KIP-18: Advance KNC Allocation for Small-Scale Liquidity Mining Activities

Vote now: https://kyber.org/proposal/10

Summary

KyberDAO previously earmarked 42M KNC to be used as incentives for a 12-month Ecosystem Fund to work with partners and bootstrap liquidity on the new KyberDMM DEX.

Since then, approximately 22M KNC (over $30M) in incentives have been allocated or given out as part of our Rainmaker Liquidity Mining campaigns, based on our joint liquidity mining framework. We have successfully organized liquidity mining campaigns with Polygon, Binance Smart Chain, Avalanche, xToken, xDollar, Jarvis Network, DeFi Warrior, Creator, StepHero, APEIN, DYP Protocol, and upcoming ones such as Pegaxy, Unbound Finance and Evrynet.

Key milestones since launch

  • Multi-chain deployment: Ethereum, Polygon, BSC, Avalanche, Fantom, Aurora/NEAR and more networks on the way
  • Total Trade Volume: Over $2.2B on KyberDMM, $7B for the whole Kyber Network
  • Over $4M in fees collected and distributed to close to 10,000 liquidity providers
  • All-time-high TVL of ~$500M and $50B in Amplified Liquidity
  • Integrated by Dapps such as Coin98 Wallet, Kattana Trade, Rome Terminal, as well as other top Aggregators such as 1inch, Paraswap, 0x API, Matcha and Slingshot.

~20M KNC tokens remain in the ecosystem fund for additional liquidity mining/growth activities for the next 8 months.

Moving forward, in order to drive awareness and adoption, KyberDMM DEX needs to be quickly deployed on new chains with the support of a strong partner network and effective liquidity mining strategies.

We propose that KyberDAO allows 5M KNC to be taken from this Ecosystem Fund and assigned to the Kyber team in advance for small-scale (under $1M in KNC requested) joint liquidity mining campaigns, without going through an on-chain KyberDAO vote for each project proposal.

Motivation

Based on the current joint liquidity mining framework, the launch process can take up to 14 days after accounting for forum discussions and setting up an on-chain vote on kyber.org. Post-vote, KNC still needs to be transferred from the Ecosystem Fund to the relevant addresses to prepare for the farming contracts on KyberDMM, which takes additional time and resources.

The current process is not efficient or flexible enough to cater to the fast-changing demands of the DeFi landscape, especially when there are unforeseen last minute alterations or when the team has to work with multiple partners with different needs within a short span of time.

We would like to expedite the current process and make it as smooth as possible as we work with more and more projects to create token pools and run liquidity mining initiatives.

Ensuring Greater Flexibility and Speed for Future Liquidity Mining Campaigns

In order to make the entire process more efficient and flexible, we propose that KyberDAO allows 5M KNC to be taken from the Ecosystem Fund and assigned to the Kyber team in advance to use at their discretion for the next batch of small-scale (under $1M in KNC requested) joint liquidity mining campaigns . How this 5M KNC would be allocated and which projects would receive the tokens would be decided by the Kyber team after community feedback on the forum has been considered.

This way, an on-chain KyberDAO vote on kyber.org is NOT required for KNC to be unlocked for small-scale joint liquidity mining campaigns, shaving 4-5 days off the preparation phase, offering greater flexibility, and expediting the overall launch process.

Important Considerations:

  • The Kyber team only has the ability to bypass an on-chain vote and utilize the KNC IF the joint liquidity mining proposal is requesting for less than $1M in KNC rewards from KyberDAO.
  • For proposals that require over $1M in KNC, an on-chain KyberDAO vote on kyber.org is still required, similar to past campaigns.

Commitment to Transparency

The 5M KNC assigned to the Kyber team, along with the remaining KNC assigned previously, will be stored in this 2/3 multisig address on Ethereum: 0x91c9D4373B077eF8082F468C7c97f2c499e36F5b

The Kyber team will be fully transparent with the use of funds and the community will be informed whenever funds are allocated to a new liquidity mining campaign.

Although the Kyber team is able to utilize the 5M KNC tokens for small-scale joint liquidity mining campaigns without a KyberDAO vote, feedback and discussion still play a critical role in whether a project’s proposal is accepted and is very much encouraged on the community forum.

Conclusion

Being agile when it comes to the execution of liquidity mining campaigns is necessary to quickly adapt to changes in DeFi. We believe that assigning a portion of KNC tokens in advance to the Kyber team will greatly enhance their ability to deploy on different chains, grow their partner network, and drive user adoption.

As always, all important decisions pertaining to new token generation/burning, new protocols, and growth initiatives, will be decided as one Kyber community in a transparent manner. Our key objective as a community is to ensure an increase in liquidity and users on Kyber products e.g. KyberDMM DEX and that KNC continues to play a valuable and central role in the Kyber and DeFi ecosystem.

This KIP makes sense. Gas fees on Ethereum sometimes makes it too expensive to vote but cos you want to get the full reward you feel like you should vote for every KIP.
If the LM doesn’t require an on-chain vote to pass then we really don’t miss out. In fact, the benefit is that the campaign can take place sooner is like an added bonus.
This is only with regards to small-scale projects (not big ones like the network joint LM) so I would trust the Kyber team to allocate the funds as they see fit. There will still be a discussion on the forum as usual so it’s still a transparent process.

Voting yes on this :+1:

Yes I agree this makes sense. Saves time and our gas fees.