06 Sep Kyber Network
Kyber Network (KNC): Crypto’s Crystal
Published: 1st August 2018
Twenty years ago the dot com boom began. Investors as well as everyday people were throwing money at any company with ‘.com’ in its name. Along with solid projects, many startups with no stable vision and purpose were on the fasttrack to an IPO. The ongoing euphoria and greed blinded many.
The problem was, all these people were rich ‘on paper’. At this point you need one major player to pull the trigger by cashing out shares to fiat and you get the recipe for a market crash.
We witnessed Amazon go from $106 per share to $6 in less than 2 years. That’s a -94% loss.
At the same time, Adobe went down from $40 per share to $9. That accounts for -77% loss.
Apple went from $5 to $1. That’s a -80% loss.
The list goes on.
The point is, even though the aforementioned companies were making great products at the time, they were all slashed down by the massive market crash.
Fortunately, there is always sunshine after the storm. Dot-coms did a great job revealing which businesses are here to stay and which ones were nothing but money grabs. Companies with a true vision, a purpose and wise fund spending have passed the heavy stress test of the market.
Does the current bear market affects their operations? No. And we have the numbers to prove that.
BAT Project has reached new heights in terms of Brave browser downloads both on desktop and mobile.
Thrilled that Brave for @Android now has over 10 million downloads! 😍 Thank you to our users for choosing to browse faster and safer, and for valuing privacy protection! https://t.co/ME6ZkOYfLx pic.twitter.com/nBmpMFEcBa
— Brave Software (@brave) August 24, 2018
The amount of trades on 0x protocol went from 25/day in December of last year to 2000/day in August of this year and is still growing
The average token burn of REQ went up from 8/day in April this year to 66/day as of the time of this writing and keeps growing.
These are clear signals to us that the projects we picked are going in the right direction behind the curtains. That’s exactly how companies like Amazon survived the rough times.
Here at London Letter we are hustling to deliver a crypto project to you with the highest chance of surviving all types of crypto market crashes.
Without further ado, let’s welcome the next project that meets our requirements…
If we had to pinpoint one of the main reasons why companies fail it would be bad timing.
Take sixdegrees.com as an example – the very first social network platform founded in 1996. It was a great idea and it actually had thousands of users registered. The problem was, they were too early on the market, as only a small portion of the population had an internet connection back then. Not to mention the fact that internet users at the time did not want to expose their identity.
Pets.com – they showed up in 1998 and tried to quickly dominate their niche by spending tons of money on TV ads. They even bought a Super Bowl ad spot.
How could they have failed with $300 mln backing up their big plans?
Even though their marketing campaigns made everyone talk about pets.com they did not foresee the problem of the early stages of the internet. People were not used to paying for stuff online with their credit cards. It was not as straightforward of an experience as it is today. Not to mention waiting days for the delivery.
The traffic pets.com was getting did not convert into enough sales to survive.
The list of dot com fails goes on and on.
The same principle of bad timing applies to crypto as well.
There are many projects out there that are probably too early on the market.
We have to ask ourselves does the market really need another Tinder or privacy coin in the crypto space when we still have not figured out the best way to send tokens?
We believe that now is the time to invest in fundamentals, like payment processors, exchanges or protocols which lay the foundation for more advanced applications in the future.
You don’t do heavy lifting on your first day at the gym, right?
Kyber Network not only has the perfect market timing, it also allows us to invest in it at bargain price.
Why should you care about Kyber?
Back in the days when your papa wanted to travel outside the country he had to exchange
your national currency for a foreign one.
It was not an easy task.
You had to drive to a currency exchange, stand in line and wait your turn, all the while hoping the company did not shave you on the fees and spread.
Luckily for us, this process has massively changed over time. With the rise of the internet, you can exchange money in your personal bank account at the current rates.
Not that long ago people were still afraid of paying with their credit cards in foreign countries. If there is anything that comes close to that type of fear, we could easily compare it to an accidental push of the internet button on our pre-smartphone-era device, a mistake that would cost us a fortune.
Today we pay easily and instantly using credit cards for goods in foreign currencies and the banks charge a tiny, barely noticeable fee.
Fintech has realised that the speed and ease of use gives them advantage over their competitors and the process of optimizing user experience won’t stop.
The papa problem is now occurring with crypto
Have you ever tried to buy something with your beloved crypto? Say you hold some Basic Attention Tokens on your Ethereum Wallet and you’d like to buy a powerbank that costs 0.1 ETH.
People who don’t know kyber would probably take the long way around:
1. Go to their preferred crypto exchange
2. Send BAT tokens to this exchange
3. Wait for confirmation (and expose your tokens to a slight hack/bug risk)
4. Pick ETH/BAT trading pair
5. Set an order, wait for it to fill
6. Withdraw 0.1ETH
7. Go back to the online store, happy to buy that powerbank
8. You see the price has changed to 0.11ETH, as it is being constantly adjusted to ETH/USD value
9. You realize you just spend 20 minutes to get that 0.1ETH
10. You say ‘screw this’ and buy a powerbank on Amazon with FIAT instead
Same process, but with Kyber:
1. Go to Kyber Swap
2. Pick BAT <> ETH Swap Pair
3. Click Swap
4. 0.1 ETH is right there, in under 30s
5. Buy the powerbank
Surprised that there is no ‘sending and waiting’ step? So were we at first. We’ll explain that later on but trust us – it works as straightforward as it sounds!
Kyber Network allows everyone to exchange Ethereum ERC-20 tokens immediately on chain and it massively shortens the required time to do that.
You don’t go to Forex in order to buy Euros for a holiday trip. In the same way, you don’t want to go to a typical crypto exchange in order to buy a different currency.
There is a need for a service like Kyber Network on the market, but the community has not realised it yet. We have an opportunity to take advantage of this fact before crowds of investors jump on board.
Our dedicated readers know that we strongly believe in tokenisation of businesses, a future where company shares are represented in the form of digital tokens with different utilities. In order to interact with them you will need to use their token. This is getting complicated as more and more projects are being created upon the Ethereum Blockchain.
In today’s world where everything happens nearly instantly within a click or a tap, the speed is crucial, especially when it comes to crypto adoption. Decentralised Applications (DApps) will not only compete against each other in order to acquire customers, but also compete against centralised apps as well.
Nobody is going to spend 15+ minutes waiting to interact with an application.
That’s why we need Kyber, which massively shortens the process of token exchange. Not to mention apps like Request Network that together with Kyber can shorten the whole purchase process to less than 30 seconds.
The speed and ease of use is what the user experience is all about. And very poor user experience is what hinders crypto from mass adoption.
Everyday people don’t care about stuff reserved for tech wizards and investors like us.
Do you think the masses give a dime about this latest cool hashing algorithm or the fact that they can send money with one push of a button?
Kyber Network is helping companies bring that user experience to their customers.
Because of this, we see Kyber working more in the B2B sector than the B2C sector.
Kyber serves a role similar to Visa, but only for token exchange. A tool that other companies can utilize. The same way you don’t see Visa being a local store in your neighbourhood we don’t see Kyber being utilised directly by everyday consumers.
Some may argue that we have Visa cards in our wallet. Yes, that’s right, but these are issued by the banks and companies that Visa works with. A bank works directly with customers while Visa handles all transactions and currency exchanges in the background.
Kyber specifically handles token exchange in the crypto space, which will soon be in high demand.
The problem Kyber solves:
The year 2017 was a year of big promises. These promises came (or did not come) to fruition in 2018 and will continue to happen in the years to come. This is where the crypto companies are put to the test by launching their products. The amount of apps built upon Ethereum keeps rising and the amount of ERC-20 tokens goes in hand.
All these apps have their own tokens and it is getting overwhelming even for crypto veterans to smoothly operate in the space. A service that helps users to better navigate between apps in terms of payments will be highly lucrative for you as its early investor.
Look up at the sky at night.
All the stars, each tiny bright dot, represents a crypto project with its own token. Each of them being far, far away from each other, trapped in their own, unique ecosystems. Kyber can bridge them all, allowing us to travel to each star at lightspeed, instead of using traditional fossil fuels.
This is a very interesting concept that also applies to our lives.
Humankind is always looking to make things faster and easier. Be it production or transportation – the one who figures it out first is fated for success… granted he can convert his potential properly. And dear reader, let us assure you, Kyber can most certainly accomplish that.
Aside from good market timing, the business is all about the product. Kyber’s product is a service of instant token exchange. As stated before, their angle is to work with other businesses, but they also launched Kyber Swap which makes it easy for everyone to take a grasp of how their service works.
Let’s take a closer look.
This is how Kyber Swap panel looks with MetaMask active in the background. Kyber reads the amounts of tokens on our Ethereum wallet (left panel) and quickly displays all the numbers in the dashboard.
From here, with one click on the ‘Swap’ button we can change our 0.5 ETH for 315.9 KNC (at the time of this writing). This exchange also works for any other token you possess.
Let’s press the ‘Swap’ button and see how this works!
After clicking the ‘Swap’ button we are quickly presented with a confirmation pop-up. All set? Let’s confirm the swap!
Then, another Meta Mask pop-up presents us with the summary of the activity we are trying to complete. Let’s confirm!
Another pop-up informs us that the Swap has been broadcasted to the network. In less than 25 seconds we are presented with a final message:
Phew! That’s it. We know it might look like it takes eternity but that process took us less than 30 seconds. Plus, this is still more like service preview for geeks and investors rather than than tool from which most of the kyber’s network activity comes form.
Let’s sum up what just happened here:
1. We converted ETH for KNC at the current best market rates available
2. Transaction occurred on-chain, meaning that our ETH did not leave the wallet to go to some external exchange, which would expose it to risk
3. It costs 0.5$ in gas fees – compare that to the centralised exchange withdraw fees
We see thismore as a demonstration of Kyber’s product capabilities rather than a tool that will make revenue. This process of a safe and near instant exchange is already tied to apps and services where people use Kyber Swap without even knowing it.
We will talk more about existing projects that have implemented Kyber in a moment.
Compared to many crypto projects out there that exist only on a whitepaper, Kyber Swap is like: ‘Hey, this is us and this is our product that already makes us money.’
In crypto, working products or demos are nothing but marketing funnels. Once potential investors land there and see for themselves the product which actually works and generates revenue, their investment decision is pretty much made up.
Seasonal crypto enthusiasts are likely to turn around and look for the next fugazzi moonshot coin.
But the wise investors who do the research before investing their hard earned money are more likely to stay and invest in Kyber, as it is one of the few projects out there with working product.
Soon, the market will mature and so will its investors. People will invest in projects that deliver on promises rather the ones that brainwash crypto newcomers with quick profits.
These days pretty much no one cares about crypto, compared to the attention it got in late 2017. Thanks to that market attitude we can buy Kyber Network Crystal (KNC) early on before other investors realise that crypto as a whole will shift from scammy moonshots to more stable and legit types of businesses.
Is Kyber Network team able to deliver?
We have verified Kyber’s timing, product and its business model with positive check marks. Now it is time for our penultimate factor.
This is the second most important factor when it comes to x-raying a crypto project, but we wanted to walk through Kyber’s product first to make this article more understandable.
Our loyal readers are familiar with London Letter’s rule that the team is the king, product is the queen. Whereas timing is the chessboard.
In this case Kyber Network has more than one ruler.
Loi Luu is the face of the project.
He is the one presenting Kyber at conferences all over the world.
Many people fall into the trap of emotional, pushy presentations. Be it crypto, MLM or some coaching niche. Hosts of such events tend to use that positive vibe to influence the state of the audience and make them invest in their new, world-changing, brilliant idea (we are looking at you, Carlos Mantos).
Additionally, if the project promises you incredible returns with no risk involved it is a red flag for us and you should avoid these types of investments at all costs.
After studying a ton of videos with Loi on stage we fell in love with his non-pushy presentation method. He explains what Kyber is in a simple, non-emotional way. Unlike many projects out there, he is honest about Kyber’s restraints, like it being pretty much tied to Ethereum Network which is currently facing transaction limitations (which developers all over the world are working to solve).
Digging deeper into Loi’s accomplishments we found a very interesting publication regarding smart contracts on Ethereum. Along with other contributors he wrote ‘Making Smart Contracts Smarter’ in which he describes common loopholes, how to identify ponzi schemes in smart contract codes and much more.
Extract from Loi’s article
This ensures us we have the right man in the right place.
As a cherry on the cake, it is worth mentioning that Loi Lu was listed among Forbes Asia’s 30 under 30, 2018 together with Victor Tran.
We can’t move on from here without mentioning Yaron Velner who’s the co-founder of Kyber. One of the really impressive things about Velner is that he ranks among the highest hunters in Ethereum’s bounty program, which proves he’s at the top of his game when it come to blockchain and coding.
Last but not least, there is Vitalik Buterin – one of the most influential and powerful people of the cryptocurrency world. He’s no longer available to advise on crypto projects, yet Kyber has aquired his skill as their advisor. This speaks volumes when it comes to the quality of this project. In a nutshell: Vitalik impress.
Kyber’s approach and community
We have already made sure that Kyber has good market timing and a great product. There are also other factors that we have taken into consideration while picking this project as our September recommendation.
User experience is what sells.
Your product can have a fantastic tech back-end but if the front-end, which is seen and interacted with by your users, sucks, you are not going places. That’s why crypto lacks mainstream adoption.
This is how things are developed though. The internet wasn’t all roses for the first two decades of its existence either. The same is happening with crypto now, but we believe that it will reach mainstream much, much faster.
In order to be adapted by ‘normies’, Kyber Network has to be adapted by developers and crypto geeks first. In fact, they will be the ones to either spread the news of a great product or abandon it.
Kyber has put a lot of work into its large, free and open developer section. This is one of the keys to the success and a proof that external devs can already put their hands on Kyber’s working product and implement its solution. See it by yourself here: https://developer.kyber.network
We are happy to see Kyber is aware of that fact. It is the external developers who will integrate their apps with Kyber and thus make money for its Network.
Kyber’s Impressive Updates
When you look at the way Kyber keep their community up to date, they’re one of the best out there. Their blog posts are detailed, generate a ton of engagement and on the top of that, are translated into other languages which also generate engagement. It’s one of those details that actually makes a difference.
But don’t take our word for granted, take a look yourself at the quality of their updates.
Partnerships – Kinda Big Deal
“None of us is as smart as all of us.” – Ken Blanchard
When it comes to partnerships, Kyber has partnered with some of the best in the crypto space.
On the 24th of November 2017, the partnership between Kyber and Request Network was announced. If you’re new to our site and haven’t read our issue on Request Network, be sure to read it in order to see how serious of a project they are.
With so many cryptocurrencies out there, people will face situations where they’ll be asked to pay using a cryptocurrency that they don’t store. When you’re purchasing something using the Request Network checkout you’ll be able to pay using your prefered tokens and the funds will be forwarded to Kyber and exchanged there to finish the transaction.
However the most important partnership to date is the one with MyEtherWallet (MEW). If you’re not familiar with it, MEW is the most popular, free and open source Ethereum wallet. This crucial partnership will allow greater token accessibility: millions of users can now convert their tokens using MEW. It’s a milestone of great significance that will help bring the project to a mainstream audience.
Understanding the KNC Token
The KNC token is a vital part of the Kyber Network. It’s used as a fee for transactions when between reserves. In a nutshell, reserves are third parties who own big amounts of tokens and provide liquidity for the ecosystem. In return these parties receive part of the fee in the form of KNC token for every transaction they participate in.
As Kyber processes the transaction, it will be burning the KNC token. KNC is essential to the ecosystem and the bigger the Kyber Network becomes, the more tokens will be burned. This approach will boost the demand for the remaining KNC tokens which will increase their value.
If you have a big token reserve and would like to join the Kyber Network in order to provide more liquidity, you will also be required to hold KNC tokens which is another factor that will drive their demand.
The reserves will pay Kyber Network a small fee of 0.01% for using the network and having access to the users.
Here is a perfect example, taken from Kyber’s whitepaper, of how it would work:
‘As an example, for a trade volume of 10 ETH with a 0.01% fee, a corresponding 0.001 ETH worth of KNC will be paid by the chosen reserve to KyberNetwork as a fee for the use of the reserve dashboard and access to network users. Suppose the rate of KNC at the trading time is 1 KNC for 0.1 ETH, the reserve needs to pay 0.01 KNC to the Kyber platform. The wallet/website that helped the user initiate the t n rade will get, supposedly, 5% of the fees, or 0.0005 KNC. The remaining 95% of the fees, or 0.0095 KNC, will be burned forever.’
Another way Kyber is going to drive more adoption is by offering developer tools for free. This allows DApps developers to integrate Kyber into their ecosystem, which will help them expand their reach by accepting more tokens as well as earn a commision with every coin that’s converted within the DApp using Kyber.
The Kyber team did a great job making sure the integration process is not complicated and can be completed within a few hours by providing a thorough integration guide for developers.
Addressing the Kyber vs 0x debate
There is one question that comes up over and over again: what’s the difference between Kyber and 0x?
The thing is, they’re doing different things so they’re not direct competitors even though it might seem like they are on the surface.
One of the differences is the deflationary policy. While Kyber is burning their tokens during transactions, thus reducing the total supply, 0x doesn’t have such a system in place.
As far as public holdings go, 50% of 0x and 61% of Kyber’s tokens are held by the public.
From a technical point of view, 0x is a protocol for others to build decentralised exchanges, whereas Kyber is a decentralised exchange.
Both projects can co-exist and investing in both (we recommended 0x in July 2018) will increase your chance of being on board the right projects tackling the decentralisation issue.
Decentralised exchanges are going to be the future. Big giants like Binance recognised this trend and are already preparing for it. The Kyber Network project provides a trustless decentralised exchange offering instant trades with guaranteed liquidity from reserves and plans to develop for cross-chain transactions.
Whereas there are different projects trying to offer a DEX service, Kyber is the one that offers the ultimate decentralised experiefnce. On top of that, add the fact that they’ve partnered with crypto giants like MEW and have Vitalik Buterin as an advisor and you’ve got a recipe for a high-confidence investment.
Last but not least, we’re happy to see MakerDAO and their DAI token (which we wrote a report about) to be the most traded token on the Kyber Network.
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