The Kyber Network is an Ethereum-based protocol which allows people to instantly exchange and convert digital assets, both crypto tokens and cryptocurrencies.

This network differs from the traditional centralized exchanges in several points:

Centralized exchanges are often seen as bad because of security problems.

Centralized exchanges might have slow process times

In centralized exchanges funds can take days to withdraw.

Liquidity directly affects the way in how decentralized exchanges work, which might be a downside.

The Kyber Network does not have an order book, thus instantaneously exchanges goods.

While decentralized exchanges properly differ and provide benefits when compared to normal centralized exchanges, they do have some other issues. Should there be low liquidity, it might be hard to sell whichever token or currency you want to trade.

The Kyber Network also provides a benefit in the way that users do not need to own the token the receiver wants. As you can read in our article about the partnership between ICON (ICX) and the Kyber Network, the network takes care of exchanging the tokens the payer sends into the requested tokens the end user wants. ICON can strongly take benefit of this in their operability between different blockchains. The fact that ICON partnered with Kyber, means the platform is already creating strong relationships in order to build a reputation and strong user base for their exchange.

The fact that a payer does not have to own the currency the receiver wants, means that the process is much smoother and time-saving than other trading means.

Going into more detail, this exchange executes all orders on-chain using reserves and does not use an order book, providing instant and guaranteed liquidity. This happens because, without an order book, you only need to do one on-chain transaction. The reserve entities which hold the funds that can be traded and provide liquidity, can be internal or hosted by a registered third-party. These reserves hold funds given by the reserve contributors (only applies to public reserves), and these profit of off the reserve.

The way in which the network maintains this needed liquidity for trading is by having a pool that is funded by several different reserve entities, which, in turn, prevents monopolization and keeps the exchange rates competitive.

The way this works is: When an exchange request is started, the reserve entity with the most competitive price is chosen, which, in turn, means exchanges have to compete between each other for the lowest price. This is also the way that a market price is established.

With this, Kyber creates a time-saving, as well as, smoother experience for the end user, allowing very efficient trades between whoever uses the platform. Decentralization means fast and secure trading, which many users complain about centralized exchanges.