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KNC Tokenomics & Utility
Kyber Network Crystal
- Community investors and participants: 61.06% (137,995,600 KNC)
- Company operational reserves: 19.47% (44,002,200 KNC)
- Founders, advisors, early investors (2-year vesting, 1-year lock-up): 19.47% (44,002,200 KNC)
By the end of September 2019, all vested KNC tokens for founders, advisors, and early investors was unlocked and distributed.
With ongoing advancements in token designs, the Kyber team proposed a KNC token upgrade and migration to make KNC much more dynamic and flexible with the ability to support more efficient upgrades, while amplifying KyberDAO’s governance power. This was approved by the KyberDAO in KIP-6 and the migration process began on 20th April 2021.
The previous KNC token was renamed KNCL (KNC Legacy) with the newly created token maintaining the KNC ticker. Previously, from ICO date through to the migration date, a total of 5,374,386.84 KNCL was burned as part of the initial design whereby KNCL gets burned whenever trades go through the protocol. Consequently, the new KNC was allocated a max supply of 210,250,962 KNC.
As of 27 October 2023:
The KNC token framework serves as an important guidepost ensuring that KNC remains a vital element securing the decentralization and sustainability of the KyberSwap Ecosystem. By aligning governance and product incentives, the KNC token framework intends to generate ever greater adoption of KNC through synergistic ecosystem growth.
The KyberSwap Ecosystem is composed of a myriad of stakeholders, each contributing to the KyberSwap network in various ways. Some obvious examples are:
- KNC Token Holders: Stake their KNC tokens in the KyberDAO to vote on the future of KNC. All changes must receive a majority vote via KIPs (Kyber Improvement Proposals) prior to being implemented.
- Third Party Developers & Integrators: Individuals or teams building on top of the KyberSwap ecosystem. By leveraging superior rates from KyberSwap, such integrators are also significantly expanding KyberSwap’s market depth and consequently facilitate trade volume.
- Traders & Liquidity Providers: Facilitates the seamless trading of tokens, including KNC, via KyberSwap. Ranging from market makers to users conducting a single trade, the aggregate effect of their actions result in a vibrant market for token swaps.
Given the multitude of user profiles, each with their own objectives, the ultimate goal of the KNC token framework is to steer development towards long-term ecosystem growth. This means aligning individual stakeholder objectives to drive KIPs which will increase KNC’s reach through lasting utility.
KNC holders who stake their tokens gain voting power within KyberDAO, enabling them to vote on KIPs (Kyber Improvement Proposals) and influence key decisions that steer KyberSwap’s development and enhancements.
In return for staking and participating in governance through voting, KNC holders receive a portion of protocol trading fees generated on KyberSwap. As more trades are carried out on KyberSwap, trading fees increase, resulting in more rewards for the KyberDAO. The more KNC staked by a user, the bigger their share of fees! Thus, there is a symbiotic relationship between KyberDAO stakeholders and KyberSwap’s success.
With our new Gas Refund Program, KNC holders who stake their tokens on KyberDAO are also able to enjoy gas refunds when they trade with KyberSwap. The percentage of gas refunds are based on their KNC staking tier, offering more rewards for higher levels of commitment.
KNC holders can contribute to KyberSwap’s liquidity pools (e.g. KNC-USDC), providing valuable liquidity and earning fees from the trading activity that flows through the pool.
KNC’s role extends to incentivizing liquidity providers through liquidity mining rewards, on top of standard trading fees. This provides more value to liquidity providers, bootstraps liquidity, and further amplifies ecosystem growth.
KNC is supported as a collateral asset on some lending/money market platforms for users to mint or borrow other tokens. For example, KNC can be deposited in Aave as collateral to borrow stablecoins or loaned out to users who want to borrow KNC (earning interest in the process). KNC can also be deposited in QiDao vaults to borrow the MAI stablecoin.
As KyberSwap evolves and gets equipped with additional features, KNC’s utility is poised to grow even further. User feedback, community engagement, and ongoing developments will collectively shape the token’s future applications.