Key Takeaways
Kyber Network is a decentralized liquidity protocol built on Ethereum and deployed on multiple EVM-compatible chains. Its main product is KyberSwap, a multi-chain decentralized exchange (DEX) aggregator that sources liquidity from hundreds of DEXs across its supported networks.
KyberSwap operates two core protocols: KyberSwap Classic, which uses a Dynamic Market Maker (DMM) model with programmable amplification, and KyberSwap Elastic, a tick-based AMM with concentrated liquidity.
KNC (Kyber Network Crystal) is the native governance token of the Kyber Network. KNC holders can stake their tokens to participate in KyberDAO governance, vote on protocol proposals, and potentially earn rewards from network activity.
Introduction
Kyber Network is helping shape decentralized trading by building infrastructure that connects users to liquidity across multiple blockchains. To understand why Kyber’s relevance in DeFi, it helps to look at how KyberSwap works, what KNC is used for, and how the protocol has evolved in response to both innovation and security challenges.
What Is Kyber Network?
Kyber Network is a decentralized protocol built on Ethereum. It's deployed on multiple Ethereum Virtual Machine (EVM) compatible chains, such as Polygon, BNB Chain, and Avalanche.
Founded by Loi Luu and Victor Tran, Kyber Network is a liquidity hub that aims to make DeFi trading more efficient and cost-effective. Kyber Network's main product is KyberSwap, a decentralized exchange (DEX) that allows users to trade tokens and potentially earn rewards by providing liquidity.
The protocol is governed by KyberDAO, and proposals are voted on by holders of the Kyber Network's native token, KNC.
What Is KyberSwap?
KyberSwap is the flagship product powered by the Kyber Network. Built on Ethereum, KyberSwap is a multi-chain decentralized exchange (DEX) that allows users to conduct transactions on supported networks, including Ethereum, Polygon, BNB Chain, Avalanche, Optimism, Arbitrum, Base, Linea, and others.
KyberSwap is also an aggregator, meaning it sources liquidity not only from its own liquidity pools but also from hundreds of DEXs across its supported networks. Similar to other DEXs, KyberSwap is a trustless trading platform, which means users have complete control over their orders and funds. KyberSwap aims to solve the liquidity challenges that many DeFi traders encounter every day, while providing competitive rewards for liquidity providers (LPs).
KyberSwap enables users to swap, earn, and seamlessly participate in DeFi across each of its supported chains. It is a decentralized and permissionless trading platform, meaning users retain full control over their funds at all times.
Security considerations
In November 2023, KyberSwap Elastic suffered a critical exploit in which an attacker used flash loans and tick manipulation to drain approximately $47-55 million from concentrated liquidity pools across Ethereum, Polygon, Avalanche, and other chains. Kyber Network paused affected Elastic pools, advised users to withdraw funds, and negotiated partial returns from front-running bots. The protocol has since undergone significant structural changes and introduced new products to rebuild its liquidity layer. Prospective users should review the latest security disclosures and conduct their own research before interacting with any DeFi protocol.
How Does KyberSwap Work?
KyberSwap is split into two main protocols: Classic and Elastic. Both are built on smart contracts that execute trades automatically without intermediaries.
KyberSwap Classic's Dynamic Market Maker (DMM) protocol is a modified version of the traditional Automated Market Maker (AMM) model used by Uniswap and other DEXs. It is a market maker protocol that dynamically adjusts LP fees based on market conditions. When the market is volatile, fees increase to better reflect the risks involved in each trade. When the market is stable and volatility drops, fees decrease. The DMM automatically recalculates fees by analyzing on-chain volume data for each liquidity pool.
KyberSwap Classic's second feature is a programmable price curve called Amplification (AMP). This allows a liquidity pool to mimic higher levels of liquidity without requiring more tokens. LPs can set their own AMP according to the type of token pair in the pool. Pairs with lower deviations, like stablecoins, will have higher AMP. More volatile pairs will have lower AMP. Liquidity pools with AMP equal to 1 still work according to the dynamic fee model but with no amplification.
KyberSwap Elastic is a tick-based AMM with concentrated liquidity. Users can add liquidity to a specific price range of their choice and receive an NFT that represents their liquidity position and their share of the pool.
With concentrated liquidity, LPs can specify the price range within which they want to add liquidity. The liquidity provided is then evenly distributed over this price range. LPs earn a fee for any swap processed at a specific active tick in the selected range, proportional to the liquidity they provided at that price. A full price range allows tokens to be traded at any price but may come with lower fees than a concentrated price range, due to liquidity allocation across inactive price ticks.
KyberSwap Elastic also auto-compounds fees for LPs using a Reinvestment Curve. This makes things more convenient for LPs, as they don't have to add liquidity back into the pool manually, and separately compounding fees allows LPs to potentially increase earnings as fees accumulate on top of compounded fees.
In addition, KyberSwap Elastic comes with multiple fee tiers and JIT (Just In Time) Protection to give LPs the flexibility and tools to tailor earning strategies without compromising on security.
LPs can also potentially earn rewards through KyberSwap's liquidity mining farms, where KyberSwap works with blockchain foundations and projects to provide incentive programs for LPs.
Beyond liquidity services, KyberSwap has features and pro trader tools designed to help DeFi traders, such as Discover, Dynamic Trade Routing, and Pro Live Chart. Discover is an intuitive DeFi tool that helps users find potentially trending tokens using on-chain data, trading volume, and technical indicators. Dynamic Trade Routing scans different DEXs and splits trades to find the most suitable route for any token swap on supported networks. Pro Live Chart is integrated with TradingView to help traders map and conduct technical analysis.
What Makes KyberSwap Unique?
KyberSwap Classic uses two features, DMM and Amplification, to promote healthy liquidity, while KyberSwap Elastic brings concentrated liquidity, auto-compoundability, multiple fee tiers, and JIT protection to help liquidity providers optimize rewards safely and securely.
Liquidity ensures that traders can easily buy and sell assets without large price changes. Low liquidity can lead to slippage and impermanent loss. The more volatile an asset, the more likely its price changes will negatively affect traders.
Slippage occurs when a trade is executed at a lower or higher price than desired due to low liquidity (thin order books).
Impermanent loss can be defined as a price decrease experienced by a crypto asset after being placed in a liquidity pool. Liquidity can be considered the ease with which traders are able to buy or sell an asset: easy trades favor price stability, and a higher number of participants makes it harder for single entities to affect the market.
What Is the Kyber Network Crystal (KNC) Token?
Kyber Network Crystal (KNC) is KyberSwap's native token that fuels the Kyber Network ecosystem. Working on a proof-of-stake consensus mechanism, KNC holders can participate in the DAO and vote on all governance proposals related to the future of the network by staking their KNC assets or delegating their vote to a third-party platform.
As a governance token, each KNC token equals one vote in the KyberDAO. KNC holders may also stake their tokens in eligible liquidity mining programs for potential rewards. For other activities such as trading contests, giveaways, and community events, participants can also be rewarded with KNC tokens.
FAQ
What is Kyber Network?
Kyber Network is a decentralized liquidity protocol built on Ethereum and deployed on multiple EVM-compatible chains. Its main product, KyberSwap, is a multi-chain DEX aggregator that allows users to swap tokens and provide liquidity across supported networks. The protocol is governed by KyberDAO using the native KNC token.
What is the KNC token used for?
KNC (Kyber Network Crystal) serves three primary purposes: participating in KyberDAO governance by voting on protocol proposals, staking to potentially earn rewards from network activity, and qualifying for participation in exclusive liquidity programs on the platform. Holding KNC gives holders one vote per token in governance decisions.
What happened to KyberSwap in 2023?
In November 2023, KyberSwap Elastic suffered a security exploit in which an attacker used flash loans and tick manipulation to drain approximately $47-55 million from concentrated liquidity pools. Kyber Network paused affected pools and negotiated partial fund recovery. The incident significantly reduced the protocol's total value locked (TVL). Since then, KyberSwap has introduced new products and security improvements. Users should always conduct their own research and exercise caution when interacting with any DeFi protocol.
What chains does KyberSwap support?
KyberSwap supports multiple EVM-compatible blockchains, including Ethereum, Polygon, BNB Chain, Avalanche, Optimism, Arbitrum, Base, Linea, Scroll, ZKsync Era, Monad, and others. The platform's Smart Exit feature and Cross-Chain Swaps (launched Q2 2025) further extend its multi-chain capabilities.
How does KyberSwap differ from a regular DEX?
Unlike a standard DEX that only routes trades through its own liquidity pools, KyberSwap is also an aggregator that sources liquidity from hundreds of DEXs across its supported networks to find the best trade route. It also includes specialized tools like Dynamic Trade Routing, Pro Live Chart (integrated with TradingView), a Discover feature for identifying potentially trending tokens, and liquidity innovations such as FairFlow MEV redistribution.
Closing Thoughts
Kyber Network is a liquidity hub that powers KyberSwap, a DEX aggregator built on Ethereum. It's a hub for decentralized services and a place where DeFi enthusiasts can trade, provide liquidity, and participate in protocol governance. However, as with all DeFi protocols, users should review available security documentation and conduct their own due diligence before participating.
Further Reading
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