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Decentralized exchange protocol Kyber Network (KNC) has announced the launch of a dynamic market-making (DMM) protocol. According to the announcement, the protocol is better than the automated market-making (AMM) protocol because it’s more capital efficient.
After months of research, we're excited to unveil the mainnet beta of Kyber Dynamic Market Maker (DMM) protocol! 🚀https://t.co/RjjAK3qe5V is a next-gen AMM designed to optimise fees and enable extremely high capital efficiency for liquidity providers. https://t.co/aSMArRzw7t pic.twitter.com/QyvPEIOeQb
— Kyber Network (@KyberNetwork) April 5, 2021
The new Kyber DMM will be optimizing and maximizing earnings for liquidity providers, according to the announcement by the company.
With this launch, the DMM has been upgraded with two new features – “programmable pricing curve” and “dynamic fees”.
Amplifying the network balances in the pool
Chief technology officer of Kyber Network Victor Tran commented about the new launch. He stated that whenever the tokens are added, the “AMP will virtually amplify the token balances in the pool.”
It means that with the same trade size and liquidity pool, Kyber DMM may offer a much better slippage and liquidity compared to AMMs, Tran added.
Slippage is the difference between the execution price of a trade and its expected price. It has the potential of becoming “100X better” compared to AMMs when it comes to more stable pairs.
However, Tran noted that there is always a tradable price range for the token pair in that pool.
More protocols to be added in future
In terms of dynamic fees, Tran pointed out that each liquidity pool will not be supporting the usually fixed-fee model but a dynamic fees model instead.
Tran added that fees will likely decrease during low market volatility and increase at the time of high volatility. This is right to encourage more trading.
Generally, it will optimize the potential returns for liquidity providers, which is similar to the operational methods of market makers to get the most returns from their trades.
Tran stated that the DMM will not be the only protocol to be launched on the Kyber 3.0 platform, as many more protocols are expected in the future.
The post Kyber Network (KNC) rolls out more capital efficient DMM protocol appeared first on Invezz.
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