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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.

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.

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. 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

Crypto Update: Market Stabilizes but Bulls Not Out of the Woods

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The cryptocurrency segment looks much better than any time in the last 10 days, as the major coins managed to hold up above the liquidation lows hit on Tuesday. While the bounce stabilized the market, there is still substantial fragility following the steep selloff, and until further bullish moves, traders shouldn’t enter full positions.

That said, finally, there are signs of relative strength among the top coins as correlations are slightly lower, and some of the bearish leaders managed to recapture key resistance levels. Litecoin is trading right at the crucial $56 level, while Monero is above the $90 level, and as we noted before the exhaustion of their downtrend is a positive sign or the whole segment.

XMR/USDT, 4-Hour Chart Analysis

The bounce and the following stability triggered a few upgrades in our trend model after spending almost 1 month in the sell zone, but there are still no majors on a buy signal as the segment-wide downtrend remains intact. Bitcoin remains the strongest coin from a technical perspective, while Ethereum and Ripple, which showed weakness for weeks, are also in better shape, even as they face very strong resistance levels.

ETH/USD, 4-Hour Chart Analysis

Ethereum managed to hold up above the $275-$280 level during the overnight pullback, and now it faces the $300 resistance level again, trying to build on the recent rally. While the short-term downtrend is intact, and the oversold longer-term momentum readings could fuel a rally in the coming weeks, but now the coin is in a structural bear market after the break below $400.

The coin is now neutral from a short-term standpoint, but a move below $275 would point to another test of the lows. Further resistance is ahead at $3335 and $360, while strong long-term support is at $260.

Bitcoin Still Below $6500 as XRP Nears $0.30

BTC/USD, 4-Hour Chart Analysis

Not much has changed for Bitcoin in recent days, but relatively speaking the largest coin showed significant strength. That said, until BTC doesn’t show bullish momentum, traders still shouldn’t enter positions, as the structurally important $5850 level is still not far below the current price level. A move above $6500 would trigger a short-term buy signal, but further strong resistance levels are ahead at $6750 and $7000, while support is still found at $6275 and $6000.

XRP/USDT, 4-Hour Chart Analysis

Ripple and Ethereum are in very similar technical setups, and XRP is also facing strong resistance at $0.30 after finding support overnight near $0.275. After the panicky spike below $0.26, the odds of a durable increased, and should the coin stay above the overnight lows, the coin could avoid another short-term sell signal. While traders should still stay away from entering full positions here, a bottoming process might already be underway.

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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4.6 stars on average, based on 318 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Analysis

Ethereum Takes Baby Steps to Recovery as Global Markets Surge 10%

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Following the first serious rebound from the last week’s carnage the global market gained 10% overnight, pushing back through the $200 billion barrier after a brief dip to $190 billion yesterday.

Ethereum Price Recovery

The rebound was not distributed equally, with many of the altcoins which had previously lost the most now benefiting in turn. Ethereum made a strong push in the last twenty-fours as it climbed from a near year-long low of $254.56 up to the current range in the $280’s, where it sits at the time of writing.

The 11% gains for the day sound good, but amount to relatively little in dollar value considering how much the coin lost in recent weeks. At one point during the night ETH climbed to a unit price of $290 – but that’s as far as it could go during this particular twenty-four stretch.

The sudden surge over the last twenty-four hours wasn’t enough to take Ethereum to the £300 mark, although that could be achieved following another 5% growth. The current $284 price per ETH is still one of the lowest witnessed in the last 11 months, so there’s still plenty of scope for investors to jump on board.

Predictably, USDT trades are the most popular today, making up close to 20% of the daily total as a significant portion of ETH becomes un-tethered. Wash-trades, or transaction mining on multiple exchanges once again comes close to equalling the actual recorded daily volume of $1.8 billion.

Global Surge Re-Rearranges Altcoins

While nothing could be termed normal in the crypto world, several coins have returned to their former market cap positions from before the dip. EOS is back in 5th place after temporarily being ousted by Stellar, and Cardano has returned to 8th spot after briefly giving up its place to Tether.

TRON and IOTA are still lingering outside the top ten, with Monero holding strong in the 10th spot previously occupied by TRON, and then IOTA in recent times.

Correlation and Causation

You’ve probably seen the Google Trend charts which show an alignment between ‘cryptocurrency’ Google searches, and the total cryptocurrency market cap. Right now the search volume is as low as it has been since before the surge of 2017 – but that isn’t necessarily an indicator of a lack of interest. It just means that people aren’t typing the word ‘cryptocurrency’ (or Bitcoin, which has an immensely larger search volume) into Google any more.

It says nothing about the number of people checking CoinMarketCap every day, and it doesn’t let you know how many people have suddenly become interested again after seeing prices drop to such long-time lows.

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 38 rated postsGreg Thomson is a full-time crypto writer and digital nomad. He eats ICOs for breakfast and bleeds altcoins. Wherever he lays his public key is his home.




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Analysis

Pre-Market: Selling Resumes as Dollar Extends Rally

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Global stocks are sharply lower today after the US open, as a bearish Asian session was followed by a lackluster European showing, and the major US indices also opened lower, erasing yesterday’s gains. Emerging markets are still to be blamed for the current selloff, even as the underlying cause is still the global tightening cycle and the Dollar’s rally.

S&P 500, 4-Hour Chart Analysis

The Chinese stock market and the Yuan led the way lower today, with the Shanghai Composite getting close to hitting new bear market lows, and with the currency hitting fresh 13-month lows. European stocks also continued their relatively weak streak, with the DAX trading at the lowest level since the end of June. The undoubtedly leading US benchmarks are all down by more than 1% today, but they are still close to their all-time highs, even as the divergences are just getting deeper and deeper.

Shanghai Composite, 4-Hour Chart Analysis

The Turkish Lira is still in the center of attention, as the battered currency added to yesterday’s gains after the Turkish central bank intervened in the interbank markets. The bank made it harder to short the Lira, which in effect also make it harder to hedge against the decline of the currency, so basically the country started on the road of capital controls.

USD/TRY, Daily Chart Analysis

While preventing a run on the currency is a legitimate goal, by not changing its confrontative stance and not taking steps to clam the market, the risk of a massive capital flight is still very high. The broad rally in the Dollar is just making matters worse for the country, and contagion is far from being dodged by global markets at this point.

With several European markets being closed the large pre-market moves are not a surprise, even as the key economic indicators leaned bullish before the bell. The most awaited US retail sales report was a sizeable beat in both the headline, and the more reliable core figure, although the previous numbers were revised lower. The Empire State Index was also well above the consensus estimate, but US industrial Production missed, similarly to yesterday’s Chinese and European indicators in the segment.

Dollar Break-Out Continues

EUR/USD, 4-Hour Chart Analysis

The US Dollar’s surge is arguably the most important trend globally, and the reserve currency confirmed its break-out to new 13-month highs today, as the EUR/USD pair hit 1.13, the GBP/USD pair trading with a 1.26 handle for the first time in a year, and with commodities suffering heavy losses again.

Copper Futures, 4-Hour Chart Analysis

We have been following copper’s struggle to stay above the key support zone near $2.7, and today’s Asian weakness sealed the faith of the commodity for a while as Dr. Copper hit a new 14-month low itself, signaling that more trouble is ahead for China and the commodity-complex.

Gold is also at levels not seen since early 2017, and crude oil gave up its recent bounce falling to an 8-week low, getting close to $65 per barrel with regards to the WTI contract.

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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4.6 stars on average, based on 318 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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