Following the approval of KIP-9 by KyberDAO, it was announced today that crypto liquidity platform Kyber will deploy its new Kyber DMM (Dynamic Market Maker) protocol on the Polygon network on June 30th.
This announcement from Kyber is joined with the launch of ‘Rainmaker’ — Kyber’s very first liquidity mining program on Polygon and Ethereum; with an estimated $30M in rewards.
Scaling with Polygon
Formerly Matic Network, Polygon is a platform for Ethereum scaling and infrastructure development. Polygon’s scaling solution is built for DeFi users; with lower gas costs and fast block processing times.
Kyber + Polygon to Enhance DeFi Liquidity
Designed as a capital efficient and flexible liquidity protocol; Kyber DMM will cater to Polygon’s ecosystem of DApps and DeFi use-cases.
The aim of Kyber DMM is to enable liquidity providers to maximize their capital. In addition, using Kyber DMM on Polygon allows for a cost-efficient user experience during trading and liquidity provision.
Also, with the deployment of Kyber DMM on Polygon; a portion of trading fees generated will go to KyberDAO. This complements the existing Kyber DMM protocol deployment on Ethereum.
“Liquidity is a crucial element in any DeFi ecosystem. We’re glad to work with Kyber to help enhance liquidity on Polygon through the Kyber DMM protocol!”
– Sandeep Nailwal, Co-Founder & COO of Polygon
New Rainmaker Liquidity Mining Program
Starting on June 30th, Kyber’s new Rainmaker liquidity mining program will distribute an estimated total of $30M in rewards over the course of 3 months to eligible Kyber DMM liquidity providers (LPs).
The aim is to incentivize liquidity providers and developers to use Kyber DMM by offering high yields on eligible token pairs; while also enhancing liquidity for both the Polygon and Ethereum DeFi ecosystems.
Liquidity providers receive DMM LP tokens (representing their liquidity pool share) which they can stake in the eligible liquidity mining pools to earn additional KNC or MATIC (Kyber’s and Polygon’s governance tokens) rewards on top of protocol fees during the program period.
1. Liquidity Mining on Polygon
The Polygon phase of the program will run for 2 months. Kyber and Polygon will be distributing 2.52M KNC tokens (~$5M) and $500K worth of MATIC tokens respectively across six eligible amplified pools:
- USDT-USDC (AMP=200)
- USDC-ETH (AMP=1.6)
- USDC-DAI (AMP=200)
- MATIC-DAI (AMP=1.5)
- KNC-ETH (AMP=1.9)
- KNC-MATIC (AMP=1.7)
KNC and MATIC rewards can be used to add liquidity to the KNC or MATIC pools for earning even more. Also, KNC can be staked on KyberDAO to join in Kyber’s governance and earn voting rewards.
2. Liquidity Mining on Ethereum
The Ethereum phase of the Rainmaker program will run for 3 months and 12.6M KNC (~$25M) in rewards will be distributed across five eligible amplified liquidity pools:
- USDT-USDC (AMP=200)
- USDT-ETH (AMP=1.5)
- USDT-WBTC (AMP=1.5)
- WBTC-ETH (AMP=2)
- KNC-ETH (AMP=1.9)
Benefits of Kyber DMM
Besides receiving additional KNC and MATIC yield, Kyber DMM liquidity providers enjoy a multitude of benefits that are not available on typical AMMs:
- Amplified Pools: LPs save the flexibility to select amplified liquidity pools that greatly improve capital efficiency and help reduce trade slippage. With the same pool and trade size, stable token pairs with low variability in the price range (e.g. USDC/USDT) can be up to 100–200x better compared to other platforms. Liquidity providers can provide better prices and earn more fees with less capital.
- Dynamic Fees: Protocol fees are adjusted dynamically based on market conditions to maximize returns and reduce the impact of impermanent loss for LPs; with fees automatically accruing in the pool.
- Fully Permissionless: Anyone can add liquidity to Kyber DMM pools; while any DApp, aggregator, or end-user can access this liquidity. Kyber DMM is already integrated with 1inch and Matcha.
- No 3rd-Party Oracles: Not vulnerable to external oracle risks.
- Security Minded: Kyber DMM’s codebase has been audited by its team and external auditors such as Chain Security with no critical issues found. It is open-source on Github for community review. Kyber DMM is also covered up to $20 million by decentralized insurance provider Unslashed Finance.
Invitation to DeFi Builders and Liquidity Providers
The Kyber team believes the partnership with Polygon and the $30M Rainmaker liquidity mining program, will help showcase the robust benefits of the Kyber DMM protocol.
“Through this partnership, Polygon’s vibrant ecosystem will gain access to the highly capital efficient and flexible Kyber DMM protocol. And we believe this will empower more liquidity providers, traders, and developers to effectively engage in the world of decentralized finance.”
– Loi Luu, Co-Founder of Kyber Network
For developers looking to build with Kyber DMM, please check out Kyber’s developer documentation.