This is our proposal to include KNC as a collateral asset for MCD.
1) Who is the interested party for this collateral application?
The interested party for the collateral application is Deniz Omer, Head of Ecosystem Growth at Kyber Network protocol
2) Provide a brief high-level overview of the project, with a focus on the applying collateral token.
Kyber Network is an on-chain liquidity protocol that aggregates liquidity from a wide range of reserves and powers instant and secure token exchange in any decentralized application. Almost a hundred dapps plug into this liquidity protocol to swap one asset to another while dozens of reserve managers, including bridges to other liquidity providers, provide the necessary liquidity.
Kyber Network Crystal (KNC) is an ERC-20 utility token and an integral part of the Kyber Network protocol especially within the Katalyst protocol upgrade due end of Q2 2020. In Katalyst, KNC holders stake KNC in the KyberDAO and vote on important protocol level decisions such as rebates-rewards-burn ratios and network fees. In return, KNC holders receive rewards in ETH from network fees collected from swapping activities in Kyber Network. In its current iteration in place since launch in Feb 2018, 0.25% of each trade is paid by the liquidity reserves in the form of KNC. 70% burnt of this 0.25% is burnt while the remaining 30% of the KNC is forwarded to dapps that brought in the trade.
3) Provide a brief history of the project.
Kyber Network was founded in early 2017 by Loi Luu, Yaron Velner, and Victor Tran, It acquired runway to build out the protocol through an initial coin offering in September 2017, deployed on the Ethereum Mainnet on February 11th 2018, and has been running non-stop since then with $1B worth of tokens traded over 900K transactions.
4) Link the whitepaper, documentation portals, and source code for the system(s) that interact with the proposed collateral, and all relevant Ethereum addresses. If the system is complex, schematic(s) are especially appreciated…
5) Link any available audits of the project. Both procedural and smart contract focused audits.
6) Link to any active communities relating to your project.
7) How is the applying collateral type currently used?
KNC is currently required by market makers to provide liquidity on Kyber Network. 0.25% of each trade is paid for by the market maker in the form of KNC which is then split 30% towards the dapp the trade originated from (ie. to Instadapp, Fulcrum, 1inch or wherever the trade was initiated from) and the remaining 70% is burnt.
After the Katalyst upgrade due end of Q2 2020, KNC will have an upgraded role and instead of KNC being required by market makers to trade, it will take on a governance utility role within the KyberDAO. KNC holders will govern the parameters of the Kyber Network by staking KNC.
Some of the parameters they can vote on is how to distribute fees between:
Participation rewards: KNC holders staking KNC in the KyberDAO and voting on parameters earn staking rewards (in ETH) collected from network fees on Kyber Network.
Reserve incentives: A portion of the network fee is used as rebates for reserves (liquidity providers)
Burning: Some of the network fees will be burned to reduce KNC supply permanently, providing long-term value accrual from decreasing supply.
Over time, as more trades are executed, additional fees are generated for staking rewards and reserve rebates and more KNC tokens are burnt.
8) Does one organization bear legal responsibility for the collateral? What jurisdiction does that organization reside in?
No organization bears legal responsibility for KNC, nor does holding of KNC confer any equity rights in any entity. KNC is a decentralized utility token used within the Kyber Network protocol.
9) Where does exchange for the asset occur?
Exchange of KNC occurs on over 50 different secondary exchanges including centralized exchanges such as Coinbase & CoinbasePro, Binance, Huobi, OkEx as well as decentralized exchanges such as KyberSwap and Uniswap. All exchange of KNC is initiated by KNC holders for personal reasons independent of the Kyber Network team.
[Coinbase, CoinbasePro, Binance, HuobiGlobal, Huobi Korea, OKEx, Bithumb, Bitfinex, Bitkub, Poloniex, COSS, HitBTC, Radar Relay, Upbit, Tidex, Bancor, Mercatox, KuCoin, KyberSwap, IDEX, DragonEx, 55 Global Markets, AAx, BitAsset, ABCC, Bitbox, Bitrue, BKEX, BW.com, Cashierest, Coineal, CoinExchange, Coinnest, Coinone, CounPlace, CPDAX, CredoEx, Folgory, Gate.io, Gopax, Hanbitco, Korbit, P2PB2B, Livecoin, OTCBTC, Switcheo, Vebitcoin, Vinex, VinDAX, ZB.com, ZG.com]
10) (Optional) Has your project obtained any legal opinions or memoranda regarding the regulatory standing of the token or an explanation of the same from the perspective of any jurisdiction? If so, those materials should be provided for community review.
A legal opinion has been obtained regarding the regulatory standing of KNC stating KNC is not a security under the Securities and Futures Act of Singapore (“SFA”). Reach out to @denizomer for further info.
11) (Optional) List any possible oracle data sources for the proposed Collateral type.
Than you for your consideration,