Buy Kyber Network

Kyber Network is one of the older pieces of infrastructure in decentralised finance. It began in 2017 with the goal of making token liquidity available to any application that needed it, and today its main product is KyberSwap, a trading platform whose most used feature is an aggregator: software that searches across many decentralised exchanges at once and splits a single trade between them to get a better price. KNC is the network's token.

That distinction is worth holding on to, because it separates Kyber from most tokens in the same category. Kyber's core business is routing trades rather than holding the liquidity itself. Our guide to decentralised finance explains the wider category, and our guide to Ethereum covers the network Kyber started on.

What an aggregator does, and why it matters

Liquidity in decentralised finance is scattered. The same pair of tokens might trade across dozens of separate venues on a single network, each with its own depth and pricing, and a large order sent to any one of them moves the price against the person placing it.

An aggregator solves that by treating all of those venues as one pool. It searches the available routes, breaks an order into pieces, sends each piece where it will get the best execution, and returns the combined result. For a trader the benefit is less slippage. For the software, the hard part is doing that search quickly and cheaply enough to be worth it, across many networks at once.

Kyber has built this into a service that other applications and wallets plug into rather than only a website people visit. That is the strongest part of the business, and it is also the part with the least direct connection to the token.

KyberSwap's other pieces

Alongside the aggregator, KyberSwap has run its own liquidity pools and features aimed at people supplying liquidity rather than trading.

Classic pools. Standard automated market maker pools with amplification settings for assets that are meant to trade close to each other. Elastic pools. A concentrated liquidity design, where providers choose a price range for their capital. This is the product that was exploited in 2023, covered below. Trading tools. Limit orders, cross chain swaps and analytics built on top of the routing engine.

The November 2023 exploit

On 22 and 23 November 2023 an attacker drained KyberSwap Elastic pools across multiple networks, taking assets valued at roughly forty seven million dollars at the time.

The flaw was in the maths of the concentrated liquidity design. By manipulating the price to sit precisely at the boundary between two liquidity ranges, and exploiting a precision issue in how the contract handled that boundary, the attacker was able to make the pool count the same liquidity twice and withdraw far more than it should have released.

Kyber's response was to launch a treasury funded grant program and, according to its own post mortem, to cover one hundred percent of affected funds for users who applied. The KNC token contract and the KyberDAO were not themselves affected by the exploit. The company also cut a substantial part of its team in the aftermath, and its development focus since has been on the aggregator and routing side of the business.

Two things are worth taking from this. Users were made whole, which is not the usual outcome after an exploit of that size and reflects a treasury being spent to protect a reputation. And the vulnerability was another precision and rounding failure in complex pool maths, the same class of bug that has cost other major protocols very large sums since.

What is KNC used for?

Governance. KNC is staked in the KyberDAO to vote on proposals covering protocol parameters, fee levels, supported networks and how treasury funds are used. Voting rewards. A share of trading fees generated by KyberSwap is directed to the DAO and distributed to stakers who actually vote. Rewards follow participation, not merely holding. Protocol incentives. KNC has been used to bootstrap liquidity and support ecosystem programs, at governance's discretion.

Two limits are worth stating plainly. KNC is not gas, so using KyberSwap does not require you to hold it. And rewards depend on trading activity on Kyber's own venues and on decisions the DAO makes, neither of which is guaranteed.

KNC's supply is not fixed

KNC was upgraded to a new contract in 2021, replacing the original token. Holders had to migrate, and the old token is generally now referred to as KNCL.

The point of that upgrade was flexibility. The current KNC contract allows the DAO to mint new tokens or burn existing ones as part of managing incentives and fees. That means supply is a governance decision rather than a fixed schedule set in code.

For a holder this cuts both ways. Fee driven burns can reduce supply, and minting to fund growth or incentives can dilute it. Neither is guaranteed in either direction, and the current settings matter more than any historical supply figure.

Which network is your KNC on?

KNC is natively an ERC-20 token on Ethereum, and representations of it exist on other networks compatible with the Ethereum Virtual Machine where KyberSwap operates.

Addresses are not interchangeable between networks. Sending KNC to an address on a network the receiving wallet or exchange does not support is one of the most common ways people permanently lose tokens, and it usually cannot be reversed. Before any transfer, confirm which network the destination expects and make sure the network you are sending from matches. Our guide to sending crypto on the wrong network covers what can and cannot be recovered.

What are the risks of holding KNC?

Demonstrated smart contract risk. Kyber lost a very large sum to an exploit of its concentrated liquidity pools, and the wider sector keeps finding similar precision bugs in similar code. Treasury depletion. Compensating users in full was good for trust and expensive. A treasury that has been drawn down has less capacity to fund development, incentives and any future incident. Reduced capacity. The team was cut significantly after the exploit, which affects how much can be built and maintained. Weak link between product and token. The aggregator can be used without KNC, so growth in routing volume does not automatically create demand for the token. Fee dependence. Staking rewards depend on trading fees earned by Kyber's own venues, which fluctuate with market activity and competition. Adjustable supply. The DAO can mint KNC. Dilution is a governance decision rather than an impossibility. Competition. Aggregation and routing are crowded, with several well funded competitors, and much of the volume flows through interfaces that can switch providers. Governance concentration. Voting is token weighted and turnout is typically low, so a small number of holders can decide outcomes. Liquidity and volatility. KNC can move sharply, and market depth can be thin in a downturn. No consumer protection. Crypto assets are high risk, your capital is at risk, and KNC is not a financial product covered by the Australian Government's Financial Claims Scheme. You should be prepared to lose the money you put in.

Buying KNC with Australian dollars on CoinJar

CoinJar has operated since 2013 and lists KNC against Australian dollars, so you can buy, sell and hold it without converting through another cryptocurrency first. Current charges are on our fees page, and live Australian dollar rates are on our cryptocurrency prices page.

CoinJar Australia Pty Ltd is registered with AUSTRAC as a digital currency exchange provider, Registration Number DCE100749118-001.

How is KNC taxed in Australia?

The ATO generally treats KNC as a capital gains tax asset. A CGT event can occur when you sell it for Australian dollars, exchange it for another cryptocurrency, spend it or give it away.

The ATO explains these rules on its crypto asset investments guidance page. Our guide to crypto tax in Australia provides a practical overview. This is general information, not tax advice. Consider speaking to a registered tax agent about your circumstances.