Bringing Amplified Liquidity and Capital Efficiency to DeFi

Transcript

hi everyone my name is shane i'm head of marketing at hybrid network uh today i'm going to be sharing with you a little bit more about uh our upcoming plans for kyber as well as our latest protocol called kyber dynamic market maker or kyber dmm for short and i'd like to thank edcon and the team for inviting kyber to participate in this virtual conference and inviting us to to share about our project so for those of you who are not familiar with kyber network we started back in 2017 and previously we were an on-chain liquidity protocol but with our recent kyber 3.0 upgrade we are now a hub of the different liquidity protocols

catering to different d5 use cases so our aim is you know having in mind that in d5 there are many different target audiences and many different users that require liquidity for different needs we are trying to cater to these different needs by developing different protocols to suit these needs and the the the recent major protocol that we came up with is called the kyber dmm and this caters to uh a general target audience of any liquid liquidity provider that wants to maximize the capital in d5 so one of the some of the key problems that we

observed in the d5 space today is among like the most popular type of liquidity provisioning platform amms or automated market makers is that first they are they can be extremely capital efficient if we are talking about the most common constant product formula type of amms they are very capital efficient as and this is more pertinent especially pertinent for stable coins for this type of amms you can see that because they cover an infinite price range from zero to infinity although this is great you know for

long-tail assets and helping them uh cover uh a big price range due to their volatility for assets where you are more um i mean you can expect a certain uh range upper and lower bound for the range a lot of the inventory that you deposit into the pools are actually not used and so this makes them very capital efficient so you need an exorbitant amount of tvl or assets deposited into the pool in order to achieve decent liquidity second problem that we see that ams face as well is that of course of uh implemented laws and you know this there's a lot of literature around this

this has been covered over the past year a lot of times i'm not going to go into detail but in general a simple uh scenario for implemented loss in a typical amm is that there will be opportunity cost for holding uh two assets right in the pool when you are a liquidity provider in this simple example if you're holding a tnc and if as a liquidity provider in the pool when the kmc price goes up by uh you know a large amount you might have the opportunity cost of you know instead of holding k n c alone hundred percent you can see you're doing it 50 50 for knz if

and you actually you know could emit more by just holding knz so this is of course a very simple example but in general whenever there's price fluctuations for a pool where you're holding two assets you might suffer a potential impermanent loss and third you know with the proliferation of so many amms out there and uh of course there are established reputable projects uh and and amms that uh has been have been in space for a very long time and these are the ones that you can trust right uh more but there are also a lot of new emm's coming up uh that are basically fox of the more established

and reputable ones those that have already gone through multiple rounds of audits these forks might have added more features and this increases the complexity of their emms and that also increases the risk of vulnerability vulnerabilities and bugs and we have seen so many hacks even this past year so a lot of the typical emfs you see today might have poor security as well so having this problem keeping these problems in mind kyber network for our latest liquidity protocol we aim to try to tackle these problems and this protocol is called the kyber dynamic market maker or dmm for short

and this is device first multi-train dynamic market maker so up till today uh most of these market makers are the the typical automated market makers you're seeing for kyber how we are trying to uh our approach right to really ben give more benefits of device space in terms of liquidity is to provide is to provide a more flexible and dynamic type of market maker and we we position this as a next generation amm that helps liquidity providers maximize the use of their capital by enabling extremely high capital efficiency through our amplified liquidity pools and optimize returns for liquidity

providers through dynamic fees and i'll go deeper into the details in the next few slides so for capital efficiency how do we actually tackle this for typical amms as i described earlier the the the constant product formula usually caters to a zero to infinity price range but what we are doing for the kyber dmm is uh concentrating the the price range uh with a lower and upper bound by creating by allowing the crew providers to add an amplification factor to it so if you write i mean if you input

an amp of let's say 1.3 you can enjoy 1.3 times the 30 you know better capital efficiency and this can be done very easily you know within five minutes uh when you create the pool so for most pairs what we recommend is you know 1.15 1.3 it can it differs for a less volatile pairs like wdc and eve of course it can be quite volatile as well but relatively to some new coins a less volatile pair like wptc and if it can be can be five to ten times more capital efficient and this is this uh benefit is very uh clearly observed for stable pairs

like usdc usdt where you can go up to even 400 times uh more capital efficient with better slippage so in general with the kyber dmms amplification factors liquid providers can create amplified poops and uh you know other the the future liquidity providers with when the pool is already created they can add more liquidity to these amplified pools to also enjoy the capital uh the high capital efficiency and with a fraction of the tvl compared to a typical amm the liquidity on the kyber dmm can be much better the slippage can be much lower and the volume generator can be

so this is a very basic example uh for a usd usdc with a tvl of 110 million dollars and uh you know with a lower lower tbl compared to uh typical amm with without any capital efficiency we are able to provide better rates of course you know this also depends on the token pair the token amount the trade size and at any given point in time but just to illustrate how what i mean by amplified liquidity is having a fraction of the tbr compared to another amm and achieving the same or even better rates for the pair

so the second key feature for the kyber dmm is that it has dynamic fees so unlike the static nature of typical amms where there are fixed fee tiers no matter whether the how volatile the market is for the kyber dmm when the market is uh more volatile when there's a lot of demand for the tokens fees actually increase to capture more value for liquidity providers but when the market is less volatile and you see trading volume start to decrease the fees will automatically uh become less so that it encourages more trading and

overall the collected fees will be higher as well and so this offers greater flexibly flexibility compared to typical amps optimize returns for equity providers and in the process it helps to mitigate and reduce the impact of impermanent loss so kyber dmm is fully permissionless and open source anybody can integrate with it any that can integrate with it uh any liquidity provider can create a pool can add liquidity to existing pools and any takers like dex aggregators or any new amms that wants to actually source

liquidity from multiple platforms they can integrate kyber dmm our objective is really to provide as good liquidity as possible for the d5 space and we are very open to help any project that is willing to get very good uh amplified liquidity for whatever depth that they are building be it a game a landing protocol and you need a liquidity for liquidation if you are next aggregator getting the best rates you must integrate the kyber dmm for sure and one of the points where we try to mitigate risk is also not to have an external oracle for

this protocol let's say and as i mentioned earlier in the d5 space there are a lot of hacks happening and uh and one of the main reasons is because some of these developers they are just forking the code from reliable reliable protocols and adding some features increasing complexity but without auditing without insuring the protocol so kyber dmm we have a very strong commitment towards security and reliability we have been audited by chain security it's a very well-known audit firm that was uh you know acquired by pwc we are open source you can look at our

code on github so we welcome community developers to also fact check and verify uh our code and we have an ongoing bounty so reach out to us you know about your white hat if you discover anything we'd love to help and see how we can you know compensate you for your efforts and unlike a lot of protocols we are also insured and we are working with unslash finance and kyber dmm is insured up to 20 million dollars and we are also looking to increase the insurance as our tvl goes up so who can use the kyber dm uh basically anybody in the d5 space

right it covers a broad range of use cases and target audiences so daps and wallets that want uh an easy way for people to swap tokens or just as another liquidity source they can integrate a kyber dmm for example a very you know a popular wallet and in recent times coin 98 has already integrated kyber dmm dex aggregators like 1 inch 0x api matcha uh and and other popular aggregators are also have also integrated the kyber dmm for decentralized financial products let's say if you are lending protocol and need a backend

liquidation mechanism and you require a liquidity protocol to liquidate your assets kyber dmm could be an option for you as well asset management platforms that want to give a variety of options for their users to trade tokens they should ideally integrate the kyber dmm as well and of course token teams that are looking to provide very good liquidity for their tokens when they just do their ido and you know with kyber dmm as i explained earlier with just a small pool you are able to give your users uh and traders very good rates for your tokens

so just to illustrate how easy it is to create a new pool you basically need to just type in the ratio of the tokens you want to add into the pool if you are the first pool creator set your amp so this stands for the amplification factor a higher amp is ideal for more stable pens but for new tokens a lower amp like 1.15 to 1.3 is recommended and based on the amp your active price range uh your upper and lower bound for the tradable range for the token pair and your dynamic fees will also change depending on the amp once the pool is created adding

liquidity is also a piece of cake less than five minutes just key in you know the amount of uh tokens that you wish to add into the pool the required ratio for the pool will change over time depending on the trades that happen through the pool but it's indicated there on the ui and after adding liquidity you get dmm lp tokens that represent the share of your pool so whenever you uh you know return your lp tokens to get back your initial liquidity all the fees that have accumulated uh for for you being an lp will also be withdrawn automatically when you

burn your lp tokens for those of you who are interested in trying out the kaiba dmm we have an ongoing liquidity mining program called rainmaker so we recently partnered with polygon by the polygon phase of the liquidity mining program the first phase is ending soon i think a couple of days if i'm not wrong we are looking to continue that soon but for the ethereum uh part of the liquidity mining is still ongoing so feel free to try it out you are gonna get uh decent uh returns for being a liquidity provider for selected pools so right now we for the kyber dm alone

we have already surpassed 1.1 billion dollars worth of total trading volume so kyber just as a recap hybrid dmm is just one protocol in the entire carbon networks uh hub of liquidity protocols so for whole the whole carbon network we are actually have surpassed six billion dollars worth of trading volume on cyber dmm we now have about 440 million dollars uh in tvl and considering that we are still in beta uh this is uh you know we are we are very happy with the current tvl and and this is on ethereum and polygon so for total amplified liquidity so this is liquidity that is you know when you

compare it to a typical amm how much liquidity effective for it or and what we call amplified liquidity there actually is so it's about 36 billion dollars so how we get this number is for all the pools that have amplified liquidity we we multiply the m factor with the tvl in deadpool and sum all of them are so if you integrate with the kyber dmm and if you add liquidity to kyber dmm and be part of the kyber network ecosystem you also gain access and exposure to all the 100 overdaps that are already using carbon network

so what's next for kyber and kyber dmm so right now carbon dmm has is on ethereum polygon and we will soon be on binance smart chain as uh the dynam our kyber dmm protocol is meant to be multi-trained we are already looking at other networks and chains out there like avalanche polka dots solana and uh you know any popular chain that the community would like us to research and look into will be happy to explore further so for kyber we are very community driven project and uh we always welcome feedback from the community i think at the end of the day

the community is what really drives the success of any project so um for for the next in the short term we are looking at expanding into multiple chains improving the kyber dmm and optimizing it further making sure that it provides very good liquidity for the dex aggregators out there for the depths out there and wallets out there we are also looking at layer 2 specifically roll-up solutions and apart from just deploying into multiple chains we are also researching swaps between chains so on both fronts uh swaps within the chain and swap

between the chains and scaling the whole process through possible layer two solutions these are some of the initiatives that we are looking at so to recap kyber dmm is device first multi-chain dynamic market maker we aim to maximize the use of capital for liquidity providers and for traders by enabling very high capital efficiency through our amplified liquidity pools and we also have dynamic feeds right that optimize returns for liquidity providers by changing according to the market conditions so this week's video to the end of the presentation i really thank you guys for listening in and thank you edcon for uh

inviting us to talk about kyber dmm today just to remind you uh loy our founder is having another call in about half an hour at 11 pm gmt uh and he will be uh on the panel for layer two solutions with chain news methods start wear uh and few laps so uh be sure to tune in for his panel talk as well if you want to learn more about the archivist