The decentralized exchange Kyber Network has announced an upgrade to its service called Kyber 3.0. The upgrade will introduce a new DeFi innovation known as the Dynamic Market Maker (DMM).
The Kyber 3.0 upgrade will take place in two phases, Katana and Kaizen. This will be completed by the end of the 3rd quarter of 2021.
The decentralized exchange Kyber Network has announced the Kyber 3.0 upgrade, which will introduce the Dynamic Market Maker (DMM).
Kyber Network said in a statement that it describes the upgrade as the most important change to Kyber since its inception.
Kyber 3.0 will introduce a new DeFi innovation known as the Dynamic Market Maker (DMM). The team claims that this will eliminate the problems already faced by popular decentralized trading platforms such as low capital efficiency and high spares.
The team says the new update will transform its existing platform from a single protocol to a hub of liquidity protocols. “Kyber will become a hub for liquidity innovation and growth,” said Loi Luu, CEO and co-founder of Kyber Network.
Improvement in AMMs
Kyber Network also describes DMM as an improvement over automated market makers (AMMs).
Due to the static nature of popular AMMs, most participating liquidity providers have little control over the pricing system available to traders.
In contrast, Kyber’s DMM is much more capital efficient as it allows dynamic fine tuning of transaction parameters for liquidity pools. For example, liquidity pool operators using a DMM can preset pricing curves based on specific token rates.
DMM will automatically adjust fees for liquidity providers based on market conditions. This will prevent discontinuous loss that may occur in AMMs such as Uniswap during price fluctuations.
The new update will also make Kyber largely unauthorized. Anyone can contribute to liquidity by depositing tokens in different pools, and any dApp or end user can provide this liquidity.