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ICO Analysis: Kyber.Network

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Kyber Network wants to enable Ethereum addresses to receive payments from any kind of blockchain. That’s the top deck view of what they intend to do, and perhaps their best offering. Although they appear to believe that the exchange nature of their platform is what is important – and that definitely adds value to their offering, as well. We should open by saying we applaud the academic and informed approached taken by the team behind Kyber.

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Kyber lists “risk of centralization” as one of their chief motivating factors.

However, despite the decentralized and trustless natures of cryptocurrencies and crypto tokens, most of the trades happening on centralized exchanges are vulnerable to internal fraud and external hacking. This is an ongoing concern and a number of hacking incidents has been reported at various exchanges affecting thousands of users and loss of hundreds of million of dollars.

Another is a “lack of instant exchanges.” While not mentioning the several allegedly instant exchanges out there, the point Kyber focuses on is that most exchanges take too much time to execute transactions for the user. Instant trades would be preferable, but these are not possible for most centralized operations like ShapeShift.io or Changelly.com. Both of these efforts would quickly go bankrupt if double-spends were flagrantly allowed, and the only way to prevent against them is to require a certain number of confirmations for each different blockchain. With Bitcoin, for instance, ShapeShift requires at least one, sometimes two confirmations. They utilize a third-party service called BlockCypher to determine the quality of transactions. In a world where Kyber.Network and similar technologies are in play, ShapeShift, BlockCypher, and other centralized exchanges become obsolete for standard users.

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Kyber Network Particpants

Kyber proposes an ecosystem of several layers, including the ability to exchange and make payments in cryptographic tokens in a universal fashion. They want to be able to conduct all the functions currently served by various centralized services in one-click – if a merchant only accepts a certain token, the user will simply pay the equivalent value in the tokens they do have. Rather than maintaining and regulating a global order book which determines exchange rates, Kyber prefers to offer a fair spread across the board and simply horde coins in order to serve orders. The management of these reserves is carried out by a class of network participants called reserve managers, who determine the exchange rates and must all agree on them.

Other roles in the system are mostly related to the maintenance of reserves. Before diving into them, we should note the other two of five roles there are to be played: users and “operators.” Operators are essentially the network miners, responsible for the ultimate officiating of information on the network.

The other three roles in the network are directly involved in the management of reserves. The first is the reserve operator, who takes liquidity from the second, the reserve contributor, who derives part of the network’s profits along with the operator and the third role, the reserve manager. Splitting these roles up among three different groups is presumably meant to ensure that all moving parts work correctly before rates are published and used in the network.

Unlike many cryptocurrency projects, the user needs to only send a transaction. Their transaction is immediately valid, while the reserve components of the network are responsible for moving the numbers around, and the network operator is responsible for ensuring all records make it to the top side of the network.

Kyber already has a working smart contract to fulfill the vision of the network. In the month of August, they intend to create a minimum viable product. The white paper does not mention specific rates that the network will derive for various types of transactions, but this is due to the trustless and decentralized nature of it. One concept that is covered is the idea of “dynamic reserves.” This means that several reserves of, for instance, Ether could exist, some managed by larger entities on the network for larger pairs and some being registered on the network by smaller interests in order to support the trading of less popular pairs. For example, if Aragon network were receiving less volume globally and they wanted to ensure some liquidity in their token, participants of their network could create reserve funds specifically for that pair. Exchange rates would be determined by the triumvirate of reserve personnel. This equates to a form of democracy in the exchange of the equities. Allowing for this all to happen on one chain is important – the multi-wallet functionality alone will make the Kyber Network attractive to veteran crypto traders who want to hold tokens outside of exchanges, everything from Bitcoin to Ripple.

Kyber Team

Everyone in the executive branch of the Kyber Network is a worthy opponent for the industry they intend to disrupt. Beginning with co-founder and CEO, Loi Luu, who is an active researcher in the cryptocurrency and smart contract space. Having someone with this sort of expertise, and immersion, is at the helm of an ICO, is refreshing. It might help explain why they want to be sure they are prepared before they actually do the token launch, which they’ve yet to fully announce.

Aside from Luu, we’ve got Israeli computer science PhD Yaron Velner, who is acting as CTO and is also a co-founder. As a researcher, Velner is a valuable addition – he has several Ethereum flaws to his credit, for which he was compensated under the bug bounty program. Critical infrastructure work of this kidn means he will know what to look for when hiring other talent later on.

The rest of the team appears formidable as well.

The Verdict

Being that we don’t know much about the token distribution or the cost of the tokens, nor what real utility they would play within the network (perhaps they would be used as the base token of exchange, giving them an inert form of value from the start), we have to rate this project purely on the idea.

The idea is there, although it is perhaps misleading to assert there is a lack of “instant” exchanges. For there are plenty, but there is no such thing as actually instant within the cryptocurrency realm of things.

Growth Potential

We believe that several options will emerge over time which will totally subvert the need for centralized exchanges, and that the best of these will be very prosperous endeavors indeed. For token holders to experience this growth, however, the token has to be somehow tied to it. We would prefer to see more tokens which directly compensate their holders with profits from the operations of the company which offered them, rather than speculation thereupon. This is a better, more equitable way for people to comfortably invest – in order to realize their own value, at that point, the companies must perform. If this is the case with Kyber.Network, we can award them an extra point on top of the overall rating which follows.

In terms of growth regardless of the above, we can see that these types of technologies are bound to take off. Kyber intends to release a minimum viable product very soon, and this will be an encouraging sight – more people will take interest in the project when it is demonstrably workable. Being able to send and receive any token at all via a single network, “instantly,” is a great plus. For this novelty and its potential to disrupt the entire exchange industry – being that anyone can really play a role in the ecosystem – we lend 7 points off the top.

Risk

We believe there will be many efforts at creating decentralized networks on which all chains can trade. These efforts will not stop multiplying, and so the market will soon be split. Kyber has a heavy onboard cost in terms of technical investment, and one must remain invested to recoup time invested. As such, we must deduct a full 1.5 points for the possibility that among a sea of competitors, Kyber will just not attract enough people to create the sort of volume that will be necessary across global pairs. For their network to truly function and prosper, they require a lot of volume and activity.

Disposition

All the above outlined, we have a simple equation with Kyber – 7 – 1.5 = 5.5.

Don’t forget the above note wherein we can add a full point if token holders are allowed to profit from the token once it is released. That would be a valuable addition, and give the token an actual value – people would be willing to pay more up front for tokens which promise later revenues. This is the ideal situation and we think ICOs will figure this out more and more moving forward.

Investment Details

Unfortunately, there are no details yet on the Kyber ICO. There will be this year, however, and you can stay tuned with them by subscribing to their mailing list or following them on social media. This is definitely one to watch, and as they engage with the community more, they may improve various aspects, only increasing their potential for being a profitable investment.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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5 stars on average, based on 2 rated postsP. H. Madore has covered the cryptocurrency beat over the course of hundreds of articles for Hacked's sister site, CryptoCoinsNews, as well as some of her competitors. He is a major contributing developer to the Woodcoin project, and has made technical contributions on a number of other cryptocurrency projects. In spare time, he recently began a more personalized, weekly newsletter at http://ico.phm.link




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1 Comment

  1. mitchpah

    September 4, 2017 at 2:31 am

    Morning PH, can you tell me what ICO’s you plan to cover in the near future? Looking forward to the next round of analysis

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Analysis

The Raiden Network: Is Now A Good Time To Invest In RDN?

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It seems like we have talked about the need for speed whenever the topic of blockchains and cryptocurrencies are mentioned.  These days, transactions are consuming huge amounts of energy and still only perking along at 10-15 per second. If there is a crypto future this rate isn’t going to get us there.  As we all know, Mastercard and Visa work with a system supposedly doing 100,000 per second.

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Who knows if that number is absolutely accurate of some smoke but one thing we know: 10-15 per second is pathetic.  Bitcoin’s potential savor is The Lightning Network. The latest version was released within the last few weeks. Along with about everybody else, we will be watching closely to get a read on TLN.

A Savior For Ether Investors?

The Raiden Network could save Ethereum from techno irrelevance.  The important word here is could. That is because there is lots of Ethereum envy out there.  There are folks such as Cardano and NEO that have their own blockchain platforms complete with smart contracts.  Then there is Liquidity.Network, the recently announced Ethereum focused competitor to Raiden.

Creating A Separate Coin For Investors

Raiden Network completed its ICO last November, raising $32.8 million.  Rather than simply creating a fork of ether, developers created the opportunity for investors to directly participate in a solution that could save the day for Ethereum and investors in ether.  

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I do not own any RDN.  A small amount of ETH has my name on it, so I am eager to find the protocol that can protect my measly holdings.  Here is what gets me interested in Raiden.

Well Along In The Development Process

RDN has been around for about the same amount of time as Ethereum dating to 2015. That is about 21 in dog years and practically a millennium in crypto time.  But the development team strikes me as the most interesting part.

RDN is being developed by BrainBot Technologies AG.  This is not a smattering of amateurs but a company with a deep bench of developers and a history of successful projects.  Check them out at brainbot.com.

Last November, Brainbot demonstrated the high throughput and low latency of the Raiden Network with a demonstration of Micro Raiden applied in real-time, showcasing the great potential for products that require the type of high speed transactions involved with the Ethereum blockchain.

Off The Blockchain

Technical reports describe The Raiden Network as an open source, trustless, fast, inexpensive and scalable off-chain payment solution for the Ethereum blockchain. This means it functions smoothly with the Ethereum platform. The Raiden Network provides bidirectional payment channels for low scale value exchanges of ERC20 compliant tokens to users within the Raiden Network. These bidirectional payment channels may interlock to create a system of channels between infinite parties in a hive.

Translated into comprehensible english, Radien promises almost instantaneous transactions with fees low enough to attract low value transactions. At less than $0.01 per transaction, a $5 latte fits.  Ethereum fees at the peak last year were more $4.15. So the potential for Raiden is really big.

In fairness it should be mentioned that Ethereum is considering options such as sharding and that would reduce the singular importance of Raiden. So perhaps the role of savior is a bit extreme.  But sharding is not likely to be a preemptive force. Raiden development is that much further along.

Speaking Out

Members of the Raiden development team are taking their show on the road having made presentations recently in Tokyo.  The next event is scheduled for Toronto this coming week on May 4th. The presentation is being billed as an opportunity to give an update on the progress in deploying the network.  This is a date to put in your digital calendar if you own ETH or have an interest in RDN.

Aside from the obvious reasons, here is why.  Like about every other crypto, RDN peaked in price in early January around $8.65 before taking a plunge to less than $1.20 by April.  This drop of 87% made RDN one of the worst performers in the recent crash. In addition to all the crypto market woes, there were delays in the network deployment.  That is enough to disappoint anyone.

Since early April RDN’s price has rebounded to about the $2.00 level.  Even so this is a long way from the good old days of 2017. Logic dictates that a good showing in Toronto might translate into investors taking notice.   By good showing we are talking about favorable news about Raiden deployment.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 64 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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Analysis

Euro hits 3-Month Low Despite Hawkish Draghi

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All eyes were on the European Central Bank and Mario Draghi today, as the recent string of disappointing economic data put pressure on the Euro. Investors started questioning that the ECB will follow through with its monetary tightening plans. As far as the actual momentary policies are concerned, the central bank left everything unchanged today, while the head of the bank signaled that he is confident about growth in the Euro-zone, sparking initial buying in the common currency.

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EUR/USD, 4-Hour Chart Analysis

Despite the hawkish words of “Super Mario” the Euro took a sharp turn lower right at the US open, and the EUR/USD dipped below 1.2150, hitting the lowest level since January. From a technical standpoint, the most traded pair is at a very important juncture, and should the break below support hold, a quick move below $1.20 is likely.

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S&P 500 Futures, 4-Hour Chart Analysis

Stocks are higher for the second day in a row after the strong bearish move in Tuesday, with the NASDAQ leading the way higher, led by Facebook, as the recently troubled social media giant is staging a strong bounce following yesterday’s positive quarterly earnings report. Despite the rally, the charts still suggest that there are more troubles ahead for bulls, with the short-term downtrend clearly being intact in the major indices.

Facebook (FB), 4-Hour Chart Analysis

US Treasury yields which have been in the focus in the last days are slightly lower today, especially regarding the longer end of the curve, as core durable goods orders came in much lower than expected, even as the less reliable headline number beat the consensus estimate. While it’s unlikely that the rising trend in yields will be broken, a correction is in the cards after the strong move higher in rates.

Dollar Rally Dominates Forex Markets

USD/JPY, 4-Hour Chart Analysis

Should Treasury yields pull back substantially from their highs that could mean that a correction the Dollar rally is also ahead, as the Greenback looks stretched from a short-term standpoint too. The Dollar’s strength also weighs on commodities, with gold dropping below $1320 and WTI crude oil falling back below $68 per barrel.

Commodity currencies are still under pressure too, while European and Asian stocks are benefiting from the USD rally, which will remain in the center of attention this week.

Featured image from Shutterstock            

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

Crypto Update: Correction Continues but Uptrend Not in Danger

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The major cryptocurrencies are consolidating in a choppy range today following yesterday’s sharp pullback, with the total value of the market stabilizing near the $400 billion level. All of the largest coins found support above key support levels, keeping the bullish trend intact, as the overbought readings are being cleared.

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While the correction will likely continue and our trend model is still only neutral from a short-term perspective in the case of most of the coins, the underlying trend is positive, and we expect the recovery to resume after the dip.

BTC/USD, 4-Hour Chart Analysis

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Bitcoin fell below the $9000-$9200 support/resistance zone during the pullback, but it remained above the $8400 level that marks the previous swing high. The MACD indicator is still showing a downswing, but it is now in neutral territory, and the coin could already be ready to resume the uptrend and aggressive traders could enter new positions, using the overnight low as a stop loss level. Below $8400, further support is found near the $7650 level, while targets are ahead at $10,000 and $10,500.

ETH/USD, 4-Hour Chart Analysis

Ethereum found support just below the $600 level and moved back to the vicinity of the $625 support level holding within the steep short-term uptrend.  A break below the trendline is still likely, and a test of the $555 to $575 zone is possible after the strong rally. That said, ETH, one of the leaders of the upswing is expected to resume the recovery after the correction, and long-term investors should hold on to their coins despite the move. Further support is at $500, with targets still ahead near $735, $780, and $845.

EOS Holding Up Well Amid Broad Correction

EOS/USD, 4-Hour Chart Analysis

EOS has been spearheading the broad rally in the segment, and the coin got close to the prior all-time high before the current correction, being the largest coin to do so since January. Although the currency retreated somewhat from the highs, it remains from a short-term perspective and traders should use tight stop losses or reduce their positions as correction risk is high here.

IOTA is the closest to giving a short-term buy signal among the majors, as it began the correction earlier and found strong support near the previous swing high, while there are no negative outliers that would hint on a failed rally off the recent multi-month lows. With that in mind, long-term investors could still use the current correction to boost their altcoin holdings.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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