Kyber Network's KNC token, used to pay transaction fees on the decentralized liquidity pool, has tripled this year, making bitcoin's 26% return look tame, CoinDesk's Leigh Cuen reports.
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MARKET MOVES
Bitcoin's outperformance this year versus gold and U.S. stocks has turned heads, and multibillion-dollar hedge funds like Renaissance Technologies and Tudor Investment are nosing into cryptocurrency markets.
But Kyber Network Crystal (KNC), a little-mentioned digital token potentially setting up for a leading role in the fast-growing arena of decentralized finance, is blowing away bitcoin in performance returns.
The KNC tokens, issued as digital assets atop the Ethereum blockchain, are used to pay fees on the Kyber Network, which calls itself "a decentralized liquidity network." The system aims to connect "the fragmented tokenized world by enabling instant and seamless transactions between platforms, ecosystems and other use cases," according to its website.
It's pretty complicated, but here's what's clear: The token's price has more than tripled this year in digital-asset markets, making bitcoin's 26% look tame. Gold is up 14%, and the Standard & Poor's 500 Index of U.S. stocks is down 8.7%.
Of course, KNC is tiny in relative terms, with a market capitalization of $109 million that's less than 1/1000th of bitcoin's $166 billion. And these smaller cryptocurrencies can be highly speculative, surging one day and plunging the next. So there's plenty of risk.
But Kyber Network is attracting genuine interest from traders and technologists alike.
According to Flipside Crypto, the network has been one of the fastest-growing token projects during the coronavirus-led recession, in terms of developer contributions, social media chatter, blockchain records, wallet addresses and corresponding apps.
The Kyber Network's protocol is the third-most-popular decentralized exchange, with nearly $5.4 million of reserves, behind Uniswap and IDEX.
And the network survived its first true stress test in March as the coronavirus-induced economic turmoil rattled markets globally. The protocol supported $33 million worth of trading in a single day without any significant glitches.
Demand for the token is surging across exchanges as more teams use the Kyber Network's protocol for unique trading strategies related to stablecoins like dai, USDC and tether. A stablecoin is a digital token whose price is linked to a government-backed currency, usually the U.S. dollar.
“Market makers and liquidity providers all need different options based on their trading strategies,” said Volt Capital's Imran Khan, who also is co-founder of the alliance. “Kyber’s competitive advantage is that it’s a decentralized exchange.”
Nascent digital-asset markets can seem like a hotbed of speculation, but right now decentralized finance is the hot bet.
Trend: Bitcoin prices appear to be finding a floor at $9,000.
The top cryptocurrency by market value is currently trading at $9,190, representing a gain of about 1.2% on the day.
Prices appeared to find support at $9,000, rebounding after two straight daily declines that saw the cryptocurrency retreat from this month's highs around $10,000.
Earlier this week, chart patterns indicated that the rally from the low of $8,100, reached just before bitcoin's May 11 halving, had ended, and the cryptocurrency now appears to be moving into in a sideways range.
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