Hello fellow Kyberians,
What a crazy few weeks and months its been in DeFi. Seemingly out of nowhere yield farming has exploded in popularity and caused all sorts of mayhem in the crypto world. Gas prices have shot up to previously unseen levels and in pursuit of high yields users are taking on higher risk to try out these experimental and in many cases unaudited contracts.
We at Kyber are heads down hard at work building the best liquidity protocol and asset swap experience out there and we feel we have a strong roadmap that navigates us through these scaling and other challenges in this path towards mainstream adoption. That is why we come to you every month with our ecosystem updates; to highlight the myriad of technical progress, growing on-chain activity, and decentralized governance narratives shaping Kyber over the last 30 days. Lets jump right in..
The KyberDAO is the main decentralized governance mechanism for setting the Kyber Network protocol parameters and as such we place a high priority in ensuring as many people can seamlessly and easily participate in its governance as possible. August saw the mainnet launch of a new pool master to help KNC stakers participate in the KyberDAO in a gas and time efficient way. Unagii by StakeWithUS is a staking portal and pool master that KNC holders can delegate their tokens to to vote on their behalf. This means KNC stakers do not have to vote every epoch and therefore do not have to pay gas fees while still receiving the same rewards as regular KNC stakers.
We understand the current high gas fees can reduce the net rewards for participating in the KyberDAO and therefore recommend stakers consider taking advantage of pool master services such as Unagii, the Kyber Community Pool, xKNC and others which reduce the need to transact and pay a gas fee every epoch.
The KyberDAO is currently (until the 21st of September) voting on the 5th BRR (Burn-Reward-Rebate). The network parameters as decided in the last epoch vote are as follows:
- 0.2% network fees
- 7.81% burn (% of ETH rewards converted to KNC and burnt)
- 66.89% reward to KNC stakers who vote in the KybeDAO (rewarded in ETH)
- 25.3% rebate to FPR liquidity providers (rebate in ETH)
Participation in the KyberDAO remains high and over the first four epochs has averaged 1,708 voters (this figure excludes stakers who stake through delegation in an existing pool master so total number of KyberDAO participants is actually much higher) with an average of 41.3M KNC staked per epoch.
In case you missed it DeFi_Dude who runs the Kyber Community Pool hosted the first KyberDAO Governance Call to dive deep into KyberDAO matters and we highly recommend a listen while we also encourage you to participate in future upcoming governance calls. You can stay up to date on these calls and BRR votes through the KyberDAO Announcements telegram channel or Twitter KyberDAO account.
Kyber Network Stats
This month’s on-chain data is a story of two parts. In one part we see Kyber Network transacting more volume in August 2020 than it did for the whole of 2019 ($397M in August vs $389M for all of 2019) and setting a new monthly all time high volume in the process. We are impressed by this growth and it brings us ever closer to the day that decentralized liquidity providers like Kyber better centralized ones not just in technical architecture, but in liquidity and volumes.
In part two we can’t help but comment on gas prices that have become so high (due to yield farming, Tether activity, and Ethereum’s increasing adoption) that transactions are becoming prohibitively expensive to carry out for swaps below certain values. August was an especially expensive month with gas prices reaching 400gwei at some point (for context, gas prices for an average tx have historically been between a few gwei and less than 40 gwei) and looking at number of unique addresses, first time addresses, and total trades we can infer high gas fees have had an impact on Kyber Network on-chain activity.
This is a challenge faced by all dapps but we are not worried as both the Ethereum community and the Kyber team itself are working on various solutions to increase transaction bandwidth and therefore lower transaction costs. A two-pronged approach includes hundreds of devs working towards the launch of the multiple ETH2.0 phases (developing multiple clients, speccing,testing, coordinating, etc) while individual dapps and protocols like Kyber are exploring layer 2 solutions built on top of Ethereum that can provide more immediate relief and bandwidth. As we go through this exploration phase we will continue to communicate our ideas and future plans with you.
With the prevailing high gas price situation in Ethereum, KyberSwap itself has made improvements to its order routing system to significantly reduce gas costs. By being able to directly pick which reserves to route an order through (a feature made possible by the recent Katalyst protocol upgrade) the on-chain workload can be decreased to save up to 60% in gas costs. You can read more about Reserve Routing and how it works here.
With Kyber Network volume at an all time high in August it is unsurprising individual dapps have also had their highest monthly volumes on Kyber. 1inch.exchange continues to impress us and has become the first dapp to surpass $100M monthly volume while KyberSwap’s Android, iOS, and web UIs offerings were close behind with a combined volume of $85M. To put that into perspective, KyberSwap’s volume in our ecosystem blog #1 was around $6M.
DeFi dapps including liquidity aggregators like 1inch.exchange, collateral management dapps like DeFiSaver, and leveraged margin trading dapps like Nuo have all grown their volumes by impressive amounts lately with a combined 67% increase over July and a 277% increase over June.
In the upcoming weeks we’re also looking forward to seeing Fulcrum and the bZx team relaunch their product which includes a new liquidity engine, generalized security mining, flash loans and BZRX token model v3.0. Before long we expect to see them back as one of the most popular and used DeFi dapps on Ethereum.
Reserves and Token Metrics
Professional Market Makers continue to dominate liquidity provision on Kyber Network and currently account for 70% of all volume. Their dominance comes down to their better price efficiency due to their dynamic and flexible trading strategies compared to fixed AMM curves, better risk management, higher gas efficiency, superior capital efficiency (requiring less than a quarter of the inventory of typical AMMs to provide the same level of liquidity) and no capital lockup requirements compared to order book models and AMMs.
We’ve just published an in-depth look on such on-chain market making, what it involves and the profit opportunities here.
Individual token volumes on Kyber Network are split roughly evenly between stablecoins (49% of volume) and ERC20 project tokens (46%) although its interesting to note that while only 3 stablecoins (TUSD, DAI, USDC) account for almost all stablecoin volume, 65 different ERC20 projects make up the ERC20 project segment.
August’s New Token Listings
Augur [REPv2 ] — Augur is a decentralized oracle and peer to peer protocol for prediction markets with REP serving as a representation of the reputation staked to participate in the system. Link
KardiaChain [KAI] — KardiaChain is a hybrid blockchain solution for enterprises and governments with KAI used as the medium of exchange and unit of account. Link
Matic Network [MATIC]— Matic is an Ethereum scaling solution that uses a PoS Plasma sidechain, with the MATIC token used to stake on the root contract to become a staker in the PoS check-pointing layer. Link
pNetwork pLTC [pLTC] — pLTC is pNetwork’s one-to-one ERC20 representation of Litecoin and joins pBTC. Link
StormX [STMX] — StormX is a gamified microtask platform that allows people to earn rewards with STMX acting as the reward token. Link
MATIC and KAI liquidity is provided by AMMs while REPv2, pLTC and STMX liquidity is provided by FPRs.
August was a particularly busy month of conferences for us and you could have caught us participating in panels and giving talks at Indonesia Blockchain Week 2020, Smart Contract Summit #0, REIMAGINE 2020, Status AMA, Open Finance Conference, Messari DeFi Casino Summer, Chicago DeFi — BloXroute Kyber Network Meetup Recap, B.Protocol AMA, Korea DeFi Roadshow and Smart Valor AMA.
We love interacting with you through these events and thank you for the great questions you send in during the Q&As. If you’re not already a member, we’d also love to see you in our discord group.
Here are some select articles we were featured in over the last month:
Coindesk — First Mover: Kyber CEO Predicts 2020 Transactions at $3B
Finance Magnates — Is the DeFi Ecosystem Overvalued? Chat with Kyber
AltcoinBuzz — Kyber Network Epoch 1 Voting Goes Live
Cointelegraph — You Can Now Trade Litecoin On Ethereum With Kyber
Other recent media features and mentions: BitBoy Crypto, Bitcoin.com, Crypto Advocate, Coin Bureau, Crypto Culture, Crypto Mobster, CryptoTube, CryptoOneStop, Magna Crypto, NewsBTC, Operation Crypto, Our Network, RonBubble, Somag News,
Thank you for reading our ecosystem blog, as always its been a pleasure coming to you with all the various developments from Kyber world. Until next time stay safe from the various vegetable and seafood farming bugs going around!