Kyber Network just overhauled its protocol and token holders are loving it.
Kyber’s KNC jumped 25% on Thursday after the announcement to the highest since 2018, compared with ETH’s 10% increase. Over the weekend KNC retraced some of the gains and has been hovering between $1.3 and $1.45.
The upgraded Kyber 3.0 will be transitioned from a single protocol to a hub of liquidity pools with the goal of attracting greater liquidity. Market makers will be able to leverage on-chain liquidity protocols without deploying and maintaining their own reserve contracts.
Kyber is launching a so-called “DMM” or an automated Dynamic Market Maker – allowing for permissionless liquidity contribution. Kyber DMM’s Programmable Pricing Curves allows liquidity pool creators to customize the pricing curve. This means that liquidity providers can have the opportunity to earn much more fees relative to their contribution size.
The new architecture rollout is aimed at increasing the value of the network and upgrading the KyberDAO and KNC to enhance governance. Higher adoption of Kyber DMM would potentially increase the fees collected by the KyberDAO (and KNC voters) in the long run. Token holders can determine which new protocols to fund and directional build through liquidity mining.
Kyber 3.0’s new architecture is also designed to reduce overall gas costs. Dapps will have the flexibility to take liquidity directly from their protocol or filter out irrelevant sources in the network.
Kyber is one of Asia’s leading players as a DeFi liquidity provider and has 5% of the DeFi market share. Kyber’s biggest competitor is Uniswap ($UNI), the biggest decentralized exchange by volume. Charles Hwang, Managing Member of Lightning Capital, a crypto hedge fund said in an interview that he is cautious about $UNI as price movement was too abrupt in a short period of time. He would possibly consider KNC as an alternative position, but he made sure to say it was not investment advice.