Market Cap
24h Vol
7051
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76507
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2021-04-08

New platform will boost DeFi's growth?

Decentralized exchange Kyber has launched Dynamic Market Maker, or DMM, which it claims is a world first.

The new platform, announced April 5, is designed to optimize fees and provide extremely high capital efficiency to liquidity providers.

One of the main differences between the new Kyber platform and regular Automated Market Makers or AMMs is the fee generation system. While platforms like Uniswap charge a fixed trading fee of 0.3%, the new DEX will calculate fees dynamically, increasing during periods of high volatility and demand and decreasing when markets are calm. This encourages traders to take advantage of cheaper trading opportunities that improve LP and platform capital efficiency.

The system mimics Uber-style surge pricing, which raises prices when there is high demand for rides, such as during bad weather or rush hour, and lowers them when there is less demand and traffic volumes return to normal.

Kyber Network is a chained liquidity protocol that has a DEX called KyberSwap that allows users to exchange crypto assets without a central order book or operator. Much of the inspiration for the new DMM was taken from the current Uniswap interface.

According to the DMM dashboard, liquidity on the platform currently stands at $20.5 million, with daily volume of $490,000. Kyber's native token, KNC, has retreated in the past 24 hours, falling 5.7 percent to $3.13, according to Coingecko.

The new DMM also supports a "programmable price curve," which allows liquidity pool creators to adjust prices through a "boost factor" based on the nature of the relationship between two tokens.

Essentially, tokens that have less deviation from their prices, such as stablecoins, can have a higher amplification factor, which allows for more liquidity without having more tokens in the pool. These features are also included in the Uniswap v3 update, which also aims to improve capital efficiency by optimizing the binding curve.