The Kyber Network developers have announced a move to version 3.0, which will transform the Decentralized Exchange (DEX) into a “hub of targeted liquidity protocols for various DeFi use cases.”
We’re excited to announce Kyber 3.0 transitioning Kyber from a single protocol to a hub of purpose-driven liquidity protocols catered to various DeFi use cases. This is the biggest change to Kyber’s architecture incl. the new DMM & a KNC Migration proposal https://t.co/pgffnUKjsx
– Kyber Network (@KyberNetwork) January 21, 2021
Schematic diagram of the alleged hub of liquidity protocols. Data: Kyber Network.
During the upgrade, the developers will launch the so-called dynamic market maker (DMM). It is expected to mitigate the so-called “volatile losses” resulting from price surges and capital allocation inefficiencies that are characteristic of DEXs operating on the Automatic Market Maker (AMM) model.
Benefits of DMM over AMM. Data: Kyber Network.
In DMM, depending on changing market conditions, the algorithm will optimize fees for takers and fees for liquidity providers. To increase the efficiency of the capital being placed, a programmable pricing curve mechanism will be used.
Programmable Pricing Curve Engine. Data: Kyber Network.
“Kyber DMM will give unlimited access to anyone to provide and receive liquidity placed in pools (dapps, aggregators, users),” the project’s blog says.
To quickly absorb the emerging trends in the DeFi sector, the architecture will be redesigned to better match liquidity pools to the needs of different token use cases. The current version of the protocol allows on-chain scanning of available liquidity providers.
The new Kyber 3.0 architecture is designed to reduce overall gas costs. Takers will be able to take liquidity directly from their chosen protocol or filter out sources on the network that they don’t need.
ETH will cease to be the only listed cryptocurrency. There will be various pairs and the possibility of direct exchange of token-token and stablecoin-stablecoin. The developers also promise to keep the ability to explore the best liquidity offerings available at a single point.
The scheme for the formation of liquidity pools and interaction between takers and liquidity providers. Data: Kyber Network.
There are plans to upgrade KNC, which launched staking in July, and strengthen the role of KyberDAO. With the help of voting, the community will be able to influence changes in the functionality of the native token, which will increase its value.
The transition to KyberNetwork 3.0 will take place in three stages – Katana and Kaizen. The first is expected in the first – second quarter and involves the launch of KyberDMM and proposals for changes in KyberDAO and KNC. Completion of the transition is scheduled for the third quarter of 2021.
In October, Kyber Network developers launched an on-chain marketplace platform with professional liquidity providers.
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