For those who have been keeping an eye on Kyber Network, it should come as no surprise that the sector leading DEX has seen a tremendous amount of growth in recent months.


In lieu of the launch of Katalyst – the network’s upcoming tokenomic upgrade  – the community has been eager to hear about the interworking of one of the most highly anticipated DeFi DAOs to date – KyberDAO.

Early today, Kyber shared an ecosystem update which dives into different design choices surrounding KyberDAO and the $KNC ecosystem. Let’s dig into what the report says!

Governance At Its Finest

For those unfamiliar with DAOs, KyberDAO is largely a mechanism for the community to govern how Kyber’s network fees are distributed. At its core, tokenholders will use the DAO to vote on how network fees (currently 0.25%) are split between:

  • Voting Rewards – Fees which are distributed to holders who stake and participate in the KyberDAO governance.
  • Token Burns – Fees which are allocated to burning outstanding KNC.
  • Reserve Incentives – Fees rewarded to those providing Kyber with underlying liquidity.

What emerges is a balancing act in which the three levers must be carefully curated to ensure all parties are properly aligned. Here’s a good representation of this:

Governance Cycles

Perhaps the most unique aspect of KyberDAO is the novel approach to governance. Rather than aggregating voting rewards over long time intervals or issuing them dynamically, the DAO will leverage what they called epochs.

“Staking and voting are done in epochs, which just means fixed periods of voting time, denominated in Ethereum block times. One KyberDAO epoch will be around once every 2 weeks.”

Every epoch will contain at least one governance proposal and all tokeholders will split that epochs rewards pro-rata relative to the amount of KNC staked and the number of polls participated. Best of all, all rewards are issued in ETH and claimable in the following epoch. Here’s a look at how rewards are allocated:

KyberDAO will also introduce voting delegation in the form of “pool masters”. These are highly active participants who can be relied on to vote on all campaigns and have an informed background on the logic and implications of a given decision. Pool masters share to earn a larger portion of the epoch rewards, while those who delegate to pool masters are able to collect passive rewards for governance without actually having to vote themselves.

DAO Food for Thought

All and all, it’s safe to say that KyberDAO is shaping up to play a huge role in the wider DAO ecosystem. Beyond its innovative design and custom framework, Kyber is extremely attractive for a number of key reasons:

In a world where current DAOs are largely permissioned or subject to high capital requirements, KyberDAO will be a very interesting experiment to allow users big and small to participate in governance in a value-added way.

As far as accessing the DAO itself, Kyber will roll out a new site a launch – – which is entirely focused on governance. This site is accessible both on desktop and mobile and therefore aims to make it as easy as possible for users of all backgrounds to get involved.

Shifting Towards Decentralization

One of the more respectful elements of this announcement was Kyber’s clear communication that they will initially play a major role in mandation and execution of voting proposals within the DAO. Rather than simply handing the voting off to the community and stepping aside, Kyber will aim to gradually decentralize the voting process as more participants become familiar with what is best for the wider Kyber ecosystem.

“As the current DAO maintainer, we take the role of facilitating discussions, driving open and transparent decision making, and executing (and following through) the formal DAO processes very seriously.

For those keen to get involved with KyberDAO, we encourage you to join the Discord and head on over to the governance channel. There will also be a “pre-vote” poll in the coming weeks to decide the initial set of variables to start the new network with before the DAO begins.

For developers eager to build tools to help optimize the KyberDAO workflow and onramps, we recommend referencing these documents.

To keep up with new updates in a passive manner, follow the KyberDAO Twitter.

We’re super stoked on this launch and look forward to playing a big role in their governance in the coming weeks!