On November 25, we hosted our first-ever AMA with our friends at Kyber Network to welcome new members and engage with our supportive pioneering users on Unagii. The AMA's premise was for the community to learn more about us as a team, as a product, and more about Kyber Network.
Together with Bo and Shane from the Kyber Marketing team, we sought to provide clarity and insights to some of the community's burning questions. We were thrilled to receive over a hundred questions pre-AMA on Twitter and many more during our live AMA segment on Telegram.
Below is a recap of some of the segments and questions we covered during the AMA:
- Pre-collected questions from Twitter
- Q&A with the Kyber Network team
- Live AMA
A brief intro about Unagii
You can think of Unagii as a one-stop solution for digital asset yields. While our focus at the start has been on crypto network staking yields, we're building Unagii beyond that with DeFi powered yields.
We've piloted our venture with Kyber Network staking to great success. With so much greater demand in DeFi, we'll be doubling down on our efforts with an upcoming relaunch we know our users will love!
Q1. What do you think of the competition between PoS and DeFi? If PoS revenue is greater than DeFi, why should users choose DeFi?
Mervyn: We see great synergies in offering a product that caters both to DeFi and PoS yields. We believe the derivatives being built on DeFi will eventually be built around staked assets to enhance yields. Also, DeFi and PoS products have a different kind of risk profile. Offering both options on the Unagii platform gives users the flexibility to choose the product they prefer.
Q2. Investors have multiple avenues to earn yield via DeFi and CeFi platforms. Why should investors choose Unagii over other platforms?
Mervyn: Unagii will continue to focus on non-custodial yields that ensure users don't even have to give their assets ownership over to a centralized entity. We continue to believe that this is only just the start for the DeFi. And would like to enable access to these digital asset yields via a simple set and forget it kind of process for our users.
Q3. The ease of use of DeFi platforms will be the key to mainstream use. How comfortable is your interface for beginners? Does your priority include user-friendly interface work?
Mervyn: We have a dedicated team focused on building the best experience for anyone to interact with DeFi protocols. We're currently developing our v2 application, which will be relaunched very soon!
Q4. Smart contracts are susceptible to loopholes, and even three new large-scale DeFi projects have suffered; as a result, thus wasting user funds. How efficient and safe is your smart contract? Have you ever reviewed it with any external party?
Mervyn: Our upcoming DeFi product is currently undergoing an audit. Our smart contract engineer has gone through several iterations with the auditors to lower any possible attack vectors.
A brief intro about Kyber Network
Kyber is an on-chain liquidity protocol that aggregates liquidity from a wide range of reserves, powering instant and secure token exchange in any decentralized application. The KyberDAO governance processes empower KNC holders to vote on key network parameters, i.e., deciding network fees and how it will be allocated to maximize growth.
Q1. Liquidity is a challenge for decentralized exchanges. How does Kyber Network aim to attract more liquidity?
Bo: We intend to take aggressive actions to identify and shore up any weaknesses, boost our liquidity and token competitiveness, and establish ourselves as DeFi leaders. We foresee better liquidity once:
- More professional market makers come on board, but the problem is that there wasn't a suitable system that allows MMs to easily get started and run a profitable operation. To tackle this problem, Kyber launched KyberPRO, an end-to-end framework for professionals. It easily onboards and runs a profitable market making operation on-chain, with minimal smart contract knowledge. We believe this is the only practical system that supports their needs and delivers a sustainable liquidity infrastructure for DeFi.
- There's a new open system for permissionless liquidity contribution that is usable by anyone in DeFi.
- Control is shifted to the KyberDAO when it comes to adding tokens and reserves to Kyber network.
Shane: Liquidity is often scattered across multiple platforms in DeFi. For example, Uniswap is an awesome protocol with a simple permissionless AMM model that has provided a lot of value to DeFi. Still, it's only one source of liquidity. It's a small initial taste of how big DeFi can actually become.
When it comes to liquidity provision, Kyber has a diverse network of over 45 reserves and can also connect liquidity from Uniswap, helping to aggregate the best on-chain prices. In the long run, I personally believe Kyber will be the best source of on-chain liquidity for DeFi since we can aggregate efficiently from multiple on-chain sources.
Q2. Are there any initiatives by the Kyber team to attract more DeFi projects to integrate their liquidity pools?
Bo: Besides an easy integration setup process for devs (actual feedback from them!), they can set their own custom spared on top of the liquidity pulling from Kyber. This will encourage many more DApp developers to build with Kyber while at the same time giving them the ability to innovate on their business model options.
We haven't shared all the details yet, but developers will soon be able to create any type of reserves (for different use cases like yield farming, AMMs, OTC swaps) that'll be added to Kyber Network. We intend to give developers of all stripes who want to provide liquidity to the ecosystem the ability to easily build new reserve systems on Kyber. More details will be shared soon!
Shane: Kyber Network currently has the biggest taker (DApps and end-users) network in DeFi, with over 100 different parties integrated, including all the major aggregators such as 1inch, Paraswap, DEXAG, all of which depend on Kyber for liquidity. But of course, we don't want to rest on our laurels, and we will continue to work closely with DApp developers to see how we can best serve their needs! With better liquidity over time, we expect more integrations and trading volume (and ETH rewards to Unagii users) to come our way!
Q3. What's the next milestone for Kyber Network? Apart from generic L2 research/solutions to solve gas issues.
Bo: I guess the biggest upcoming event would be the open system for permissionless liquidity contribution - one of the most heavily-requested features by the community! It's the system that allows anyone, whether you are a developer or an average user, to contribute liquidity seamlessly to Kyber. This is an area we have been working very intensely on during the past few months.
Shane: Yes, this has been heavily teased for the longest time. But we wanted to take our time to ensure that we're developing a powerful product that will truly add value and address current issues with AMMs for liquidity providers. All while providing extra advantages not possible with other solutions out there.
Bo: FYI, Loi Luu, CEO of Kyer, recently presented our upcoming plans at the conference here (17:08). Recommend you watch it after this AMA!
Shane: Since L2 research was brought up, I'd like to say that L2 research is definitely still happening in the background, though this is more of a long-term goal. ICYMI, we recently partnered with Velo Labs, a blockchain firm backed by major conglomerates and projects. Read about it here.
Among thousands of blockchain projects involved in cross-chain and scaling, Kyber Network was chosen as their technical consultant to develop the extension EvryNet. Credits go to our team in building Kyber Network, in other blockchain technologies related to decentralization (Smartpool), scalability (Elastico and Gormos), and in security (Oyente). Moreover, Kyber has worked on various cross-chain initiatives, including launching WBTC (Wrapped Bitcoin), Waterloo Bridge, and Peace Relay.
This will help us in our own cross-chain and scaling research for the future. But we are currently still focusing on Ethereum - the most popular platform for DApps and developers.
Live AMA Segment
Questions from our Telegram participants.
Q1. Do you also provide a platform for Staking or Farming?
Michael: That's our intention. We intend to be your one-stop platform to allow you to earn yields easily. Soon you will be able to stake more than 5 other Tendermint based projects and participate in DeFi via our new products!
Q2. What is Yubi2HSM? How does it work in your operations?
Poh, Head of Infra: Yubi2HSM is a hardware security module that we use to for our proof of stake Tendermint projects. It's more secure as the private key that is used to sign blocks are sealed and encrypted.
Q3. With many digital wealth managers in the market like Stashaway, Sure, etc... how does Unagii differentiate from them except with a focus on crypto? Will Unagii be in a position to compete with these setups?
Mervyn: We believe the Crypto market needs a product like Stashaway, Robinhood, or Wealthfront, for the generic non-crypto native audiences to access the high yield opportunities that are not available in traditional finance applications.
We believe our set and forget yield platform concept that gives users full custody of their assets while earning above-market passive yields will be excitingly promising. It'll not only be able to compete with existing incumbent Fintech applications but be able to surpass them as well.
It'll take time, but our focus will be on education and simplifying the user experience.
Q4. How do Kyber Network reserves give liquidity to exchanges, and how are reserves better than order books?
Bo: On-chain implementations of order books are too gas (you pay gas to update the order book every time) and capital inefficient. Automated Market Makers (AMM) are not suitable as they do not utilize inventory efficiently and offer no control over pricing. This means that liquidity providers often lose capital due to impermanent loss, an important fact that many miss amidst the yield farming craze.
Kyber has flexible reserve system which allows you to set up the reserve based on your needs or resource. Kyber reserve has an order book-like control for on-chain market making but with greater capital and gas efficiency.
Many critical DeFi use cases and transactions (pricing, matching, settlement) are performed fully on the blockchain (fully on-chain). They only can talk to smart contracts that operate fully on-chain. With that in mind, DApps can easily integrate Kyber for their liquidity needs since Kyber operates fully on-chain.
Q5. What is the business model of Unagii, and how does it works for users? Who are your potential customers, and which markets are you targeting on?
Michael: We take a fee cut off the products we offer, be it staking or DeFi. While our customers are currently mainly crypto natives, we hope to expand beyond the crypto circle and accelerate crypto adoption via Unagii's DeFi yielding products.
Q6. How do you see the DeFi potential for Unagii right now, and how do you think Unagii is positioned to take advantage of increasing interest in DeFi protocols?
Mervyn: We believe this is still the start for DeFi as it's currently still lacking in mainstream media coverage and education. Our focus will be on providing access to DeFi yields with Unagii.
Q7. What benefits does KNC really bring to the community? What is the motivation for project development?
Bo: KNC allows token holders to play a critical role in determining the incentive system, building a broad base of stakeholders, and facilitating economic flow in the network. A small fee is charged each time a token exchange happens on the network, and KNC holders get to vote on this fee model and distribution and other important decisions. Over time, as more trades are executed, additional fees will be generated for staking rewards and reserve rebates, while more KNC will be burned!