Currently, KNC (Kyber Network Crystal) can be staked to vote on KyberDAO proposals to earn a portion of KyberSwap trading fees. The team would like to kickstart a discussion on new KNC utility ideas for KyberSwap.
KNC minting and incentives have mainly been used to bootstrap KyberSwap.com adoption, especially on key chains Ethereum, Polygon, Arbitrum, and Optimism. We have achieved substantial progress in recent months, even outsized trading volume in relation to TVL, and we expect this growth to continue.
Total Value Locked (TVL)
|TVL (1 Jul)||TVL (29 Nov)||Growth|
7D Trading Volume
|Volume (3-9 Jul)||Volume (20-26 Nov)||Growth|
However, without additional safeguards, it is possible that over time this increase in incentives distributed (increasing supply) may restrict a rise in KNC value. A reduced KNC value has several adverse effects including negative community sentiment, lower governance participation, fundraising challenges, and heavily impaired DAO or company treasury to fund future activities. Conversely, improved KNC utility and higher KNC valuation with a suitable incentive structure aids KyberSwap in terms of adoption, marketing/awareness, and future fundraising efforts.
As KyberSwap starts gaining momentum, we need a new sustainable token model that mitigates major increases in KNC supply (which dilutes KNC value), while generating ‘real yield’ fees and incentivizing high-utility ecosystem participants to fuel greater adoption and governance participation. It is imperative that the intrinsic utility and value of KNC continues to be enhanced on top of the current governance and liquidity mining use cases.
The team is considering more KNC utility ideas for KyberSwap, including:
- KNC ‘cashback’ as gas compensation/refunds for traders
- Bonus rewards for trading campaigns or liquidity provision
- Rewards/Raffles/Airdrops/NFT drops
- Time-based KNC staking rewards; the longer KNC is staked, certain milestones can be achieved, enabling exclusive rewards in the future
- More diverse KNC pairs on KyberSwap
The above are not set in stone and we welcome more great ideas from the community to improve KNC token utility. Community ideas submitted here will guide the Kyber team in making further improvements to KNC utility on KyberSwap.
Note: This is an open call for ideas from the Kyber community with no fixed deadline. Although we will review submitted ideas seriously, we cannot guarantee that they will be used exactly as proposed and we may combine them to develop a more concrete proposal for KNC enhancements.
Idea Submission Template
In order to facilitate discussion and enable the team to efficiently review community ideas, please submit your idea/requests using the following template:
- Summary of your idea
- How does your idea improve KNC utility ON KyberSwap, in relation to one or more of the following:
- Liquidity providers (LPs)
- Dapp integrations
- KNC stakers and voters
- KNC staked
- Trading volume
- Total value locked (TVL) and liquidity
- Any backing research and data
- Example of a good/similar token model from other DeFi projects
- Difficulty level (Low/Medium/High) of this implementation in your opinion
- Check that your idea has fulfilled the criteria in our suggested tokenomics framework
- Your twitter and telegram handle (optional)
Suggested Tokenomics Framework
This framework acts as a guide for designing sustainable tokenomics. What are our key objectives for the KNC token model and utility?
- Long-term, healthy, and sustainable tokenomics and incentives that still drive adoption and revenue
- Incentive alignment between governance and product stakeholders; both want the best for KyberSwap and KNC
- Funnel incentives only to high-utility participants who create fundamental value in our ecosystem; align incentives with value creation
- Heavy utility and usage of the tokens within our own ecosystem; higher inelastic demand for KyberSwap features e.g. trading, LP, farming, truesight, portfolio management
- Harmonious token usage on KyberSwap that adds value to the entire ecosystem; positive net utility to KyberSwap
- Creation of a ‘Token sink’; incentivize staking and circulating supply reduction, and disincentivize withdrawals/transfers
- [Demand] > [Supply increase due to emissions over time]
Questions to consider
- Who are KyberSwap users?
- What are users doing on KyberSwap?
- What motivates KyberSwap users?
- What value are users/voters creating for KyberSwap? What actions create the most value?
- Who should be rewarded and how?
- Adoption flywheel - Are there synergies between KyberSwap stakeholders? Does benefiting one naturally benefit another/others
- How can KNC be used efficiently to incentivize higher TVL → resulting in better liquidity/slippage, more volume, and more fee revenue (further increasing TVL)?
- How do we mitigate inflation for our token/s? How do we ensure organic fees/real yield > emissions; demand > supply increase over time?
- What are the technical requirements? How fast can changes be implemented?
1. Governance forum: Submit your idea using the idea submission template in this forum topic (this page) and get community feedback.
2. KNC utility request: After you have submitted your idea on this forum topic, submit it as a KNC utility request on our new feature request page: Feature Request | KyberSwap. Get community members to vote for it as a temperature check.
Only ideas posted in those channels will be reviewed by the Kyber team. Well-structured, practical ideas may even be rewarded with some KNC. Go crazy!