Kyber stands as a decentralized crypto exchange and has recently launched a new Dynamic Market Maker or DMM. According to Kyber itself, this is a world-first DMM to ever hit the world at large.
A Brand New Platform For DeFi
The platform itself, which was announced on the 5th of April, 2021, was designed with a few key optimizations in mind, particularly with liquidity providers with extremely high capital efficiency as well as optimizing fees.
Now, as for the differences between Kyber’s latest platform and any other old Automated Market Maker (AMM), the big difference comes from the fee generation system. Uniswap charges a fixed 0.3% trading fee for all crypto transactions, but the DMM charges these fees dynamically.
What this means is the fees will increase during times of high demand and volatility, but will subsequently decrease when the markets start to quiet down. What this will allow is traders will automatically start to leverage cheaper trade opportunities when there’s a quiet time, which itself will help improve the overall capital efficiency for both the platform and the liquidity providers.
Supply Vs Demand
Now, this sort of pricing strategy is quite familiar to most urbanites: Uber leverages the same style of surge pricing, increasing the costs of using the service based on the amount of demand for the rides in question. This increase in price can be decreased as the demand for the service decreases and traffic starts to return to normal levels.
As for the stats of the platform itself, the DMM dashboard shows that it boasts a total of $20.7 million in liquidity, with another $320,000 being recorded in daily trade volumes. The KNC stands as the native Kyber token and is currently trading hands at around $3.24 a piece.
Now, this new DMM also boasts something called a “programmable pricing curve”. This tool allows the liquidity pool creators to customize their pricing, doing so by way of a so-called “amplification factor,” which itself is based on the nature of two tokens’ relationship.
The fundamentals of this tool are that tokens boasting lower price deviation, such as stablecoins, boast a higher amplification factor. This allows the liquidity to increase within the pool without actually needing more tokens. This same feature was included in the upcoming V3 upgrade for Uniswap, as well, with Uniswap planning to improve capital efficiency through bonding curve optimization.