Kyber Network is a blockchain-based liquidity hub that connects liquidity from a wide range of sources to power instant and secure crypto exchange for any application without the need for an intermediary. Kyber is powering more than 100 integrated projects and has facilitated over US$5 billion worth of transactions for thousands of users since its inception.
Kyber’s liquidity hub architecture allows developers and the Kyber team to rapidly innovate and integrate new protocols into the overall Kyber Network to cater to different liquidity needs, with the first major protocol being Kyber's Dynamic Market Maker (DMM).
Takers and traders have the option to access Kyber’s liquidity from a single flexible on-chain endpoint, or through each protocol itself, since all of them have their own endpoint for specific needs and gas optimization.
Kyber Dynamic Market Maker (DMM) is a next-generation AMM protocol that maximises the use of capital for liquidity providers with amplified pools that provide high capital efficiency and dynamic fees that optimise returns. Currently in its beta phase, Kyber DMM has already surpassed $140M+ in volume and $15B+ in total amplified liquidity (equivalent TVL when compared to typical AMMs).
Kyber's DMM introduces two key improvements when compared to typical constant product AMMs.
The first improvement is the use of amplified pools for extremely high capital efficiency. Pool creators have the flexibility to program the price curve in advance by implementing an "amplification factor" (AMP), which allows the protocol to focus liquidity around a specific price range for two tokens in a given pool. The result is that, with the same amount of liquidity, the protocol can support trades of higher volume and lower slippage, achieving much higher capital efficiency.
With the same pool and trade size, stable token pairs with low variability in the price range (e.g. USDC/USDT) can be up to 100–200 times better compared to other platforms. Liquidity providers can provide better prices and earn more fees with less capital.
The second interesting feature introduced by Kyber DMM is Dynamic Fees. Unlike most DEXes and protocols which charge a fixed percentage of every trade, Kyber DMM has a dynamic fee model that adjusts to market conditions. It basically increases fees during high volatility periods and decreases them during low volatility periods. This optimises earnings for liquidity providers over time and reduces the impact of impermanent loss.
Anyone can create a Kyber DMM liquidity pool or add liquidity to existing pools; while any Dapp, aggregator, or end user can access this liquidity. Kyber DMM is already integrated with 1inch and Matcha, with more aggregators and Dapps on the way.
Kyber has always maintained a high standard of smart contract security for all of its protocols and initiatives, and has facilitated close to $5 Billion worth of trading volume for thousands of users since 2018. The new Kyber DMM codebase has been reviewed and audited by both the team and external auditors such as Chain Security with no critical issues found, and the codebase remains open source on Github for community developers to review.
As an additional safeguard, Kyber DMM is covered up to $20 Million by decentralized insurance provider Unslashed Finance and has an ongoing DMM Bug Bounty program.
Rainmaker, Kyber DMM’s very first liquidity mining program, officially began on 30th June! Kyber DMM is being deployed on both Ethereum and Polygon Network. With the Rainmaker liquidity mining program, Kyber DMM aims to boost liquidity even further, showcase its important benefits to liquidity providers, as well as bring more DeFi participants and value into the Kyber and Polygon ecosystems.
Beginning on 30th June, at approximately 3.30pm GMT+8, the Rainmaker program started its distribution of ~$25M in rewards to eligible liquidity providers (LPs) on Kyber DMM. Rewards will be distributed over the course of 3 months.
1st Step: Add liquidity
Enter the ‘Pools’ page on the Kyber DMM site. You need to connect your wallet (Metamask, Ledger, WalletConnect, Coinbase wallet) and add liquidity to an eligible pool on Kyber DMM by depositing the required tokens into one (or more) of the eligible pools below. In return, you will immediately receive DMM LP pool tokens in your wallet representing your pool share and start earning standard protocol fees for that pool.
Eligible Rainmaker pools are labelled with the 💧 raindrop icon next to it on the left. These pools are eligible for yield farming.
A) Eligible Liquidity Pools on Ethereum
Duration: 600k blocks (3 months)
Rewards: 12.6M KNC (~$20M) distributed equally across five eligible liquidity pools
B) Eligible Liquidity Pools on Polygon
Duration: 2.4M blocks (2 months)
Rewards: 2.52M KNC tokens (~$4M) and 454,545 MATIC tokens (~$520,000) distributed based on the following allocation
2nd Step: Stake DMM LP tokens and start receiving liquidity incentives
Enter the ‘Yield’ page and stake your DMM LP tokens in the corresponding farming pool contract. You will have to approve the tokens if this is your first time. You can view the amount deposited under ‘My Deposit’.
APY here refers to the annualized percentage yield based on pool fees + rewards.
Once you have successfully staked your DMM LP tokens, you will start receiving additional KNC (and MATIC, depending on the pool) liquidity rewards on top of protocol fees.
Every liquidity provider that adds liquidity to eligible pools and stakes their DMM LP tokens will receive KNC or MATIC rewards over time, with the reward amount dependent on their share of the total staked DMM LP tokens in the pool. Distribution will be linear, with the same reward released every block. The longer you provide liquidity, the more rewards you receive. You can unstake your DMM LP tokens at any time.
Your total rewards collected from adding liquidity and staking is also displayed and you can either harvest your rewards all at once or from individual pools.
Important: Please use the official Kyber DMM user interface to stake LP tokens. Direct transfers to the liquidity mining pool address will result in the loss of your deposited tokens to Kyber DMM.
3rd Step: Harvest and Claim Rewards
After being allocated KNC or MATIC rewards, you will have to harvest your rewards.
Harvested rewards are locked initially and vested linearly over 30 days. This linear vesting mechanism is an essential governance safeguard and ensures a more robust incentive system for Kyber Network.
Ethereum Lock Duration (Linear vesting): 200k blocks
Polygon Lock Duration (Linear vesting): 1.2M blocks
Navigating to the ‘Vesting’ tab, you can view how much of your KNC or MATIC rewards have been claimed, locked, and unlocked since the beginning. You can also view your current and past vesting periods.
Depending on how many times you harvest rewards, there could be multiple vesting periods running concurrently. But please note that gas is required for every harvest so you might want to accumulate a reasonable amount of rewards before harvesting them. View past transactions by clicking the ‘History’ button.
Once unlocked, rewards can be claimed at any time. You can choose to claim all the unlocked rewards at once or only claim for certain vesting periods. Join Rainmaker today to earn competitive rewards on Kyber DMM!
To recap, here is a simple infographic summarizing the Rainmaker Liquidity Mining Program!
Learn more about Rainmaker here.