Kyber Network is a decentralized, blockchain-based protocol that facilitates the exchange of tokens without an intermediary and provides liquidity for decentralized finance (DeFi) applications. At the time of this writing, Kyber Network is integrated with more than 100 applications, and powers KyberSwap, Kyber Network’s decentralized exchange (DEX). Kyber Network is governed by the holders of its native KNC token through KyberDAO, a decentralized autonomous organization (DAO).
Kyber Network Provides Critical Liquidity to DeFi
Before examining Kyber Network’s design, let’s first unpack why liquidity is important to the DeFi ecosystem. In the cryptocurrency community, liquidity refers to several things: the ability to exchange an asset without substantially shifting its price in the process, the amount of trading activity in a market, and the ease with which an asset can be converted to cash. Liquidity is essential to healthy, functional, user-friendly markets, but can be difficult for new DeFi protocols to both attain and retain.
In traditional financial markets, liquidity providers are centralized entities like banks and financial institutions. However, utilizing centralized entities to provide liquidity in DeFi markets would run contrary to the ecosystem’s ethos of decentralization. As a result, permissionless protocols like Kyber Network have emerged to take their place. Kyber Network’s mission is to create a world in which any token of value can be used anywhere for swaps in any wallet, as well as for payment services, and other newly developed financial products.
How Does Kyber Network Work?
Kyber Network consists of a set of smart contracts that can be implemented on any smart contract-capable blockchain, though it is only implemented on Ethereum as of December 2020. The protocol aggregates liquidity from a variety of reserves, including token holders, market makers, and decentralized exchanges, into a single liquidity pool on its network. Anyone can provide liquidity to the network. Kyber Network enables its three primary users — decentralized applications (dApps), vendors, and crypto wallets — to execute instant token swaps without the use of a trusted third party.
Let’s run through two types of trades.
In every trade, there is the token that represents the core asset. Ether (ETH) currently acts as this token in the Ethereum implementation of the protocol, so any trade must involve an exchange of ETH for another token. Imagine that you want to trade ETH for BAT, Brave’s Basic Attention Token:
- You send your ETH to the Kyber Network smart contract.
- The contract then queries all of its reserves for the best ETH to BAT exchange rate.
- The contract then sends the ETH to the reserve with the best ETH to BAT exchange rate.
- Finally, that reserve then sends you your BAT.
Now let’s imagine that you want to trade BAT for DAI. In this example, since you are not trading directly in ETH, some additional steps are required because ETH is the core asset:
- You send your BAT to the Kyber Network smart contract.
- The contract then queries all of its reserves for the best BAT to ETH exchange rate.
- The contract then sends the BAT to the reserve with the best BAT to ETH exchange rate.
- That reserve then sends ETH to the contract.
- The contract then queries all of its reserves for the best ETH to DAI exchange rate.
- The contract then sends the ETH to the reserve with the best ETH to DAI exchange rate.
- Finally, that reserve then sends you your DAI.
Despite the second trade involving more steps, both trades are completed in a single blockchain transaction. Likewise, with Kyber Network, all trades are instantly settled on the blockchain and are either executed in full or reverted. In other words, your trades should never be partially executed (though they may be partially executed on other types of exchanges). Additionally, all exchange rates offered by reserves are publicly verifiable if you query the smart contracts.
When integrated into dApps, DeFi platforms, and crypto wallets, the Kyber Network has a wide range of use cases. For example, a dApp that would like to accept users who do not hold its native token can integrate the Kyber protocol to allow for in-app token swap and token conversion functionalities. These features enable the dApp’s users to utilize any Kyber Network-supported token and simultaneously enable the dApp to receive payment in the token of its choice.
KyberDAO and KNC
Holders of KNC can participate in the governance of Kyber Network through KyberDAO. By staking their tokens, KNC holders can vote on the network’s fee model, rebates for reserves, and other proposals, and also earn staking rewards denominated in ether. KNC is a deflationary staking token, which means its supply will decrease over time. KNC is only an ERC-20 token as of December 2020, but Kyber Network anticipates that it will also be implemented on other blockchains in the future. Nonetheless, its supply will be managed as if it were a single token, and Kyber Network is developing technologies that will enable the transfer of KNC across blockchains.
Kyber Network’s broadly integrated protocol offers an on-chain, decentralized solution to DeFi’s liquidity challenges and provides ERC-20 tokens with ecosystem-wide utility.
What products support KNC?
| Send/Receive | Trading | |
|---|---|---|
| Coinbase | ✔ | ✔ |
| Pro | ✔ | ✔ |
What regions support KNC?
| US | NY | EU | UK | CA/SG | |
|---|---|---|---|---|---|
| Coinbase | ✔ | ✔ | ✔ | ✔ | ✔ |
| Pro | ✔ | ✔ | ✔ | ✔ | ✔ |
Crypto to fiat trading pairs
| US | UK | EU | |
|---|---|---|---|
| USD | ✔ | ✖️ | ✖️ |
| GBP | ✖️ | ✔ | ✖️ |
| EUR | ✖️ | ✔ | ✔ |
Crypto to crypto trading pairs
| USDC | BTC | ETH | |
|---|---|---|---|
| KNC | ✖️ | ✔ | ✖️ |
See the full list of countries that Coinbase supports for crypto-to-crypto trading.
How many confirmations are needed for KNC?
KNC requires 35 network confirmations. Learn about transaction confirmations.
Which blockchain network hosts KNC?
KNC is hosted on the Ethereum blockchain.
What are the minimum and maximum withdrawal amounts?
Coinbase has implemented safeguards to ensure a healthy and efficient network both on-chain and through our platform.
These safeguards include both minimum and maximum amounts for each cryptocurrency we allow customers to send through the blockchain.
Minimum: 0.01 KNC
Maximum: 121,000 KNC
On April 20, 2021, KNC (Kyber) deployed their new token and swap contracts. You can reference KNC’s tweet for more on the token swap. While we won’t support the new smart contract at the time of the initial token swap, we will support it a later date in 2021.
What do I need to know about the KNC token swap?
The new KNC smart contract will be available on Coinbase and Coinbase Pro.
New smart contract
Coinbase will not support the new smart contract at the time of the token swap. You won’t be able to trade (buy/sell) the new token. You can still trade the older version of KNC before the conversion tha occurs later in 2021.
Once Coinbase supports the new smart contract later in 2021, Coinbase will automatically convert all the KNC tokens in your account and trading will be enabled. If you have KNC in your Coinbase accunt, we’ll notify you a few weeks before the conversion once a conversion date is determined.
Moving KNC Tokens
You have the option to move your KNC tokens out of Coinbase any time before the conversion date.
Sending and receiving KNC Tokens
When sending/receiving KNC tokens, please check what version of KNC tokens you currently hold. Exchanges and wallets might have or have not updated to the new token contract, and your funds might be lost if you send an unsupported version of KNC. The Ethereum contract address for the old KNC token is: 0xdd974d5c2e2928dea5f71b9825b8b646686bd200.
Will I be able to deposit the new KNC token to Coinbase before the conversion?
No. Coinbase KNC wallets supporting the new smart contract won’t be available until afterthe conversion later this year. We’ll announce this date on Twitter once we know.
What happens if I deposit the new KNC token into my Coinbase account before the conversion?
If you transfer the new KNC token from another exchange to Coinbase before the upgrade then the token will not be accessible or available for withdrawal from Coinbase until the KNC smart contract is supported.
What happens if I deposit the old KNC smart contract after it’s deprecated on Coinbase?
These deposits would not be supported and would be treated as an unsupported digital currency. Depositing unsupported assets in your Coinbase account will cause you to lose them.
Sending and receiving
Old KNC: You will be able to send & receive the old KNC before update/conversion.
New KNC smart contract: You will not be able to send & receive the new KNC smart contract before the upgrade/conversion.
After the upgrade, sending and receiving the new KNC tokens will be enabled on Coinbase Pro but sending and receiving old KNC tokens will no longer be available.
What happens to my KNC after the mandatory conversion to the new KNC smart contract?
As previously mentioned, all of your KNC tokens will automatically convert to the new smart contract and your new KNC tokens will be available in Coinbase products. You’ll then be able to buy, sell and convert KNC on Coinbase products.
Will we support the new KNC token on Pro trading books?
Yes, but only after Coinbase supports the conversion later this year.
What does this mean for KNC in my standalone Coinbase Wallet?
If you have KNC in your Coinbase Wallet, KNC funds will not convert to the KNC. You will need to follow the instructions outlined by KNC in their Migration Guide.