What is KyberSwap Elastic?
What is KyberSwap Elastic? KyberSwap Elastic inherits all the powerful features of the KyberSwap Classic. It also gives you concentrated liquidity and the flexibility to take your earning strategy to the next level.
To keep up with the ever-changing landscape of DeFi, KyberSwap has been working tirelessly to evolve to meet the relevant needs of Traders and Liquidity Providers.
KyberSwap’s existing protocol known as KyberDMM will henceforth be renamed to KyberSwap Classic. KyberSwap Classic, the world’s first Dynamic Market Maker. It was able to reflect market conditions to dynamically adjust the fees and optimize returns for Liquidity Providers with its extremely capital-efficient model.
Concentrated Liquidity on KyberSwap Elastic
KyberSwap Elastic takes things a step further with its concentrated liquidity! Liquidity Providers (LPs) now have the flexibility to supply liquidity to an Elastic Pool. Using a custom price range of their choice to determine how ‘concentrated’ the liquidity is. LPs can concentrate liquidity by using a narrow price range for the token pair.
This way, liquidity in the pool is used more efficiently, mimicking much higher levels of liquidity and achieving better slippage, volume, and earnings for LPs. This is especially effective for stablecoins and correlated pairs (e.g. USDC-DAI) which have a little movement in price.
Of course, LPs also have the option to set a wider price range or even a full price range (0 to infinity). This ensures that liquidity for uncorrelated token pairs such as USDC-ETH remains active even with big price swings during high market volatility.
Overall, the customizable price range of Elastic pools provides LPs with greater flexibility to achieve capital efficiency and manage risks. While rewarding them for having a sound liquidity strategy. Elastic pool fees also auto-compound so LPs earn higher APY!
Designed to provide unparalleled flexibility, security, and returns, KyberSwap Elastic provides a diverse set of features primarily for LPs. With distinct liquidity needs and risk appetites. Ultimately, with this innovative protocol, Kyber Network can expect the overall liquidity on KyberSwap to increase. Thereby benefiting the KyberDAO and KNC holders as well.
The key improvements KyberSwap Elastic has over KyberSwap Classic are as follows:
- Customizable Concentrated Liquidity: Instead of adding liquidity to a determined price range (like in KyberSwap Classic), Kyberswap Elastic allows LPs to get granular with their strategy by adding liquidity to a specific price range of their choice. LPs get an NFT that represents their liquidity position and their share of the pool.
- Flexible Strategies: With greater customizability options, you will be able to better plan investment/exit strategies depending on your risk tolerance with greater control.
- Risk Control: With KyberSwap Elastic’s customizability, you will also be able to retain closer control over the tokens’ buy/sell range. This increased control would allow you to mitigate losses brought about by Impermanent Loss.
Cool advantages KyberSwap Elastic
- 5 Fee Tiers— 0.008%, 0.01%, 0.04%, 0.3% and 1%. Liquidity providers can select the fee tier they want after considering how correlated the token pair is. The 5 different tiers bring about superior flexibility for liquidity providers compared to other DEXes.They plan on adjusting these fee tiers with time.
- Auto-Compounding of Fees— automatically reinvest the fee earnings of its liquidity providers by adding them back into the liquidity pool, so they earn more due to compounding. Liquidity providers can withdraw their tokens and collect the trading fees they have earned anytime.
- New Farming Mechanisms — created an innovative liquidity mining (i.e. farming) system for KyberSwap Elastic which distributes farming rewards to users according to:
a) Active liquidity contribution—According to the liquidity provider’s contribution to the corresponding pool’s active liquidity (liquidity that is within the active price range).
b) Active liquidity contribution + trade volume supported: take it a step further and can also distribute farming rewards based on the total trade volume that is supported by the liquidity position(s) of its users. The more trading volume you support, the more farming rewards you will earn.
These farming mechanisms complement the price range flexibility. Since it depicts different liquidity positions as well as the risk that liquidity providers take.
ABOUT Kyber Network
Kyber Network is building a world where any token is usable anywhere. KyberSwap.com, its flagship Decentralized Exchange (DEX) aggregator and liquidity platform, provides the best rates for traders in DeFi and maximizes returns for liquidity providers.
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ABOUT KYberSwap
KyberSwap powers 100+ integrated projects. Facilitated over US$7 billion worth of transactions for thousands of users since its inception. Currently deployed across 11 chains including Ethereum, BNB Chain, and Polygon. It also support Avalanche, Fantom, Cronos, Arbitrum, Optimism, Velas, Aurora, Oasis, and BitTorrent.
