What is the issuance and circulation of KNC coins?

The Kyber Network Crystal (KNC) token, initially issued during the network's inception in 2017, plays a pivotal role in governance, fee generation, and reward distribution within the decentralized exchange ecosystem.

Nov 25, 2024 at 10:31 pm

Understanding the Issuance and Circulation of KNC Coins

Kyber Network Crystal (KNC) is the native utility token of the Kyber Network, a decentralized exchange (DEX) protocol that enables seamless on-chain token swaps. KNC plays a pivotal role in the network's operations, including governance, fee generation, and reward distribution. This article delves into the intricacies of KNC's issuance and circulation, addressing key questions surrounding the token's supply, distribution, and utility.

1. Genesis and Initial Issuance

• KNC was created during the Kyber Network's inception in 2017.
• The initial token issuance consisted of 226,000,000 KNC, distributed through a public token sale.
• 61,600,000 KNC (approximately 27%) were allocated for the sale, while the remaining were reserved for the team, advisors, and ecosystem development.

2. Token Generation Event (TGE)

• The KNC token generation event (TGE) took place on September 7, 2017, on the Ethereum blockchain.
• During the TGE, 40% of the initial supply (90,400,000 KNC) was released into circulation, with the remaining locked in a smart contract.

3. Token Distribution

• The KNC distribution can be categorized into four major groups:

  • Public Sale (27%): Retail investors gained access to KNC through the token sale, which raised over $52 million.
  • Team and Advisors (15%): Founders, developers, and early contributors received a portion of the tokens as compensation and incentives.
  • Foundation Reserve (36%): A significant portion of KNC was allocated to the Kyber Network Foundation, a non-profit organization responsible for the protocol's development and governance.
  • Ecosystem Fund (22%): Tokens allocated to this fund support projects and initiatives that contribute to the growth and adoption of the Kyber Network.

4. Circulating Supply

• The KNC circulating supply gradually increased after the TGE as more tokens were unlocked from the smart contract.
• The circulating supply is influenced by factors such as trading activity, token burns, and new token issuances.
• Currently, the KNC circulating supply stands at approximately 165,000,000, representing roughly 73% of the initial issuance.

5. Token Utility

• KNC serves multiple purposes within the Kyber Network ecosystem:

  • Governance: KNC holders participate in the network's governance process by voting on proposed changes and key decisions.
  • Fees: KNC is used to pay transaction fees on the Kyber Network. A portion of these fees is distributed to KNC stakers and liquidity providers.
  • Rewards: Stakers and liquidity providers earn KNC rewards for contributing to the network's security and efficiency.
  • Incentives: KNC is used to incentivize ecosystem growth initiatives and motivate developers to build on the Kyber Network.

6. Token Sustainability

• To ensure the long-term sustainability of the Kyber Network, several measures have been implemented:

  • Buyback and Burn: A portion of the trading fees collected on the platform is used to buy back and burn KNC, reducing the circulating supply.
  • Inflation Protection: The network's inflation rate is designed to be low and predictable, ensuring the token's value does not significantly depreciate over time.

7. Future Supply and Issuance

• The Kyber Network has the potential to issue new KNC tokens in the future to support protocol advancements, incentivize adoption, or fund specific initiatives.
• However, the issuance of new tokens would require the approval of KNC holders through the governance process, ensuring community consensus and transparency.