119,876 – that is what number of ethereum ERC-20 tokens are at the moment in existence.
It’s a quantity that’s growing by the hundreds on daily basis, however the bother is, in response to Loi Luu, the CEO and co-founder of decentralized alternate Kyber Network, the vast majority of these tokens fall in need of a sensible use case.
“What we observe is that most tokens are used only on exchanges for trading purposes or within their own specific platforms if the platform is live,” Luu stated.
Luu needs to vary that and unlock the potential of ERC-20 tokens for use for funds.
And to try this, Luu revealed completely to CoinDesk, Kyber Network might be extending the on-chain liquidity good contract protocol, known as Kyber Network Crystal (KNC), which underlies its decentralized alternate to permit companies to simply accept funds by means of any ERC-20 on the market.
Luu informed CoinDesk, “Our main goal is to make tokens usable anywhere.”
In apply, this implies companies can settle for funds in any ethereum token, and that token could be immediately transformed into another token as effectively.
And Luu has some expertise to again up their ambition. For one, he is recognized for founding ethereum safety device Oyente and constructing a protocol that makes use of a scaling answer, sharding, for the enterprise blockchain Zilliqa, earlier than happening it discovered Kyber Network, that facilitates on the spot ethereum token swaps on its decentralized alternate (a time period, whereas lengthy a dream in the trade, has failed as of but to reside as much as expectations).
“With Kyber we aim to connect between ERC-20 tokens and use cases, so tokens can be seamlessly used for payments, as collateral for lending, investing in funds and so on,” Luu stated. “This will definitely create more use cases for tokens.”
And in response to Luu, Kyber Network has already secured partnerships with main ethereum recreation, Etheremon, well-liked wallets MyEtherWallet and Coinbase, and ethereum-based microblogging website Peepeth to combine KNC.
“Anyone can integrate, with no gatekeepers dictating innovation,” Luu defined, including:
“Done right, this protocol can be the transaction layer for the decentralized economy, facilitating value exchange across all parts of the decentralized ecosystem.”
Kyber Network additionally introduced at this time a developer grant that Luu stated will “provide financial support to projects built in and around Kyber’s on-chain liquidity protocol.”
And already, startups Canal and MoatFund are getting grant cash.
The key technical drawback that the crypto trade faces is liquidity – a time period that pertains to the supply and stability of cryptocurrencies.
Liquidity has been the main focus of Luu’s analysis for a few years, and it is what initiated his foray into Kyber Network, that permits for seamless trades between completely different sorts of tokens. Indeed, Luu’s adaptation of KNC to the enterprise world is not a lot of a deviation from the tech underlying the DEX. Rather, it is simply an extension of the tech right into a wider use case.
“In terms of technical architecture, it’s not different,” Luu informed CoinDesk. “The decentralized exchange was one use case of the on-chain liquidity protocol; it’s just one way to utilize the on-chain liquidity protocol that we have been building so far.”
Stepping again, the KNC contract has two important parts.
On the one hand, there’s the facet of the contract that offers with on the spot conversions between tokens, and on the opposite, there’s what is named the “Kyber reserve.” So-called “liquidity providers” commit tokens and ETH, the native cryptocurrency of ethereum, right into a pool that’s used to gasoline the rest of the contract.
Because all this occurs on-chain — which means saved in a sensible contract hosted on the ethereum blockchain — it does not depend on a trusted middleman in order to execute trades.
Luu informed CoinDesk, “These properties are critical to an open protocol since they allow permissionless innovation and trustless collaboration to happen between all the parties seeking the value exchange.”
Users that commit tokens to the pool can withdraw funds at any time.
While this might sound worrisome to crypto fanatics, particularly after decentralized alternate and token creation platform Bancor suffered a $13.5 million hack, in response to Luu, the KNC good contract has undergone rigorous safety testing to make sure funds are secure in the code.
As effectively as having undergone a number of audits, the KNC contract is constructed in such a approach that liquidity suppliers are nonetheless in management of their funds, so even when there was a safety breach, customers can’t lose funds.
According to Luu, it is for these causes that the expertise will energy many experimental fee options for companies and monetary providers.
“This protocol enables many transactional and payment flows to happen atomically and in a single step between multiple parties,” Luu informed CoinDesk. “These use cases would otherwise be very difficult or impossible to achieve.”
Making it in order that commerce can settle for a number of tokens concurrently and seamlessly convert these tokens into different crypto tokens, Luu anticipates the expertise might be extremely helpful for the decentralized applications (dapps) in the ethereum ecosystem as effectively.
“Since the overwhelming majority of attention-grabbing fee patterns and monetary use instances require a number of token swaps between a number of events, this mechanism is essential in enabling innovation in many classes of dapps,” Luu stated.
Speaking to this extra broadly, Luu concluded:
“It is crucial that we make tokens much more liquid and useful by allowing them to be easily spent by users and integrated into dapps by developers.”
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