Project: Implement a decentralized exchange which has instant trading and high liquidity. This is achieved through incentivizing reserve managers and reserve contributors. This exchange besides handles trading and payments also handles complex financial transactions like derivative options and forward contracts, while also integrating as a payment API that allows wallets to receive payment from any crypto tokens

Maintaining the reserve in KyberNetwork guarantees the liquidity of the platform . The plan is to first support the popular tokens like OMG, GNT, GNO and REP and a few others.

At a later stage when cross chain protocols become more established, with plans to tokenize other currencies (for example Bitcoin, Zcash etc.) on Ethereum to enable trades between ERC20 tokens and different coins. The team set aside a reserve of 100, 000 ETH.

Token sales distribution

A maximum amount of 226,000,000 KyberNetwork Crystal tokens (KNC) will be minted. This equates to 377,000 ETH. The token distribution will be shown as below:

61.06% for public trading and usage

19.47% for founders and advisors

19.47% for Company usage

Fund raising: is ~USD60m.

1.The company will raise 200,000 ETH at an initial exchange rate of 600 KNC to 1 ETH

2. Half have already been raised in a private round and the other half being offered evenly to every eligible whitelist applicants

3. Sale will last 48 hours.

Use of fund proceeds



50% to a reserve to be managed by KyberNetwork as a reserve operator

30% for the development and maintenance of the platform service.

10% for the operation of and other costs related to maintaining KyberNetwork.

10% for marketing and legal costs

Listing on exchange: 1 week after ICO date on 24th Sep 2017

Our views:

PROS

This is a well-received project because of a strong team especially Vitalik Buterin who is one of the advisors for the project. The whitelist applicants already reached 50,000 applicants and half have already been sold to institutional investors. As such we expect tokens to be fully snapped out within 48 hours. The project is ambitious and it will add real value to the current deficient platforms and solve current issues like hacking and loss of funds, insufficient liquidity . Being a decentralized platform also implying digital currency are not stored at one central location and trades and wallets will be secured and safe. We are especially interested and keen in the Phase 3 and Phase 4 of this project which include having advanced financial instruments trading which represents investors can play around with options, forwards on digital currencies. Also for Phase 4 on support of cross chain trades which is done either by chain relay (BTCrelay) or interchain communication (through possibly Polkadot and cosmos).

CONS

This is a promising project that may possibly revolutionlize digital currency trading. This is still at phase zero. Testnet deployment stage, there are many uncertainties that lie ahead if Kyber can deliver on its various phases. We see 2018 as the significant year of its development. In view that this is only at testnet stage with no testing on mainnet deployment, we find valuations to be relatively high at USD60m. However, we note that future expectations has been priced in for the project and in view of Vitalik branding and strong publicity from linktime team in China, the token should be fully sold in 48hours. Success of Kyber Network also depends on its cooperation and engagement with reserve contributors and reserve managers. The key question is whether using Kyber Network tokens are sufficient to incentiy them to maintain reserves at the network. Also, are they able to capture marketshare from the current big exchanges which include kraken/ poloniex/ coinbase Kyber success is dependent on the development and success of other project communities which include mentioned in whitepaper, melonport, cosmos, polkadot. Thus there’s a big question mark on how far it can go especially to phase 3 and phase 4 of its roadmap with technical development of other projects and liquidity being the main challenges.

Summary

This is a very promising project and if Kyber can achieve phase 3 and phase 4 this will truly revolutionize digital currency trading. Because it can achieve what can be done on the mainstream financial trading in a safer and better way and I am not surprised if mainstream financial instruments will also adopt the kyber network. That time Kyber will be a truly valuable company. We are very confident that the token will be snapped up in 24 hours with 50,000 applicants on the white list and half of it already been sold. Vitalik Buterin branding has added much needed publicity. Investors and speculators are yearning to go in especially considering the likes of how much Pay and OmiseGo has rose in price. However, for something in its testphase, we feel that valuation and funding of USD60m (200,000 eth) is more of a hype and prices is based on future expectations and speculations to make quick profit rather than actual realistic pricing. Kyber’s main challenges will be twofold first securing the liquidity from reserve contributors and managers. Another key challenge is its dependence on the success of technical development of other blockchain projects (eg. polkadot, melonport)

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