A great deal of development activity and record trading volumes of $196 million define March 2020 for Kyber Network. Impressively, the on-chain liquidity protocol Kyber Network has emerged as a leading solution provider for the decentralized ecosystem.
Moreover, the Kyber ecosystem fortified itself with integrated decentralized applications (DApps) and added a good number of Kyber-focused liquidity providers. Undoubtedly, the first quarter of 2020 has been extremely busy. And now Kyber is bracing for the launch of its Katalyst protocol upgrade and KyberDAO.
Katalyst protocol – driving participation
Kyber Network is about to receive a major upgrade for its Katalyst protocol in the second quarter of this year. The protocol is purely focused on encouraging the participation of key stakeholders in the ecosystem.
Besides, Katalyst introduces a new staking mechanism to Kyber. This will bring in liquidity improvements, customizable fees and improved value of KNC token.
Who are the key stakeholders?
Liquidity providers, who double as the reserve managers
DApps, who act as the link between takers and Kyber protocol
How does the Katalyst protocol benefit the stakeholders?
There is tremendous excitement among the stakeholders around the Katalyst upgrade. That’s because it brings great incentives for each stakeholder. The Katalyst protocol was successfully deployed on the testnet and the critical functions are working as expected.
The platform is currently conducting smart contract audits for Katalyst and KyberDAO. This is to identify and fix any security soft spots prior to its mainnet launch.
Reserve manager incentives
Post the Katalyst upgrade, a pre-decided percentage of total fees collected over the platform will incentivize the reserve managers. And a key factor for determining this would be the trade and volumes these reserve managers bring to the platform. As a result, these incentives will bring in more reserve managers leading Kyber Network towards higher liquidity.
Zero KNC balance
Earlier, the reserve managers had to maintain a KNC balance. And these token would burn to pay the network fees. However, with this upgrade, the reserve managers would not be required to maintain any minimum balance. And the network will collect the due fees during trades.
This will significantly increase the reserve manager participation without, in any way, affecting the rates the takers are enjoying currently.
KNC holders – staking and participation rewards
With the introduction of Katalyst, a new staking mechanism is also to be in place in Kyber Network. The KNC holders will receive a portion of network fees by staking KNC. And they can also participate in KyberDAO that will allow KNC holders to decide the right usage and distribution of network fees.
This will likely ensure the KNC holders are actively participating in the growth of Kyber Network. Over time, the DAO will attain more power and be able to make decisions on listing tokens, network development grants, and reserve approvals.
DApp integrators – freedom to set the spread
DApp developers are critical stakeholders for the Kyber Network. That’s because they connect the takers and the Kyber network. Now the Katalyst upgrade will allow DApp developers to override the existing fee-sharing program. According to the existing program, 30% of the 0.25% fee had to be shared with the network, making it a possible pain-point.
Post Katalyst upgrade, the DApp developers will have the freedom to choose the spread. Effectively, they will be able to innovate according to the target users. This is in line with Kyber’s vision for Q2 with the Katalyst protocol version designed to bring in higher stakeholder participation.
KyberDAO – passing the power of governance to holders
The proposed introduction of staking and participation rewards for KNC holders has necessitated the launch of KyberDAO. As a direct result of this, the holders can have the decision-making power about the usage fees.
KNC holders can gain more values from Kyber growth
Earlier, the KNC holders would gain value by burning (70% of the 0.25% network fee) KNC. But with Katalyst and KyberDAO, they will be able to generate more value. Moreover, this will give them the necessary channels for active participation in the growth.
Network growth incentives
It must be noted that the KNC burn incentivization will remain intact. However, KyberDAO will be able to govern the network fee allocation. With a voting system, they can determine what part of the network fee can be allocated to burning, rewards, or reserve rebates.
Critical protocol parameters
According to the upgrades, the KNC hodlers will be the main beneficiary of Kyber growth. It thus stands to reason that they will get to decide the fees and allocations. With the KyberDAO launch, their involvement and responsibility in laying down critical protocol parameters will increase.
More new crucial features
This is a brand new feature undergoing audits currently and is very much in Kyber Network’s future plans. It is set to give end-users (takers) the open choice to spread their trades across different Kyber reserves. And with the support of a fully on-chain mechanism, it will ensure the takers always get the most competitive prices.
On community request, the KyberSwap exchange team has already rolled out a few updates. And these include:
Optimizing the mobile app
2 on-ramp solutions for fiat to crypto exchange
Revamp of user interface and experience for limit order
Integrating the Torus wallet
You get to pick – holders or governance rights
One of the major takeaways of the March overview of Kyber Network updates is that users have the final say. So, it is not mandatory for the KNC holders to participate in governance. They can choose to delegate their tokens and voting power to the staking platforms. And thus, without being KyberDAO, they can still earn rewards.
Market interest is high
As highlighted in the official blog, platforms like Trust Wallet, imToken, RockX Miner and Hyperblocks are ready to participate in KNC staking. And even the Kyber Network investors like Signum Capital and #Hashed have expressed interest in being part of the governance model.