UNITALKS: Kyber Network CEO & Co-Founder Loi Luu
As blockchain gains traction day by day, we are seeing many developments, possibilities, and use-cases on decentralized platforms. Of late, centralized exchanges have seen a number of high profile hacking cases that cost millions of dollars to both exchanges and platform users. As a result, decentralized cryptocurrency exchanges are gradually gaining attention, and consumers are slowly switching to decentralized exchanges following improvements in a whole new generation of decentralized exchanges.
For this particular interview, we are fortunate to have blockchain perspectives from Loi Luu, CEO of Kyber Network. Kyber Network is one of the pioneering decentralized exchanges in the market.
- 1. In one of your previous jobs, you were a researcher at the Ethereum Foundation. Why made you choose Ethereum instead of other blockchain platforms?
I started with Bitcoin in the beginning and back then, there was only a small group of people working on it. A researcher at heart, I was intrigued by the technology, and at the same time curious about how Bitcoin works and why people invested their time and money in it. When I started my PhD, it took me a few months to fully comprehend the blockchain ecosystem as I researched on how to improve the technology.
When I set my sight on blockchain research, I convinced my supervisor to allow me to research on blockchain and Bitcoin as part of my PhD. Subsequently, when Ethereum was launched, i found that it promised greater development versatility as compared to Bitcoin.
In short, Bitcoin is a cryptocurrency while Ethereum is created to be a blockchain ecosystem that can enable multiple possibilities on a singular platform. Furthering these possibilities is the idea of a “smart contract” pionereed by Ethereum. So I turned my focus to explore different use cases with Ethereum, and eventually joined the Ethereum Foundation as a part-time researcher for a few months.
2. Singapore is an established financial hub. Why did you chose Singapore to develop Kyber Network? What are the advantages Singapore offer for blockchain startups?
Singapore has a smaller community resulting in more collaboration between different industry players. We are generally very willing to help each other out to improve on blockchain technology as a whole. Also, Singapore has a blockchain and fintech friendly regulatory system, and this goes a long way to help many companies create and innovate. Lastly, Singapore has a good reputation for reliability and talent, thus anchoring ourselves here conveys credibility to our global consumers.
- 3. How was Kyber Network conceived?
All along, our team has always been motivated in building up the Ethereum network, and spreading the blockchain concept to more people. Before Kyber Network, I was involved in smart contract audits and one of the contracts that I audited had scripts to accept 5 to 10 different tokens. Due to the absence of automated tools and a good platform design, to have that many tokens on the platform was difficult and troublesome because unique codes for each token had to be written.
Then I began to wonder: If we had to accept 100 tokens on a single platform, does it also mean we have to write 100 different codes? It struck me that the current system for smart contract audits was inefficient and difficult to scale, and I was set on improving it. I raised this issue to my team, and with some brainstorming and fine-tuning, the idea of Kyber Network was born.
- 4. How would you describe Kyber Network to our readers?
Kyber Network is a seamless and secure decentralized token conversion platform with guaranteed liquidity. We aim to offer a good decentralized exchange solution that is extremely easy to use even for mainstream users, thus indirectly expanding the cryptocurrency ecosystem.
- 5. Your team managed to generate strong support toward the project from the community and had successfully completed the token sale in September. Are you satisfied with the outcome, given that you had to exclude Chinese contributors and the majority gets 3.6 ETH personal cap? How would you evaluate the results?
We were extremely humbled and grateful for the support from the community and the success of our token sale. It was unfortunate that we had to exclude Chinese supporters, who has always been our key group of supporters. We are continously working to engage them in different ways that works best for all parties. We already have a steady pipeline of activities in place for the year 2018 that will rebuild our presence in the Chinese market.
As for the token sale, we couldn’t have requested for a better one. Not only had we raised enough capital to develop the project, we have also built a strong and crypto-oriented community with more than 40,000 members in the process. This community will be our earliest users who will support our platform and product when we launch Kyber Network in February next year.
- 6. Given the many parties that will be involved in the Kyber Network model, what is Kyber Network’s unique business design that could bring these respective parties together?
Kyber Network operates on two dimensions simultaneously. On one hand, Kyber Network liaises with reserves (supply-side), and on the other hand, Kyber Network liaises with traffic generators in the form of wallet providers and service platforms (demand-side). Our unique business proposition and revenue model is as follows:
Kyber Network guarantees liquidity by tapping onto reserves within the network. For a start, Kyber Network will operate one of the reserves, alongside several others that are managed and operated by organizations or individuals with large token holdings of different kinds.
Ultimately, it is Kyber Network’s goal to onboard more reserves onto the platform to allow our users to access an increasing variety of token offerings. Reserves are not required to deposit funds to Kyber Network’s wallet or holdings. Instead, reserve managers are responsible for their own reserves, and no funds leave until there is a suitable transaction. The interactions between reserves, Kyber Network, and users/platforms that requested the token conversion service are done through smart contracts, so involved parties need not be concerned about integrity of other parties. As an illustration, the interaction between Kyber Network and a reserve is as if the reserve “granting” Kyber Network the right to withdraw and deposit funds.
On the demand-side, Kyber Network can be embedded underneath the interface of a platform, and thus enabling buyers to transact in any ERC20 tokens and Ether (cross-chain transactions to be ready around Q3 2018) on the platform to attain the objectives of native platform currency without needing the users to own any native currency in the wallet. In other words, with Kyber Network’s conversion service, buyers can pay in any currency, while sellers or developers of games can receive the payment in their desired currency. In order to incentivize the traffic generator, Kyber Network will split the fee received from reserve (see above) with the platform that drove traffic to Kyber Network.
- 7. Aside from Kyber Network, there are other decentralized exchange projects such as 0x and AirSwap. What is the main competitve advantage for Kyber Network?
These projects you mentioned typically have off-chain and on-chain actions. If you have an off-chain order book, and settlement happens on-chain, integration with other platforms can be challenging because most smart contracts are on-chain, and they can’t access the off-chain order book.
This means that users have to trust the relayers or the indexer to show the best transaction rate for them. Since the order book is off-chain, there is no way for them to verify which one is the best rate. There is still a lot of room for doubt for conversion rates, so they are not really “trustless” platforms.
Additionally, there is also a concern about liquidity. Most decentralized exchanges do not have sufficient liquidity to process many transactions, so it can quite a challenge for many users who are looking to drive high-value transactions. Poor interface design and difficulty in navigating the platfrom can also contribute to further challenges.
With Kyber Network, we want to make it easy for everyday-users, firstly by ensuring high liquidity, and secondly, with a highly usable interface that allows users to complete a transaction in less than 5 steps across multiple platforms. By the same token (excuse my pun on the word “token”!), the integration of Kyber Network with other platforms will also focus on these propositions.
- 8. For many exchange users, the security of their assets is their major concern. How does Kyber Network help alleviate these concerns?
At Kyber Network, since we could potentially work with millions of users and handle millions of dollars worth of ETH or other assets, security is our utmost concern. Given that we are also in full control of our product platform, the solutions on our platform are designed such that even mainstream users can understand. With high usability in place and effective communication on how we do things, our users will be able to see for themselves all the secure processes developed by Kyber Network.
- 9. How would you evaluate the progress of Kyber Network so far? What were the challenges faced before and what are the challenges you anticipate in the future?
We have made good progress, and we have redesigned our website to make it easier to navigate. We will also soon allow users to trade with their hardware wallets, so they can plug in a Ledger or Trezor wallet (wallet name) to trade directly on the website.
Prior to our token sale, we spent considerable efforts on communications and outreach. To convey messages to a large group of users is very challenging, because there are a lot of areas in which other users with ill-intention could intercept and modify our content. Thus, we enforced extreme control in our communication outflow, and educated users to trust only selected sources for information.
We are going to publicly share our codes for auditing by the end of this year. By early January or February next year, we will launch the pilot program on the mainnet. 40,000 people had participated in our token sale, and our pilot launch will be made available for these users first. Through the pilot, we will get feedback from them, and subsequently will work on refining the platfom. Hopefully, with hard work and the help from the community, we can release the full version of the platform on the mainnet 2 months after the pilot launch.
A year from now, we are going to support more tokens, and also have more third party reserves on our network. I foresee some challenges to integrate Kyber Network with some platforms, as there may be modification of codes on both sides that could affect performance of our conversion services on our affiliated platforms. That being said, we are fully prepared for challenges ahead and are already excited at the many learning opportunities ahead of us.
- 10. You are an excellent developer and have successfully conducted an ICO. Can you share some key success factors (Success DNA) that we should look out in an ICO launch?
In short, a good project needs a few important things: a good problem that affect millions or even billions of people, a good solution that solves the problem, and a good team that builds and delivers the solution. The project will unlikely flourish, if one of the 3 points that were mentioned is missing.
- 11. You spent a lot of time in security and audit of smart contracts. What is your opinion towards recent Parity issues? What kind of solutions you think is best to solve these issues?
The recent bug in Parity is really unfortunate and it shows the importance of having your codes audited and formally verified before getting deployed on mainnet, while holding millions of USD worth of assets. Unfortunately, the only practical way to possibly detect and avoid similar issues is to have extreme security audits and testing by multiple independent auditors. The bug has been there for months and no-one was paying enough attention. Formal verification theoretically should be able to prevent the problem, but the main concern is that current formal verification techniques are far from being practical and/or not cheap to use.
- 12. Where do you see Kyber Network in 5 years time and what market value do you think Kyber Network will attain?
Ideally in 5 years’ time, people should know Kyber Network, similar to the popularity of Ethereum and Bitcoin. By then, most users wouldn’t even focus or know the technology that powers Kyber Network. Instead, the focus of the talk should be on the services that Kyber Network provides, the number of financial products that Kyber Network supports, and the number of markets we are operating in.
- 13. Blockchain is gaining huge traction now; What are the possibilities that blockchain can bring to the society?
Ultimately, the blockchain technology aims to remove intermediaries, thereby improving the efficiencies of most processes. For now, we should expect more implementation of the technology in the finance sector, and I believe that many other industries will soon follow suit, such as supply chain and internet-of-things. Given the amount of capital and research in the blockchain field at present, I am optimistic that we will soon see a multitude of blockchain use cases in the coming years.
Thanks a lot Loi for supporting Unitimes. If you have any related questions to Loi Luu, please leave your questions below, or send email to email@example.com, we will try our best to help you build the connections with Loi.
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