With Staking on Horizon, Kyber Token Holders Accumulate
Staking turns KNC traders into hodlers.
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Kyber Network’s native token is up 11% in the last four days. With staking set to go live this year, potential tailwinds indicate that Kyber could become a force to reckon with in the months to come.
DeFi Isn’t Backing Down
High volume traders look for a handful of features when they pick their trading avenue. Liquidity and efficient customer service are by far the most common and vital requirements.
The advent of DeFi gave birth to non-custodial trading and finance. Unlike centralized exchanges, DEXes eradicate intermediaries from the process of exchanging funds. Customer service needs are thus drastically reduced as traders coordinate with each other through rules enforced by code.
If a significant amount of liquidity accrues to these protocols, and if the trade matching engines display a healthy amount of efficiency, DeFi could truly wreak havoc for custodial finance.
Kyber Network has long been a gatekeeper for Ethereum’s DEX experiments. Although Uniswap enjoys a liquidity pool far greater than that of Kyber, the latter is not backing down.
In fact, Kyber has consistently enjoyed a greater weekly trade volume than Uniswap.
Kyber Network Fundamentals
Santiment Insights looked at a few key variables to decipher the recent price appreciation in Kyber’s native token – the Kyber Network Crystal (KNC).
Daily active addresses have been spiking once again. Santiment noticed that there is a strong correlation between this metric and price. This means that, in the past, daily active addresses spike whenever the KNC price rejects resistance and begins a downtrend.
The general theory is that as KNC volume grows, more speculators emerge to take part in short term moves. This leads to whales dumping their holdings and establishes a reason for the correlation between active addresses and KNC price.
Together, Kyber and Uniswap account for nearly half of all DEX volume. IDEX, 0x, and Maker’s Oasis have also garnered meaningful activity on their platforms.
Interestingly, the DEX market was previously cornered by IDEX with almost 60% of volume at one point. Since September 2019, Uniswap and Kyber ate into IDEX’s market share, leaving them with 20% on a good month.
Social media chatter has also been positive for Kyber Network in recent weeks. According to Santiment, the last few days have yielded the highest number of social media mentions for Kyber and KNC since December 2019.
One of the most interesting takeaways from Santiment’s data is that exchange flows for KNC have fallen off a cliff since early December 2019. This was around the time Kyber began discussions around modifying their token economics and integrating a staking mechanism.
Exchange flows for KNC decreasing looks like a bad sign from traders on the surface.
But when one couple the above with the fact that Kyber will introduce staking this year, it depicts a clear narrative that users are moving from trading KNC to hoarding KNC in anticipation of staking.
All things put together, it seems like Kyber Network’s consistency in terms of volume and token economic tweaks are the fundamental drivers for the recent price appreciation.
With DEX volume growth continuing into 2020, Kyber is well-positioned to capitalize on the macro narrative of DeFi.
Staking also promises to bring value capture from the protocol to the KNC token by directing fees earned by the DEX to stakers. This means if Kyber continues to grow and staking KNC takes off, the intrinsic value of the token will rise and cause further price appreciation.