The Kyber Network, the on-chain liquidity aggregator responsible for nearly 5 percent of all decentralized exchange (DEX) transactions on Ethereum to date, has big changes coming its way.

On December 17th, the Kyber team unveiled Katalyst, a “major” protocol upgrade that will both refashion how key elements of the Kyber ecosystem operate and update the Kyber Network Crystal (KNC) token model to “encourage participation for key stakeholders” and attract newcomers.

Set to be implemented by Q3 2020, Katalyst is described by the Kyber team as tailored to suit the aggregator’s liquidity providers, Kyber-connected dApps, and KNC token holders.

Making Kyber More Appealing for Key Stakeholders

As for the liquidity providers, which are known as reserve managers in Kyber’s system, Katalyst will provide so-called “reserve incentives,” which are accrued trading fees that are paid out to these providers “based on how much trades and volume they facilitate for the network.”

“This type of incentives, known as rebates in traditional finance, is a well-known and widely used mechanism to attract market makers,” the Kyber Network said.

For dApps, Katalyst will notably remove the liquidity aggregator’s fee-sharing program, which charged 30 percent every time its 0.25 percent fee was incurred. This dynamic that will allow dApp projects to more easily integrate with Kyber and have more freedom in customizing their own business models.

Lastly, Katalyst will affect KNC holders because the upgrade will implement a new staking system for the token. In the post-Katalyst future, KNC holders will be able to stake their tokens in exchange for earning a portion of the Kyber Network’s fees.

A new KyberDAO is also being launched to help guide how Kyber fees will be used in general going forward. KNC tokens will used as the governance token in the new organization and token voters will be eligible to earn fees for participating in governance votes.

“The token changes in Katalyst significantly improve incentive alignment between token holders, users and market makers. Kyber is one of the most critical projects in DeFi, so it will be exciting to watch this major improvement in the KNC token utility model,” Kain Warwick, founder of the Synthetix project, said on the news.

A Time for Growth

Kyber Network heads into the new year with some notable milestones under its belt, namely in having facilitated 2 million ether (ETH) worth of trading volume to date distributed across more than 500,000 trades.

2019 was a year of change for the liquidity aggregator, too. In the fall, the project partnered with Coindirect to launch a fiat-crypto gateway for its associated decentralized exchange, KyberSwap. The collaboration made it possible for users in more than 100 countries to buy ether with a credit card for trading against tokens on the DEX.

A few weeks prior to that development, Malta-based crypto exchange giant Binance turned to Kyber Network to help Binance’s Trust Wallet users to source liquidity from with a series of different decentralized exchanges right from within the Trust Wallet app.

Moreover, just days before that Trust Wallet news the Kyber Network team rolled out support for non-custodial limit orders on KyberSwap, which allowed traders to set up crypto trades without having to first deposit that crypto onto a centralized exchange.

In a sea of cryptocurrency projects that have struggled to gain traction, Kyber’s growth has been steady and promising so far. It has faced challenges as have all projects in the space, and more are in store for Kyber and its peer and competitor projects alike.

In Katalyst, the Kyber Network team sees some near-term answers to some of these challenges, as the project’s stakeholders plan to further harness the upswell of momentum they helped create in 2019.