KNC Price Update
The price of Kyber Network (KNC) today is $0.729700 USD, which has increased by 0.014594 (2.04%) over the last 24 hours. The total number of KNC coins in circulation stands at 164,893,760 and $277,381 USD has been traded for the KNC/USD pair across exchanges over the last 24 hours.
About Kyber Network
Kyber is a decentralized on-chain liquidity protocol built on Ethereum. The liquidity protocol powers seamless token swaps for a wide range of Ethereum-based assets in a permissionless fashion. This means that anyone in the world can access Kyber’s liquidity to swap tokens, integrate into their application, and more.
Kyber leverages a native token, Kyber Network Crystals (KNC), to align incentives between key stakeholders – allowing tokenholders to capture the potential upside of the protocol’s growth. After launching its ICO back in 2017, Kyber saw an increasing amount of success in terms of exchange volume, liquidity, token burns and other fundamental metrics. However, the KNC tokens failed to capture any value accruing to the protocol on a fundamental level.
To solve this issue, Kyber released the Katalyst upgrade – a new token model targeted towards three main stakeholders: reserve managers, dApps, and KNC holders.
Each of these stakeholders play an important role in the overarching ecosystem. Reserve managers provide liquidity, dApps connect takers and other users needing token swaps to the protocol, and KNC holders who are at the core of the ecosystem.
In short, there are three main mechanisms for KNC value creation:
- Participation Rewards: KNC holders can stake and participate in the KyberDAO to get rewards from network fees
- Burning: A portion of network fees are burned for long-term value accrual as it effectively acts as a dividend for KNC holders.
- Reserve Incentives: Rebates based on performance to drive greater volume and fees.
Token Economics
Demand Side
The driving factor behind the demand for the KNC token is Kyber’s position as the liquidity layer for DeFi and the Ethereum ecosystem at large. By having a diverse set of takers and makers using Kyber as their single on-chain liquidity provider, the decentralized liquidity protocol can accrue a significant amount of fees.
With the Katalyst upgrade, a portion of the fees are directed towards active participants in the KyberDAO as well as reserve managers. In order to become an active participant in the DAO and to earn the underlying fees, users are required to hold and stake KNC tokens.
As the amount of volume on the exchange increases, so do the amount of fees for Kyber participants. The higher the fees, the higher the incentive for users to purchase and stake KNC to earn a claim on the network’s fees via DAO governance. KyberDAO has the power to decide on key parameters within the system (like network fees) and how its distributed amongst the ecosystem participants. In addition, the DAO will also be able to decide on token listings, reserve approval, and network development grants.
Importantly, the more fees, the higher the incentive for reserve managers to provide the most vital aspect of the network: liquidity. The more liquidity, the higher the capacity for trades which in turn accrues more fees to the network.
All of this ties into one core demand factor: exchange volume.
The more that Ethereum applications and its users leverage Kyber for liquidity, the more fees, making Kyber’s liquidity protocol more valuable which should accrue to KNC in the long term.
Supply Side
Kyber Network raised approximately 200,000 ETH in a two-day token sale in September 2017. The KNC token supply is as follows:
According to Messari, the outstanding supply is 215,625,348 KNC. The Kataylst upgrade retained one of the core factors that influences the long term supply of the native token: burning.
A portion of the fees collected from the liquidity protocol are removed permanently from the outstanding supply and burned. Token burns are an interesting supply-side mechanism as they are essentially a universal dividend to existing token holders as it increases the tokenholder’s percentage share of the network.
As a brief example, if a user holds 1,000,000 KNC with a liquid supply of 214M, the user owns 0.46% of the protocol’s tokenized native asset. If by the end of the year, 14M in KNC is burned from exchange fees, the same user’s percentage share of the network increases to 0.50%.
KNC Price
Over time, token burns will play an increasing role in the overall scarcity of the token and long term price appreciation. If KyberDAO is earning millions in annualized fees (claimable by active tokenholders), and there’s millions of KNC being burned as well, there will be a growing competition for the remaining supply – driving up the price of the token.
Obviously value accrual is all contingent on whether or not Kyber remains as one of the dominant liquidity protocols over time. However, the Katalyst upgrade provided a more robust and diverse token model for value capture for one of Ethereum’s leading permissionless liquidity protocols.
