Kyber Ecosystem Blog #26 May ‘21

This article was first published on Kyber Network - Medium

Hello fellow Kyberians!

Lets jump right into another packed ecosystem update. The most exciting announcement from our side this month was the proposal to establish the Kyber Network Ecosystem Growth Fund. We believe this new fund is going to turbo-charge liquidity on Kyber and really showcase the benefits of the Kyber Dynamic Market Maker to liquidity providers. This fund will not only bring more liquidity providers onboard, but also attract more DeFi participants and more new community members to the Kyber ecosystem. Let’s explore what this proposal is and what it can achieve.

Ecosystem Growth Fund

There are two components to KIP-8, we are proposing that the Kyber DMM protocol gets added as a new liquidity protocol on Kyber’s liquidity hub, and in parallel, the KyberDAO is allocated a to-be-minted 42M KNC to distribute as part of the 12 month Kyber Ecosystem Growth Fund. These two components are connected as currently the DMM is not part of Kyber’s liquidity protocol and therefore does not accrue trading fees to the KyberDAO. Once the DMM is added as a new liquidity protocol on Kyber, it establishes a link to the KyberDAO and this opens a path to the KyberDAO to not only collect fees, but in turn, also distribute incentive rewards to the DMM.

Liquidity Mining and Ecosystem Collaborations

With the 42M KNC at its disposal, the KyberDAO can use part of this KNC in the Ecosystem Fund to incentivize liquidity by implementing a liquidity mining program which, as we have seen from other large DeFi projects like Aave and SushiSwap, is an incredibly powerful tool to bootstrap and increase liquidity. This program will showcase the DMM as the most capital efficient venue to provide liquidity from in DeFi. Liquidity providers attracted by the incentives provided by this fund will gain first hand experience on ...

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Kyber Network - Medium

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