Kyber Network System Review and Rating (SVET)


The rise and the rise of DeFi was propelled by the sudden (but not unexpected) advent of the decentralized exchanges / swaps protocols after their initially more successful and marginally older brotherins — custodial platforms — had gradually succumbed to severe regulatory pressure and one by one started to introduce humiliatingly annoying and highly controversial KYC/ AML procedures.

Here I have to mention that, to the credit of our freedom-loving and oppression-defying industry, there were some who tried to actively resist by moving their businesses into more crypto-friendly jurisdictions reducing their degree of interference with users privacy to a reasonable minimum.

(Some, however, might object that it was more the matter of pursuing business interests rather than following the ideological adherence).

Totally with accordance to a free-market’s magic of ‘an invisible hand’, those users, which have to enjoy a particularly high level of their governments’ ‘care’ about how and where they dare to spend their hard-earned dimes, happily embrace the brave and rapidly expanding world of DEXs.

One of those new species — ‘Kyber Network’ (KNC) — I have decided to review and to rank on the SVET scale (‘System’ — ‘Vision’ — ‘Execution’ — ‘Trust’) today.

According to its WhitePaper (v0.1 ‘An On-Chain Liquidity Protocol’ as of 22 April 2019): ‘Kyber, a fully on-chain liquidity protocol for implementing instant cryptocurrency token, swaps in a decentralized manner on any smart contract enabled blockchain.’

The one crucial characteristic of DEXs — that they have a serious incentive to stay opened for an external scrutiny — makes them very attractive for public auditors like me.

That also helps them to maintain an important competitive advantage, creating a level of transparency (in our space often associated with an attractiveness for developers and individual security-focused users) unattainable for even the long established custodial exchanges.

Kyber Network (in addition to the habitual and extensively populated GitHub account) maintains in a number of dedicated web-pages a very thorough record of its overall contracts design features and a description of its core contracts functions for external developers’ access (see link below). Only that alone induces me to raise Kyber’s ‘Transparency’ straight up to ‘a-’ level (‘minus’ is explained below).

As to Kyber’s ‘Engineering’ (‘a’) it is the simplicity itself, which within its two main contracts (KyberNetwork.sol and IKyberReserve.sol) connects Proxies and Maintainers (see below) to the Network, which then, in its part, connects to the Matching Engine, the Storage, Fees Handlers and the Reserve.

(Kyber’s list of main contract functions includes: getExpectedRateAfterFee; tradeWithHintAndFee; addReserve; removeReserve; listPairForReserve; getConversionRate; and trade.)

Basically, it means, that anyone (have to get through Maintainers first :) can create its own Reserve and then control its level and a pricing mechanism. All Reserves allow funds pulling and, in a bunch, create an indispensable feature of the Kyber core protocol — an instant market making, which is based on the best prices discovery among different reserves.

[ Btw, those ‘maintainers’ force me to pull Kyber’s ‘Transparency’ to ‘a-’ levels.

Extract: ‘Maintainers refer to anyone who has permissions to access the functions for the adding/removing of reserves and token pairs, such as a DAO or the team behind the protocol implementation.’ ]

Here we come to one of the major disadvantages for users of decentralized exchanges. ‘Instantaneous’ matching and free-market based Fees Handlers (combined with a relatively small numbers of Reserves) mean that those fees can get astronomically high (as it is currently the case with Kyber where the price paid for one transaction reaches now up to $20).

For a regular, ‘none-wale’ trader, which usually places a large number of relatively small orders that might be a party-crasher.

That reality (combined with the ‘maintainers’ institution and the fact that Kyber has presently only 70 reserved coins) pulls Kyber’s ‘Velociy’ to ‘c+’ level.

As to its ‘Security’, although, I’ve got a relative confidence that the open-for-all parties’ investigations Kyber’s contracts have already provided a practical safeguard for its users, we all know too well that there’s no such a thing as the ‘bullet-proof contract’. It has to withstand the test of time before I can move Kyber’s ‘Security’ up from the present ‘b-’ level.

Result for ‘System’ (Security — Velocity — Engineering — Transparency): b-/c+/a/a-

[Please, do not forget that I am not your financial advisor and all above was not intended to be a financial advise, of course. You’ve got to use your own gray matter enclosed between both of your ears to take all important as well as unimportant financial decisions.]

For the original version of this article, please, refer to:

Link (Kyber WhitePaper):

Image: The old exchange, Amsterdam, Job Berckheyde.

What Is SVET Rating?

SVET Rating is the first public praxiological (human actions driven) rating. It takes into account combine effects of cognitive, emotional and social factors on the decisions of individuals and institutions dealing with crypto currencies and blockchain projects. Uses S.V.E.T. Metrics = System + Vision + Execution + Tokenomics. Includes 16 parameters. Accounts for main drivers of public behavior: technology, economy, organization and psychology. Integrates insights from independent experts and everyday users

  • Security (safety): for defenders (
    - The Protector: Warm-hearted and dedicated, they are always ready to protect the people they care about.
  • Velocity (scalability): for megalomaniacs (
    - The Commander: Outspoken and confident, they are great at making plans and organizing projects.
  • Engineering (design): for geeks (
    - The Architect: High logical, they are both very creative and analytical.
  • Transparency (decentralization): for crypto punks (
    - The Crafter: Highly independent, they enjoy new experiences that provide first-hand learning.
  • Singularity (uniqueness): for Individualists (
    - The Artist: Easy-going and flexible, they tend to be reserved and artistic.
  • Volume (market): for Globalists (
    - The Performer: Outgoing and spontaneous, they enjoy taking center stage.
  • Empathy (enthusiasm): for Tribes (
    - The Persuader: Out-going and dramatic, they enjoy spending time with others and focusing on the here-and-now.
  • TimeLine (road-map): for Visionaries (
    - The Mediator: Idealistic with high values, they strive to make the world a better place.
  • Solution (business): for Dealmakers (
    - The Director: Assertive and rule-oriented, they have high principles and a tendency to take charge.
  • Validity (legality): for Lawyers (
    - The Inspector: Reserved and practical, they tend to be loyal, orderly, and traditional.
  • Equity (finance): For Venture Capitalists (
    - The Advocate: Creative and analytical, they are considered one of the rarest types.
  • Team: for Friends (
    - The Caregiver: Soft-hearted and outgoing, they tend to believe the best about other people.
  • Sustainability (stability): for Sages (
    - The Thinker: Quiet and introverted, they are known for having a rich inner world.
  • Value (venture): for Adventurers (
    - The Debater: Highly inventive, they love being surrounded by ideas and tend to start many projects (but may struggle to finish them).
  • Engagement (usability): for Pragmatics (
    - The Giver: Loyal and sensitive, they are known for being understanding and generous.
  • Transactions (speed): for Travelers (
    - The Champion: Charismatic and energetic, they enjoy situations where they can put their creativity to work.

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