Kyber Network Is Bringing Yield Farming to DEXland

Fresh pastures are opening in the world of yield farming.

Kyber, a decentralized exchange (DEX), is preparing to share trading fees with KNC token holders. Launched Tuesday, KyberDAO will let users stake KNC and earn yields in more KNC, proportional to their stake.

Yields won't actually kick in for about two more weeks, but participants will need to participate in voting in the week prior in order to start accruing earnings.

A growing trend in decentralized finance (DeFi) has been for users with significant holdings to earn returns by contributing those assets to DeFi applications that need liquidity. Launched in 2017, Kyber has always been designed as a DEX that connects liquidity with users, without middlemen.

Read more: What Is Yield Farming? The Rocket Fuel of DeFi, Explained

A fee of 0.20% on each trade made on Kyber will be paid out to various parties. Of that, 65% will go to those who have staked on the DAO, 30% will go to entities providing liquidity on-chain for Kyber and 5% will be used to buy KNC and burn it, gradually increasing the value of KNC.

Kyber's daily trading volume over the last month has been as high as $9 million and as low as over $2.4 million. DeFi Pulse lists it as the fifth-largest DEX in terms of total value locked (TVL), with $6.6 million. It's worth noting Kyber is not limited to liquidity directly on-chain, but also makes it easy for other liquidity providers to access Kyber's orders.

Yield farming a DEX?

With KyberDAO, the company is giving an incentive for more users to hold onto their KNC and actively participate in governance. As in most such setups, users can do this easily by delegating their stake to another entity that will cast votes for them.

KyberDAO is part of a broader upgrade on the DEX called Katalyst.

There has been a general uptick of interest in DEXs thanks to the broader surge in DeFi. More broadly, there's just a lot of activity on Ethereum right now.

Read more: DeFi’s ‘Agricultural Revolution’ Has Ethereum Users Turning to Decentralized Exchanges

For now, Kyber provides a way for DeFi apps and people to make trades straight from their wallets, but the vision is bigger than enabling users to play the market. Kyber anticipates a bright future for payments in various crypto tokens. By providing incentives to get enough liquidity on-chain, one day vendors could accept any token for any payment.

ParaFi Capital recently announced an investment in Kyber. As ParaFi's Ben Forman told CoinDesk in an email:

“Kyber is growing rapidly across a variety of KPIs [key performance indicators] – monthly trades, monthly unique traders, number of integrations, and monthly trading volumes. The team is executing flawlessly and is well-positioned to capitalize on the growth of the broader DeFi ecosystem.”