The decentralized finance (DeFi) space was at full throttle last year. At the end of 2020 Q3, the total value locked (TVL) in the DeFi space was about $10 billion. Despite these huge achievements, the space also experienced several major constraints. Kyber Network, a popular Ethereum-based DeFi protocol, has previously highlighted most of these challenges in an October blog post. The protocol also highlighted several important changes that will help take care of the challenges currently faced by DeFi.
Topping its list of proposed solutions is its Kyber 3.0 protocol upgrade. The upgrade will move Kyber Network from “a single protocol to a hub of purpose-driven liquidity protocols catered to various DeFi use cases.”
Hashed officially confirmed this announcement via Twitter.
Congrats to @KyberNetwork team who just announced plans for Kyber 3.0 – the biggest upgrade to Kyber’s architecture including the launch of New Dynamic MM Protocol and KNC Migration Proposal! #KyberV3 #DMM https://t.co/fsDtwkIHlJ
— #Hashed (@hashed_official) January 21, 2021
More Details on Kyber 3.0
The Kyber 3.0 upgrade will be the greatest change to the Kyber ecosystem. It would enable the network to easily get accustomed to DeFi trends, also equally providing improved benefits to KNC holders, liquidity providers, developers, takers, etc.
Kyber 3.0 is made up of two phases – Katana and Kaizen. Alongside Kyber 3.0, the platform will also be launching a new liquidity protocol dubbed Kyber DMM. In essence, it will allow for permissionless liquidity contributions from any person and give full access to this liquidity to any interested takers.
Kyber Network also has plans in place to enhance its token’s (KNC) governance power. To achieve this, plans are in place to upgrade both the KNC token and KyberDAO. This proposed upgrade will be voted upon by KNC holders.
Kyber Network’s design was effective. It enabled on-chain scanning of liquidity providers on the network but faced huge drawbacks as the DeFi ecosystem grew. It was built as a single interface, so it had to be ETH-based and be a single permission model in order to ward off DDoS attacks. Kyber 3.0 aims to put an end to these constraints.
The upgrade is expected to drive better adaptability and also provide the network with better access to DeFi trends.
What Does Kyber 3.0 Mean To Players on the Kyber Network?
There are several advantages embedded in the proposed Kyber 3.0 upgrade. They include:
- More liquidity options
- Dynamic and gas-saving taker options
- New liquidity protocols to drive Innovation, etc.
Kyber DMM Launch
Alongside the proposed protocol upgrade, Kyber Network also has plans to launch the first-ever Dynamic Market Maker (DMM) in the DeFi space. The DMM will be available to all players on the network, including retail LPs.
The DMM will furthermore take care of AMMs’ impermanent loss (IL) and capital inefficiency. It will also help optimize fees on the platform via its Programmable Pricing Curve and its Dynamic Fees To help mitigate IL and increase LP profit
KyberDAO and KNC Migration Proposal
To make the network’s proposed architecture change easy, the Kyber team will put forward a special upgrade to both KyberDAO and KNC tokens. The proposal is aimed at:
- Facilitating multiple sources of use cases and improved value for KNC tokens.
- Help KyberDAO facilitate more liquidity innovation.
- Lastly, improving KyberDAO’s governance power.
As previously stated, the upgrade will be in two phases: Katana and Kaizen. The Katana phase of the upgrade is expected between Q1 and Q2 2021. During this phase, Kyber DMM and the KNC and Kyber DAO proposal submission is expected to take place. The Kaizen upgrade is slated for Q3 2021, signaling the official completion of the Kyber 3.0 upgrade.
At the time of publication, KNC was trading at $1.34, with a market cap of $270,119,835 and a 24-hour trading volume of $77,729,379.
Altcoin Buzz recently published an article on the step-by-step processes of installing the KyberSwap wallet.
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