Kyber – a leading DeFi liquidity protocol – has officially launched KyberDAO as a part of their highly anticipated Katalyst upgrade.

Paired with a new website, KNC tokenholders can now easily stake their holdings to participate in governance via the newly launched governance dashboard. While the dashboard currently only shows the amount of KNC which has been staked and the amount of network fees that have been collected to date, voting will start next Tuesday following the first 7-day Epoch.

For those who missed it, Kyber’s governance cycles are split into 14-day periods – called Epochs – in which rewards are distributed relative to eligible stakes and voting participation. Seeing as KNC must be staked for one Epoch to capture rewards, this first 7 day period allows tokeholders to charge up the voting weight for the first on-chain proposals next week.

The first proposal will offer marginal changes to the Pre-DAO Poll in which the community voted for protocol fees to be split 65% to voting weight, 30% to rebates and 5% to burning.

What’s to Know

KNC tokenholders can either vote independently or delegate their voting weight to Kyber protocol politicians called Pool Masters. We recently covered the Kyber Community Pool – a staking pool that will launch this week featuring zero fees while optimizing gas costs to earn maximum rewards. All voting, delegation, and rewards will be handled natively through the dashboard so be sure to check out this tutorial on how to get started!

While the first proposals will be offered by the core team, Kyber is currently working on a Kyber Improvement Proposal framework which would allow anyone from the community to create a proposal for voting. We expect Kyber to follow in the footsteps of COMP’s proposal framework in which there are checks and balances on who can issue a proposal onchain to mitigate spam.

Regardless, it’s an exciting time for the Kyber ecosystem as a whole – especially with the underlying protocol upgrades brought about with Katalyst.

Why Katalyst?

Outside of governance, Katalyst features a suite of changes to the parameters of the underlying liquidity protocol. First and foremost, the protocol fee has been reduced to 0.2% while parters can set custom spreads on top of this to create strong business models.

Liquidity providers (called Reserve Managers) are no longer required to hold a bond in KNC to add liquidity, significantly lowering the barriers to entry for new LPs. This comes in tandem with a form of smart order routing in which traders can pull the best prices from all Reserves, rather than the previous model in which only one Reserver was used at a time.

Lastly, liquidity providers now have an added incentive to provide liquidity as they receive rebates directed from protocol fees. At inception, KyberDAO has voted to allocate 30% of network fees to rebates for those providing the most volume to Kyber-based trades.

Looking Forward

All in all, the launch of Katalyst solidifies Kyber as a top contender for DeFi liquidity. With a suite of incentives for LPs backed by the capacity to earn ETH for participating in governance, we expect Kyber to enjoy strong growth over the coming year as DeFi continues to proliferate.

One of the interesting things to keep an eye on is how profitable staking actually is – especially if major exchanges like Binance, Coinbase and Huobi put their holdings to work.

Less than a day after launch, 6.9M KNC (roughly~$11M) has been staked to date, accounting for roughly 3.5% of the total supply. We expect this number to quickly ramp up once voting goes live, so be sure to stake during Epoch 0 to participate in the first cycle’s rewards.

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