Hi Kyberians! We are grateful to be able to undertake this journey so far together with you. With this year being an important juncture for both Kyber Network and the decentralized economy in general, we hope to significantly deepen and expand the involvement of the community this year.
In this post, we would like to share how we intend to build on top of the strong technical, ecosystem and community foundations that were laid in 2018, to embark on 3 key long term objectives, as well as the plans for 2019 to get started on them.
The 3 key objectives are summarized below, based on careful contemplation from the team and how the ecosystem has evolved over the last one year.
- Expanding the scope of Kyber, by moving towards a permissionless liquidity protocol that can be implemented on any smart contract enabled blockchain.
- Supporting the growth of the decentralized economy in 5 key areas: End user swaps, NFT and commerce payments, exchanges and trading, decentralized finance and liquidity provision.
- We expect protocol direction, implementation and treasury decisions to eventually be made by the Kyber community. Therefore, the technical, communication and governance framework must be established to grow a community with the passion, expertise and incentive to build Kyber together.
In each of these objectives, we have outlined a few key areas of focus, as well as our plans in 2019 for them. It is critical to understand that the end results of these efforts will take several years to be realized. 2019 will be the beginning, where we take the first affirmative steps in the journey towards building Kyber into a core infrastructure of the decentralized world, and achieving that together with the community.
Formalising Kyber as a Liquidity Protocol that is applicable to smart contract-enabled blockchains
At Kyber, we have always been focused on finding the most optimal technical solutions and systems to best serve the ecosystem and drive adoption of decentralized applications (DApps), while incrementally broadening the scope and applicability of the underlying technology and framework.
As documented in our Kyber, Together post, initially when we launched on mainnet, we focused on providing immediate value to the space by developing a trustless and secure token swap system with a seamless user experience, while ensuring the solid technical basis of the underlying token swap technology.
We then embarked on the mission of Any Token, Anywhere, with the key goal of building a world where any token of value can be used anywhere for swaps in any wallet, payment services, and financial products. In doing so, we established Kyber as a protocol that allows developers to seamlessly integrate token swaps into their wallets, DApps and financial platforms.
For technical development, we have been consistently working on improvements to the core systems, as seen in the introduction of the Order Book Reserve, Automated Price Reserve (APR), and Kyber Trading API. The version 3 upgrade to the core smart contracts to accommodate the permissionless Order Book Reserves was deployed recently, which is a major piece towards allowing open contribution of liquidity. This upgrade will be detailed in an upcoming technical update.
As we continue to establish these core anchors, we will be formalising and positioning Kyber as a permissionless liquidity protocol that can be implemented on any smart contract-enabled blockchain.
Main Protocol Aspects
There are 3 main aspects we are driving forward:
Implementing Kyber’s protocol across smart contract-enabled blockchains
While Kyber started out on the Ethereum blockchain, there are a number of other blockchains with distinctively different features and with different types of ecosystems emerging. We believe Kyber will become a key backbone in these ecosystems as well.
In order to support these emerging ecosystems, Kyber will drive the implementation of the protocol in these chains to facilitate liquidity between token holders, token teams, DApps, and liquidity providers. This will be a complex process with many forms of execution, and Kyber will be both exploring the implementation of our protocol on other chains by ourselves, as well as working with third party teams and projects who are interested in doing so.
Fostering a vibrant reserves ecosystem
Kyber already has 16 reserves that support over 70 tokens, but so far the team has played the main role in establishing and managing most of them. A few third party reserves are building their own solutions but these are not open source and publicly available. As such, the technical barriers to entry for a new reserve setup are admittedly still very high. Apart from continuing to ensure that the reserves system is and will be open for anyone to innovate upon, Kyber will welcome anyone to set up their own reserves of any token in a permissionless environment. At the same time, Kyber will push for better documentation, tools, and support to help anyone create and manage their own reserves.
Moving towards fully permissionless implementations and decentralized governance
Although network maintainers will still be the Kyber team in the foreseeable future to quickly bootstrap and boost initial adoption, and to maintain operational readiness of reserves, we intend to gradually spread out knowledge, control, and contribution ability to the wider community. Our next steps include the rollout of the first type of Order Book Reserve, as well as the initial decentralized governance system run by KNC holders and a broader community, allowing them to start governing various initiatives such as KNC utility and treasury management.
In order to focus our technical and ecosystem-building resources on the above initiatives, Gormos will be released as a technical paper later on, based on Loi’s presentation at CESC 2018, as opposed to a full fledged implementation. Since we first discussed Gormos, there has been a large number of projects that have also started working on scalability solutions. With this technical paper, Gormos as a scalability concept will become publicly available for anyone to implement or reference for their own solutions. Kyber will help the community develop ideas around it, and we may use future Gormos implementations for protocol operations if they are deemed suitable.
While the original white-paper in 2017 described the basic architecture for Kyber to allow instant, secure and convenient token trading in a fully decentralized manner, we will be releasing a new technical paper providing the key design principles and the technical specifications of the protocol to be followed when being implemented on smart contract-enabled blockchains and for the creation of reserves. This new paper, slated for completion in Q1, will provide the basis for the above efforts to manifest.
In particular, we expect to have more insights to share regarding the results of the investigation on other chains in Q2. With regards to growing the reserves ecosystem, incrementally moving towards permissionless implementations, as well as the DAO to govern Kyber, these will be ongoing efforts that we have already taken clear steps towards. More details are outlined in the post below.
Growing The Decentralized Economy
Over the last year, Kyber has had the deep privilege to work closely with many of the best projects in the space, over token swap integrations, token listings, hackathons, and other ecosystem efforts.
Kyber is leveraged by the most popular Ethereum-based wallets and DApps, powering a range of use cases, from token swaps, to payments, and liquidation of funds. We have also worked with dozens of teams as we onboarded their tokens and help them set up reserves. In addition, we have collaborated with the majority of the teams working in decentralized finance through our ecosystem efforts, most notably WBTC (Wrapped Bitcoin).
As a result of these engagements, as well as interacting with many of the winners in prominent hackathons, such as ETHIndia, ETHSanFrancisco and ETHSingapore, we have immense faith in the people in this space, and deep appreciation for the power of decentralised applications and technology to reduce the friction of utilizing and innovating on the most common financial use cases today.
While it is critical to have realistic expectations, and understand that the space is still very young, and the use cases still forming, we believe the space will make solid progress again this year and substantial utility will be introduced as part of this. The decentralised world, growing pains aside, has the necessary openness, transparency and innovation to get there.
5 Key Areas Of Focus
There are 5 areas in particular that we believe will be be ready for further innovation and growth this year. These are also the areas where Kyber can be helpful, tapping on our experience facilitating a wide range of token swaps, payments, and financial use cases.
- End User Token Swaps: Improving the ability to exchange tokens seamlessly will encourage usage. Kyber will keep pushing for adoption of this use case in popular wallets, third party websites, and mobile apps. There will be joint marketing campaigns with reputable projects in the space to increase adoption and educate users.
- Exchanges and Trading: More pooling and sharing of liquidity, more trading and arbitrage opportunities. Kyber will invite more centralized and decentralized exchanges to leverage the on-chain liquidity pool that is available in the network. We will also connect to other on-chain liquidity sources to integrate them to the combined liquidity pool. On the other hand, the team will provide more tools, API documentation for other traders and takers to easily trade with Kyber.
- Payments For NFT and Commerce: Increase usage of crypto to make payments for goods, services, and NFTs (Non-fungible tokens e.g. Etheremon), in a completely decentralized manner. Kyber will drive adoption of crypto payments, especially those involving stable coins, to make it easy for anyone to pay from other tokens, and for merchants to accept cryptocurrencies without the worries of value volatility.
- Decentralized Finance: Emergence of a variety of advanced financial instruments and options to manage assets in ways that provide either stability or leverage, and independent of barriers, exorbitant fees and opacity. Several financial DApps and protocols have already integrated with Kyber for their liquidity needs in their lending networks, decentralized funds and so on. Kyber will keep collaborating and working with other teams and protocols to deliver more integrations and strengthen our position in DeFi.
- Liquidity Providers: Providing a range of options to allow token holders to contribute their assets seamlessly in order to earn fees, while facilitating liquidity for the growing variety of ecosystem needs. Kyber will connect with more on-chain liquidity sources (e.g. Uniswap, Bancor) to provide an aggregated liquidity pool for users, while at the same time making liquidity contribution much easier for end users with permissionless order book reserves.
So far in 2019, Kyber has been enabling in-wallet token swaps for Enjin Wallet, facilitating payments for real world items through EDCON’s acceptance of Kyber-supported tokens for ticket purchases, and we have continued the expansion of our reserves with The Abyss onboarding as the 16th reserve. We have also started working with major players on ecosystem initiatives, for instance an open initiative with ConsenSys and other partners to simplify crypto-compliance around the world.
We will be launching KyberSwap as a standalone token swap service in order to better boost end user adoption. There will be a clear distinction between KyberSwap the token swap service, and Kyber Network, the protocol that powers the service. Within this context, KyberSwap will soon move out of kyber.network to its own dedicated domain KyberSwap.com. This move will be accompanied by a host of new features, including a brand new interface, AI-powered token analytics to help you decide on which tokens to swap, and many others. Read the KyberSwap.com launch announcement here.
Besides the above mentioned efforts, we will also be working with the rest of the larger crypto ecosystem to promote and innovate on more daily use cases that can be incorporated into the lives of regular investors and users. This will take the form of joint marketing efforts, hackathons and awareness building. Growing the decentralised economy is not the role of a single project, but requires the joint effort of all the passionate users, committed developers and prominent projects in the space.
Towards a community that will maintain, grow and govern Kyber together
The long term goal of Kyber Network is to become the main transaction layer for the decentralized economy, facilitating the essential instant liquidity between all types of tokens – a property that is necessary for a large number of economic use cases.
As the initial builders and maintainers, the Kyber team will ensure that the initial implementations are executed and we will bootstrap adoption for these implementations. We aim to install the technical framework for the creation of projects such as KyberSwap and reserves that are both profitable and have the potential to become key anchors of the Kyber protocol, while we grow the necessary community.
To achieve long term sustainability for Kyber, we will need to have a strong community of developers, network maintainers, and KNC stakeholders who can maintain, grow and govern Kyber together. This community will need to be able to work together to: build tech, understand the overall system to make good proposals and decisions, and help to drive adoption in terms of end users, applications, and implementations on other chains. Growing this community will take a few years and mainly take on 3 forms:
- Continued awareness, education, and technical training to reach a critical mass of community members with the required knowledge and expertise.
- Creating a fertile ground for the community to contribute to decision making, protocol evangelism, creation of new use cases and improving the core source code.
- Putting in place an open, transparent and sustainable incentive system to reward contributors. This will take the form of open grants, treasury for proposals and participation rewards.
It is important to incrementally move towards a future where adoption and technical contributions comes from an educated, engaged and empowered community, rather than a single centralized entity.
KNC: Economic, Governance, Treasury Functions
The goal of KNC (Kyber Network Crystal) is to make Kyber function as a cohesive community and robust economic system.
Besides KNC’s current role in facilitating the smooth operation of the reserves system and being utilized for network fees, we will continue to observe how best to utilize KNC to enhance the economic value of the various implementations Kyber will be on. Steps will be taken to propose any changes or improvements. In the meantime, plans will be made for KNC to be used in the context of community governance and treasury for any smart contract-enabled blockchain the Kyber protocol is implemented on.
Firstly, KNC will be utilized for DAO (Decentralized Autonomous Organization) governance, both at the protocol level and for the individual implementations on the various chains. For protocol level specs and initiatives, we expect there to be an overall DAO which will make decisions for the overall direction. For individual implementations, there will be a host of tokenomic parameters, token listings, and upgrade decisions which the community will in turn be able to vote and decide on. This DAO will be one manifestation of our community building efforts moving forward.
Secondly, on top of the economics and governance usage of KNC, we expect there to be a KNC-based treasury where the network maintainers and DAO members can leverage as a source of funds to fund development, marketing and growth of the Kyber protocol via open grant programs and proposals. This will allow a network of the most important contributors — those who understand Kyber well, drive adoption, and build the core platform — to earn part of their income with KNC. By getting KNC into the hands of contributors, and giving them an economic interest in the success of the platform, we will chart the way forward towards a sustainable, decentralized system and community.
KNC is an integral part of Kyber, both at the protocol and the governance level, and will serve increasingly important roles in our push for community participation and governance.
In 2018, we made good strides in community development, setting up a developer community that regularly engages in meaningful discussions to improve the protocol and assist fellow community members in solving technical issues. We also had the opportunity to interact with many talented developers and crypto enthusiasts by participating in various global hackathons, conferences, and meetups, which we have highlighted in our August, September and October-November community updates.
That said, community involvement so far has been mostly limited to basic feedback and discussion, as opposed to active participation. We will be working hard over the next few years to start putting in place a KNC-based technical, treasury, and governance system that facilitates effective collaboration, coordination, and convergence between all the stakeholders.
In 2019, the plans will take the form of DAO experiments where KNC stakeholders and the broader Kyber community will be able to vote on important tokenomic parameters, opening up the ability for the community to contribute to marketing and engineering efforts, as well as ensuring an open, transparent grant system for anyone to propose projects.
These plans will be rolled out gradually over the course of the year. It will be accompanied by a consistent push on awareness to broad sections of the crypto space, education to existing community members, and training for developers to understand the Kyber protocol.
As such, it is best to understand this year as laying the foundation for creating a long term and sustainable communication, governance and treasury framework. Governance changes, in particular, take a long time to be fully understood, adopted and accepted by the community and achieve legitimacy. It is critical that we, as a community, do not optimize for the short term but focus on making Kyber a vital backbone of the decentralized space for the long run.
We hope this post articulates the rationale and the objectives to everyone who is involved or interested in being involved in the Kyber project. As the initial protocol maintainers, we are focused on the key objectives outlined in this post.
- Helping Kyber the protocol become implemented in blockchains where vibrant decentralized economies are taking shape.
- Driving awareness and bootstrapping adoption of Kyber and the decentralized economy in general.
- Establishing a sustainable collaboration, governance and treasury system for the key stakeholders to effectively work together.
2019 will represent both an affirmation of the work that had been done, while simultaneously expanding the scope of Kyber. The decentralized world shines bright, and it is critical we let go of false prophets, platforms and promises, and focus on delivering, shipping and adoption.
Ultimately, we have a plan to bring Kyber forward, where core developers, partners and stakeholders come together as one community to cultivate both the Kyber ecosystem and the wider decentralized space. For all of us, there will be many hurdles to cross, many lessons to learn, and many disagreements to overcome. But we are confident that we will emerge stronger out of every challenge, and together, we will do our part to move towards a more innovative, open and transparent world.