Ethereum based liquidity protocol, Kyber Network is preparing to launch a network upgrade that will change the fundamental tokenomics of the project. This update is named Katalyst and this upgrade is scheduled to launch in Q2 2020.

Kyber Network is a liquidity protocol that primarily provides DApps with token swap functionalities. It is developed by a team of developers from Vietnam, Israel and many other countries. It works similar to how Binance's BNB token works, that is, it burns fees collected from DApps. When users of a DApp use it to swap tokens, they have to pay a fee which is collected by the network. The majority of the fees are burned.

This burn system provides velocity to the KNC token. Because the fee is collected in KNC tokens and the token burn slowly reduces the total supply of KNC tokens. This slowly increases the demand for the KNC token. At the time of writing this post, Kyber Network had burned over 4.3 million tokens in fees. The new upgrade will change this model and add staking rewards and reserve incentives for DApp integrators.

The new upgrade will reduce the burn rate percentage which currently stands at 70% of fees. The new rates have not been decided yet. The upgrade will also allow DApps integrators to change parameters of how much fees are burned and add custom spreads. This is very significant because different DApps have different needs. Currently the fee system is hardcoded to 70% burn and 30% for DApps. Changing this will allow DApps with UX in mind to charge more money for better UX or charge less to provide competitive spreads.

Staking rewards will increase community participation in Kyber Network. Kyber Network aims to decentralize the governance mechanism of the network. In order to achieve that, Kyber needs more community members to actively participate in polls about major decisions. The staking rewards will be given only to those who participate in these polls.

There is no minimum limit for staking which means everyone can participate. A user with limited knowledge may decide to delegate his tokens to another informed user to vote on behalf of him. This staking system will make Kyber Network more decentralized and will increase contributions from community members.

Also, Kyber Network is transitioning from Telegram to Discord. You can join the official discord server here.