This article was first published on Kyber Network - Medium
Kyber: Delivering a Sustainable Liquidity Infrastructure for DeFi
It has been a crazy few months for decentralized finance (DeFi) and Kyber Network. The recent yield farming and liquidity mining trends in DeFi have created an environment that is ripe for innovation and growth, but at the same time plagued with a multitude of tokens, scams, and an unhealthy obsession for unsustainable yield. Even with its huge potential, the DeFi world is fraught with uncertainty.
Instead of chasing fleeting trends, the Kyber team has been biding our time and focusing on our goal of building a sustainable and antifragile liquidity infrastructure for DeFi that is built upon real network growth and can weather all seasons.
We have written this strategy update to share some thoughts with the community regarding how we perceive the current environment and elaborate on our plans for Kyber moving forward.
Where We Are
First of all, we would like to present an honest assessment of the current position Kyber is in. The yield farming trend and explosive increase in the number of DeFi tokens have captured the attention of the space. ‘Liquidity mining’, where liquidity providers gain newly-minted tokens for contributing liquidity to a platform, has driven huge token inventory to various Automated Market Makers (AMM), allowing them to frequently outperform our (more capital efficient) Automated Price Reserves (APR) in terms of liquidity for certain token pairs.
For now, Kyber’s architecture does not support open integration with liquidity mining protocols or permissionless contribution of liquidity by any user. This was a deliberate design choice to mitigate the proliferation of scam and non-compliant tokens, while we develop the KyberDAO and a more sustainable liquidity infrastructure. However, this also meant that Kyber was not able to serve the liquidity needs of many yield farming-related activities and missed out on substantial trading volume ...
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Kyber Network - Medium