Users can trade one cryptocurrency for another without using a centralized exchange thanks to the Kyber Network decentralized finance (DeFi) technology. The Kyber Network also allows businesses to accept other cryptocurrencies while still getting paid in the cryptocurrency of their choice.
The typical cryptocurrency project frequently features a native cryptocurrency coin. The protocol frequently requires the use of this token (for example, Ether is used to run decentralized applications on Ethereum).
Users who don’t already possess a network’s native token typically need to purchase some from an exchange in order to participate. Kyber wants to eliminate this step by making it simpler for users to swap between tokens.
The Kyber Network’s Operation
The Kyber Network offers a means for users to instantly and decentralized exchange ETH and other ERC-20 tokens by utilizing liquidity pools, which are collections of various cryptocurrencies that any project is able to access. As with centralized exchanges, no registration or account creation is required.
For instance, a vendor can accept payments from customers in their preferred cryptocurrency while still receiving payment in the seller’s own preferred cryptocurrency using the Kyber Network.
Another possible application is decentralized applications (dApps). Currently, if you don’t own the native token of a dApp’s network, you are unable to use it. Anyone can use Kyber to take their existing tokens, exchange them for the token of the dApp they want to utilize, and then proceed.
The Ethereum blockchain hosts the token swaps, making transactions transparent. In spite of this, Kyber wants to collaborate with other blockchains. To do this, the developers have concentrated on developing software that would enable anyone to integrate the Kyber technology onto any other blockchain that uses smart contracts.
So far, a number of dApps, wallets, and retailers have profited from this. The Uniswap DEX and other decentralized exchanges have collaborated to distribute liquidity among their protocols.
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Kyber Network Specifications
A few crucial network elements enable Kyber to develop a service for cryptocurrency exchange.
• Smart contracts: These offer the framework necessary to enable the exchange of one token for another.
• Reserves: These offer the liquidity required for swaps to occur on the network.
• Takers: These individuals carry out the trades and remove some liquidity from the network.
The Kyber Network employs a system of reserves to supply liquidity. The network searches for reserves to find the best rate that takers are now offering when a user conducts a trade. Tokens from the three primary categories of reserves can be efficiently converted by takers.
• Bridge Reserves: They try to use other decentralized exchanges to acquire more liquidity.
• Automated Price Reserves (APR): To set token exchange prices, they use smart contracts. Direct APR transactions take place on the blockchain of the Kyber Network. To transfer tokens between users and keep them secure, smart contracts are used.
Price Feed Reserves (PFR) are a decentralized type of market maker. These transaction costs determine token exchange rates and store the results in smart contracts. The smart contract then directs takers to reserves so they may compute token exchange prices.
KNC, an Ethereum currency used for network fee payment, was originally required to be held in Kyber Network reserves. (Fun fact: Kyber Network Crystals, or KNC for short, were named for the crystals that operate the light sabers in the Star Wars films.) However, this was altered by a software update, which improved the situation for reserves.
Now that fees are collected by Kyber in ETH, some of those tokens are placed in reserves.
Who Is Kyber Network’s Owner?
In 2017, Yaron Velner, Victor Tran, and Loi Luu developed the Kyber Network. In an initial coin offering (ICO) for its KNC cryptocurrency, the Kyber team raised 200,000 ETH, or about $50 million at the time.
The application went live on Ethereum in February 2018.
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What Will the Kyber Network Be Worth in The Future?
The number of network users and the level of KNC speculation in cryptocurrency markets both affect the value of the Kyber Network.
As of July 2020, the Kyber Network had already processed more than a million transactions totaling over a billion dollars.
The KNC cryptocurrency’s value may continue to climb steadily or it may decrease to zero, just like any other alternative coin. What will happen to the price of KNC or the Kyber Network is difficult to forecast with any degree of accuracy.
Is It Wise to Invest in The Kyber Network?
At most, Kyber Network Crystals (KNC) should be viewed as a speculative investment. There is no other reason to hold KNC outside the prospect of making speculative gains unless someone is actively using the Kyber Network (or staking KNC).
KNC might be just as excellent as any other altcoin for people looking to make quick money in the cryptocurrency markets. Users who stake KNC can get ETH as compensation. The value of KNC, ETH, and the current APY rate, which are all in constant change, will determine how much you earn in the form of staking rewards.
Stakers can also vote on modifications to the network’s charge structures and rates. This has been the case ever since the network’s Katalyst upgrade in July 2020, when the KyberDAO, a decentralized autonomous organization, was launched (DAO).
Holders of KNC now have a voice in the governance of the Kyber Network and can influence how the network is changed in the future thanks to this DAO.
All things considered, a number of altcoins have lost all of their value, and it is possible that KNC will follow suit.
The Lesson
Crypto traders may instantly switch between various tokens without using a centralized exchange thanks to Kyber, a DeFi tool. Owners of the KNC cryptocurrency can vote on network updates and stake their tokens for a regular reward.
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