prices elsewhere. It then adds a markup fee so as to earn a profit on Kyber.
Notably, interested people can either customize an already existing model or create a completely new one.
About Kyber’s $100K Reserve Innovation Program
In a bid to support developers on Kyber, the platform has launched the Reserve Innovation Program. Participants will also learn in-depth details of the obstacles associated with market making. Kyber’s $100K is a way to motivate and attract users. Recipients will each receive about $20,000. Kyber, however, reserves the right to make changes to the terms and agreements of the program.
At the time of writing, the Kyber Network (KNC) token was trading at $0.882551, with a market cap of $176,896,726 and a 24-hour trading volume of $27,909,057.
Find out more about the Kyber Network on the Altcoin Buzz YouTube channel.