Victor Ugochukwu · Dec 4, 2020 . 9min read
KyberPRO to help bridge the gap between traditional finance and DeFi
With the launch of KyberPRO, the Kyber network aims to provide a holistic approach by bridging the gap between DeFi & traditional finance
By Victor Ugochukwu · Oct 26, 2020 . 8min read
Kyber Network may sound obscure but definitely not new in the world of cryptocurrencies, specifically in the DeFi sector as powered by Ethereum. The trio of Loi Luu, Victor Tran and Yaron Velner founded the Kyber Network in 2017 after raising 200,000 ETH via ICO, worth $50 million as at then. Targeting a niche and serving it effectively may be a good strategy for a business or industry. However, when the goal is to bridge the DeFi enclave with traditional finance, then a holistic approach is needed to accommodate both the budding DeFi and the established traditional finance, otherwise called “TradFi”. Kyber network is out to achieve that noble objective with KyberPRO using composability to consolidate among other DeFi solutions out there as well as connect the splintered DeFi ecosystem with the larger traditional finance industry.
What is KyberPRO and significance to the DeFi ecosystem?
The Kyber team officially released the KyberPRO three days back as an API and suite of services. It addresses head-on a holistic, the problems of on-chain market-making, especially for institutional funds who may have their risk threshold limited.
The unbelievable growth we saw in DeFi this year couldn’t have been expected by the established centralized exchanges like Binance, Coinbase, OKEx, Kraken etc. They (Centralized exchanges) were able to mimic traditional finance platforms in speed, UI/UX and richness in liquidity. Hence, using the conventional approach, big exchanges were able to use a central limit order book approach to match traders on their platform. Thus, the risk persists. Traders will have to move their assets into exchange wallets to perform trades. Hackers continually target exchanges to steal funds. This makes the approach untenable to strong advocates of privacy and decentralization.
Automated Market Makers to the rescue
Automated market makers (AMM for short) traversed the central limit order book approach. This method and solutions adapt order book to on-chain trading or even do away with it entirely. Nonetheless, this is still fraught with problems. The security of on-chain transactions, especially on a low-throughput network Ethereum means slowness in transaction confirmation. The tradeoff has always been to pay very high fees to push for quicker transaction confirmation to miners. This usually doesn’t go down well with institutional funds who may want to tap into DeFi.
The Kyber team developed KyberPRO to be a holistic, institutional friendly DeFi framework for on-chain market-making. KyberPRO is an API and suite of services comprising end-to-end framework for on-chain market-making in DeFi.
What makes KyberPRO significant is that it comprises of thorough documentation, SDK developer toolkits, technical and operational support. More importantly, it has got a specific liquidity solution called the Fed Price Reserve system.
Although Kyber has competitions like Uniswap and 0x’s Matcha, KyberPRO looks revolutionary in a specific sense. Specifically, DeFi protocol composability like these that build coalitions, foster connections, and create composable products constitute a significant win. Kyber provides hands-on support for those deploying KyberPRO, as well as the on-chain simulation of traditional financial products. This could be the long-awaited bridge between DeFi and traditional finance.
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