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As per the white paper of Kyber Network, the following were the factors that motivated the team to come about the idea of Kyber Network.
- Risks Associated with Centralization:
Although blockchain and cryptocurrencies as a whole are decentralized, but majority of cryptocurrencies are still being traded on the centralized exchanges.
These centralized exchanges operate under the influence of a lot of external factors, such as, regulatory directives (latest being Chinese Authorities banning Cryptocurrency Exchanges), hacking attacks and internal frauds and corruptions, just to name a few.
Lack of Instant Exchange:
Every current exchange in existence today, be it centralized or decentralized, don’t offer an instant withdrawal functionality to their customers.
Shortcomings of Existing Decentralized Exchanges:
The existing decentralised exchanges suffer from high transaction costs and very tedious buy, sell & order cancellation processes. A delay in the execution of orders is inherent, as there is always a time gap between the creation & acceptance of a transaction on the block of a blockchain.
Even though some exchanges tried to eliminate this step by matching the bids offline, before the trade is initiated on blockchain. But this solution violates the trust less nature of decentralization.
Existence of Fragmented Digital Assets:
The inter-convertibility of tokens, from one form to another, is a challenge that every cryptocurrency investor faces on every single day.
Solution (Decentralized Exchange & Payment Service)- Kyber Netwotk?
KyberNetwork will be the first system that implements several ideal operating properties of an exchange including trustless, decentralized execution, instant trade and high liquidity. Besides serving as an exchange, KyberNetwork also provides payment APIs that will allow Ethereum accounts to easily receive payments from any crypto tokens.
KyberNetwork APIs to allow users to pay in any crypto tokens, but the merchant will receive payments in Ether (ETH) or other preferred tokens.
- Pay & exchange tokens
- Pay anyone with your own token
- Hedge against price fluctuation
- Receive payments in Ether
Kyber Network’s Design:
Actors in the KyberNetwork:
Comparison with Existing Systems:
We compare KyberNetwork to existing systems in the table below. Bancor excluded intentionally as they claim to be a platform that focus on community tokens, rather than general purpose exchanges.
Kyber Network has laid out a detailed plan, which started from Aug 2017 and will continue to roll out several deliverables un-till early 2019.
Disclaimer- This is not an investment advice.