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Kyber DMM: The new Kyber 3.0 tool

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Why is the Kyber DMM able to achieve extreme capital efficiency and flexibility based on an open and permission-free liquidity supply?

The original title: "notice | Kyber dynamic marketmakers beta launch"

Original source: Ethereum enthusiasts

After months of extensive research and development, we are excited to announce the much-anticipated mainnet beta of the Kyber Dynamic Market Maker (DMM) protocol! Starting today, any liquidity provider can add idle funds to Kyber's DMM pool for optimal utilization, and any buyer (dApps, aggregators, end users, etc.) can access this liquidity.

Kyber previously created the first liquidity aggregation protocol and on-chain endpoints in the DEFI space, as well as the KyberPro framework for professional market makers. Kyber DMM is a new liquidity protocol designed specifically for retail liquidity providers and token teams, and the first new protocol to be launched in the Kyber 3.0 Liquidity Center.

Kyber DMM marks the beginning of a new era for DEFI, achieving for the first time ultra-high capital efficiency and flexibility based on an open and permission-free liquidity supply. Kyber DMM has the following advantages:

1. Significantly improve the capital efficiency of the liquidity pool, although not necessarily to exceed the AMM.

2. Due to high capital efficiency, the transaction slip rate is reduced.

3. Charge dynamic transaction fees to optimize returns for liquidity providers and reduce the impact of fickle losses.

4. There is no risk of third party or centralized information input mechanism.

Kyber DMM Beta Tutorial

While we were developing the beta version of Kyber DMM, we were inspired by the intuitive and user-friendly user interface of automated market maker Uniswap, so users will find operations such as tokens trading and protocol analysis pages familiar. However, there are some important differences that will be highlighted below. Further improvements to the user interface are also planned in the near future to make it more compatible with the new Kyber DMM features.

If you are a liquidity provider

1. Inject liquidity into existing liquidity pools

Click on the "Pools" TAB, then select a token pair to inject liquidity. The available Liquidity pools associated with the selected token pair will be shown in the list below, and each Pool will provide important data such as "POOL", "Ratio", "Liquidity", "Volume", "Fee", "AMP", "1Y F/L" and "My Liquidity". If there is no pool available, you can create one yourself.

Ratio: The current Ratio of the token pairs in the selected liquidity pool. The liquidity provider must inject liquidity at this rate. The ratio starts at 50-50, but changes over time depending on the trading in the pool.

Liquidity: The amount of tokens held in a Liquidity pool.

Volume: The 24-hour Volume of the selected liquidity pool.

Fee (24-hour transaction Fee) : The total transaction Fee charged by a selected pool over a 24-hour period and paid to a liquidity provider.

AMP (Amplification Factor) : Within a specific price range, the higher the AMP, the higher the capital efficiency. This means that with the same liquidity pool and volume, the Kyber DMM can provide more liquidity and lower slip rates than the AMM. With a low volatility token pair, the Kyber DMM may have a slip rate 100 times lower than the AMM! Therefore, a pair with low volatility (such as USDC/USDT, SETH /ETH) is recommended to use a lower AMP, and a pair with high volatility is recommended to use a higher AMP. The liquidity pool with AMP = 1 is the base pool that supports dynamic transaction fees, but has no amplification factor. The creator of a liquidity pool can pre-assign an AMP factor to each pool, and the liquidity provider can select the pool to which it wants to inject liquidity based on the AMP.

1Y F/L (annualized rate of return on liquidity based on forecast 24-hour trading volume and transaction fees) : This measure can be viewed as the liquidity rate of return on a liquidity pool.

My Liquidity: If you have injected Liquidity before, this is shown here.

Add Liquidity: Click the "+" button next to the Liquidity pool of your choice to inject Liquidity and earn dynamic trading fees. After the liquidity injection, you will receive transferable DMM-LP pool tokens representing your share of the pool. When you get your liquidity back, you automatically get the transaction fees you earned as a liquidity provider.

Migrated Liquidity: If you want to quickly Migrate your Liquidity from external platforms such as Uniswap and Sushiswp to Kyber DMM, we have a simple Mobility Mobility page to use.

2. Create new pools of liquidity

For the same token pair, we can create multiple liquidity pools with different AMPs. If you want to Create a New Pool, click "Create New Pool". As a liquidity pool creator, you can customize your programmable price curve using specific AMP to create an augmented liquidity pool and achieve a highly capital-efficient liquidity supply.

The token ratio you add will determine the initial price of the liquidity pool, so make sure you set the appropriate token ratio and keep in mind the market price of the pair.

Dynamic transaction fees: Each liquidity pool supports dynamic fees. When market volatility is high, transaction fees increase; When market volatility is low, transaction fees fall, driving trading volumes up. In general, dynamic transaction fees help liquidity providers optimize potential returns and maximize returns as some professional market makers do. The dynamic transaction fee range (the dynamic transaction fee paid to the liquidity provider) will be based on the change in AMP used to create the liquidity pool.

Effective price range: refers to the effective/tradable price range for a pair of tokens in a particular liquidity pool. If you set AMP above 1, the capital efficiency of the liquidity pool will increase, but the effective/tradable price range will also change, as shown in the user interface. Please note that if the price is above or below the price range, the liquidity pool may stop working. If AMP is set to 1, the liquidity pool supports dynamic transaction fees, but is not amplified. A liquidity pool of AMP = 1 has no price range (0 to infinity).

If there are multiple pools of liquidity, the liquidity provider can choose which pool to put liquidity into based on AMP and other important data.

If you're a trader

With this liquidity, Kyber DMM allows anyone to exchange tokens on the "Swap" TAB. The Kyber DMM will automatically query all liquidity pools to find the pool that offers the best offer (and meets its volume). When trading in an augmented liquidity pool, traders can enjoy a low slip rate due to high capital efficiency.

DMM analysis page

We also have a protocol analysis and tracking page for our users to track token pairs, available liquidity, transaction volume, and other important statistics.

To learn more about the Kyber DMM, read theKyber 3.0: Architecture improvements, dynamic market makers, and KNC migration proposals".

Developed on the Kyber DMM basis

Developers can start developing on the Kyber DMM! Any diner can access the liquidity in each liquidity pool. The Kyber DMM's programmable curve and dynamic transaction fees can provide liquidity providers with greater flexibility, higher rates of return, and hyper-capital efficiency that AMM cannot achieve.

We encourage all Defi wallets, dApps, aggregators and end users to integrate the Kyber DMM to meet their liquidity needs. Direct integration of the Kyber DMM rather than the primary Kyber network flow endpoints can also help dApps save a lot of gas.

All documents are available athttp://docs.dmm.exchange/ To find it. You can also ask questions in our Discord or forums.

Safety commitment

Kyber has consistently high security standards for smart contracts across all protocols. Its liquidity infrastructure has helped tens of thousands of users facilitate nearly $5 billion in transactions since 2018. The new Kyber DMM protocol provides the same security and reliability.

Our team and external auditors have conducted multiple audits of the code base and found no serious problems. The full audit results will be released soon, and the code base will remain open source on GitHub for developers to audit. To strengthen protection and honor our security commitments, we will soon be launching a DMM Bug Bounty Program.

Future plans

Thank you very much to our community for supporting the launch of the Kyber DMM protocol! Please note that the protocol is still in the beta phase and the number of tokens available remains low. We welcome feedback to help us optimize our user interface and operations to ensure smooth token trading, liquidity provision, and liquidity traceability experience. We will be releasing more information about the BUG Bounty Program soon.

We welcome everyone in the Kyber community to join our governance forum gov.kyber.org to share feedback and ideas on how to increase mobility on the Kyber DMM.

Given the significantly improved flexibility and capital efficiency of the Kyber DMM, we believe it will soon become a significant source of liquidity for a wide range of different DEFI application scenarios. We look forward to seeing Kyber DMM thrive and drive Kyber NetWrk as a sustainable DeFi liquidity infrastructure.