Category Archives: Katalyst

What is Katalyst by Kyber Network | Protocol Upgrade & New Token Model

What is Katalyst by Kyber Network | Protocol Upgrade & New Token Model

Welcome to this crypto and blockchain video posted by DeFi Dude. In this video you learn about Kyber Network and the Katalyst protocol upgrade and new token model being released in 2020.

Kyber Network

Many people have been showing an increased interest in the blockchain project known as Kyber Network. Here we will be doing a brief overview of the Katalyst protocol upgrade to the Kyber Network.

If you don't already know what the Kyber Network is we have shared a few video reviews of Kyber Network which do a really good job at explaining the platform. In summary the Kyber Network is a liquidity protocol designed to have a lot of assets on standby ready to be used in conjunction with a decentralized application or decentralized exchange.


Katalyst Protocol Upgrade for Kyber Network

Katalyst is changing many things to do with how the Kyber Network works. In the new system 'reserve managers' are going to be paying no fee and instead they will be receiving rebates. These rebates will be a percent of the network fee that's going to be sent directly to those who are providing liquidity. This in-turn incentives liquidity. The previous/current model did not incentivize liquidity because the reserve managers actually paid to provide the liquidity. Which greatly cut into profits for the participants of the network.

Why is more liquidity good?

You want to provide more liquidity because more liquidity means less slippage, more competitiveness, bringing more users, which creates a better ecosystem, that generates more fees generated from higher transaction volume.

Katalyst Upgrade KNC

Dapp integrations and new fee model

In the previous/current model 30% of fees are given to the decentralized application integrators. Once the Katalyst upgrade has been implemented into Kyber Network the new protocol will allow for dapp integrators to set their own fees. The fee percentage will no longer be set in stone in the smart contract and will be a variable that the dapp integrators can play with on top of the base rate.

How do KNC holders benefit from Katalyst upgrade

KNC holders are going to benefit from this upgrade because they are the one's who will be doing the voting in the KyberDAO. Katalyst revolves around the KyberDAO a decentralized autonomous organization in which a group of governors can vote on various things to do with the network and protocol.

KNC holders stake their KNC tokens in the KyberDAO and get a voting weight based on their staked holdings. The weight is how much power or say you have on whatever you are voting for. An example is if you have 20 KNC and the total supply was say 200, you have 10% weight and you are voting for 10% of the entire network. You can vote on things such as fee governance.

Katalyst rewards - Burn vs Inflation

Through Kyber Network transactions the fees are dispersed back to the KNC holders as per the weightings of staked tokens and at the same time a percentage of tokens are burned from the total supply. Because the tokens are burned there are less in circulation which makes the remainder of the tokens more valuable.

Katalyst Flow

Other staking platforms do not burn tokens but release more tokens into the supply which creates inflation. This is still a reward and you are receiving more tokens, but inflation makes the circulating supply increase which intern decreases the value of the existing tokens.

With Kyber Network there is no inflation, the network is sustained just on the network fees generated. It is actually a deflationary supply. With the Katalyst upgrade KNC holders will have voting rights on the percentage of tokens that get burned and the percentage of fees. The Katalyst upgrade gives KNC holders more say on the governance of the Kyber Network.

What do you think about Kyber Network? Share this project and this page and view more about Kyber Network from the links below.

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