We recently concluded our first KyberDAO Proposal, where the KNC community voted on-chain for the first time on the allocation of network fees that goes towards burning KNC, voting rewards, or reserve rebates (BRR). In just 10 days, 57 Million KNC tokens ($80 million worth) were staked on the KyberDAO, with 2580 voters for the first BRR proposal. More than 630 ETH ($200,000) have also been distributed as rewards to KNC holders who staked and voted.
Overall, this is one of the highest, if not the highest DAO participation rate in the Ethereum space! A key objective for us from the beginning was to have active voter participation and we are truly humbled by the response from the Kyber community. KyberDAO Epoch 1 marks the first step towards Kyber’s transition to decentralized governance and aligning incentives for all Kyber stakeholders.
The first Burn/Reward/Rebate BRR-1 proposal in Epoch 1 lasted for 10 days. Option B: Pro-Reward, received the highest number of votes. This means that out of the network fees collected in Epoch 2, 4.3% will be used to purchase and burn KNC, 70% will be allocated to voting rewards, and 25.7% will be given as reserve rebates. These votes were all casted entirely on the Ethereum blockchain.
Total Voting Rewards distributed to all voters: ~630 ETH ($200,000).
As mentioned earlier, transparency is a critical pillar of the governance process. Votes are all performed on-chain, and you can access the proposal’s Details page to see all the Ethereum addresses that voted for each option. Top known addresses are also displayed with their names.
To recap, staking in the current Epoch makes you eligible to vote in the next Epoch, and claim rewards in the following one. Each Epoch is 2 weeks, and can consist of one or more proposals. Each proposal can last from 4–14 days, but has to start and finish within the same Epoch. For example, BRR-1 in Epoch 1 lasted 10 days. For a very rough ETH reward estimate, here are two unofficial reward calculators created by Kyber community members:
Some of you have requested for more insights into the Burn/Reward/Rebate allocation and potential trade-offs. We provide a brief overview below and we encourage the community to rigorously evaluate the different trade-offs together in Discord. This will help inform your voting decision for subsequent BRR proposals.
Delegation is an important step towards decentralization and increasing the number of active KyberDAO participants. On kyber.org, KNC token holders are able to delegate voting power to another Ethereum address. This could be a friend they trust or another Ethereum wallet they control.
The Kyber team is intending to delegate a portion of our KNC voting power to important ecosystem participants that have been big contributors to Kyber’s development. These could be a few of the 100+ DApps powered by Kyber, our Fed Price Reserves (FPRs), our industry partners, or active community members. Token holders, Traders, Reserves, and DApp developers building with Kyber are all encouraged to actively participate in governance.
We believe that KNC can be a successful example of how governance tokens should operate, and it will help align incentives among stakeholders in the Kyber ecosystem.
Delegating to Third-Party Staking Pools
The only way to ensure full transparency is a fully on-chain vote. However, this means voting incurs Ethereum gas costs, and gas prices have been very high lately.
To help users to save gas, we have prepared multiple custodial and non-custodial staking options for KNC holders to suit different needs. For example, xKNC by xToken was able to participate successfully in Epoch 1, and already has over $226,000 in AUM! This is part of our commitment towards making staking and voting easier for everyone involved.
The following staking pools might help you save some gas if you are staking a small amount. Note: Some third-party pools are still going through audits. They are not managed by Kyber. Please do your own research when using any pool.
Non-custodial and trustless options (where you have full control over your funds)
Some concerns were raised about staking pools or centralized exchanges potentially possessing a large amount of KNC tokens and voting power. Firstly, Kyber aims to ensure that all stakeholders, including these third-party pool operators, are well-educated about the impact of every proposal so that they can make an informed vote. To mitigate the abuse of voting power, some pool operators might explore ways to gather community feedback prior to voting, and will likely vote on the last day for proposals so as not to deviate from the option that already has the majority vote.
In addition, Kyber may consider an ‘Abstain’ option for third-party pools in the future, so that they can abstain from making a choice while still being eligible for rewards. We would like to hear the community’s thoughts on potential approaches that can help achieve the right balance of practicality, transparency, and decentralization.
A Kyber Improvement Proposal (KIP) framework has also been developed to introduce and govern changes to the protocol. Not every KIP will be voted on by KNC holders on the KyberDAO. Certain KIPs are purely meant to provide information about upcoming upgrades. For example, KIP-1 and KIP-2 are informational documents outlining the KyberDAO fundamentals and general BRR process.
KIP-1: Concepts and Terminologies https://github.com/KyberNetwork/KIPs/blob/master/KIPs/kip-1.md
KIP-2: BRR Process and Framework https://github.com/KyberNetwork/KIPs/blob/master/KIPs/kip-2.md
The Kyber team will seek input from the community, but will ultimately be responsible for implementing all protocol changes. This ensures efficiency when it comes to upgrades and reduces delay when urgent changes are required during emergencies. This also acts as a safeguard against any single malicious KNC holder that seeks to pass changes that can compromise the network.
An important part of the governance process is for the community to regularly debate all proposals and issues, whether they are KIP, BRR, Network Fee, or General proposals. This will help the community signal a rough consensus even prior to on-chain voting and this has worked well for our Pre-DAO Poll and BRR-1 Proposal.
Discord has so far been a suitable platform for the community to air their views on the KyberDAO proposals, though we do see interesting discussions on reddit as well. We are glad to see that our new Discord group has since grown to over 4,200 community members, with many contributing valuable insights that all of us can learn from. We have created the following channels to keep discussions focused on specific topics.
- #kyberdao channel: for general discussion and feedback around the KyberDAO
- #burn_reward_rebate: for discussions about the network fee allocation and BRR (Burn/Reward/Rebate) proposals.
- #kip: for discussions about the latest KIP proposal.
- #kyberdao-updates: for important governance-related updates
In the future, to complement our Discord discussions, we plan to organize governance calls and possibly set up a community forum to discuss the proposals in detail. These tools have been utilised successfully by other DeFi projects and were requested by community members. All updates and calls will be announced on twitter and on Discord. If we have any governance calls, they will be recorded and uploaded to our Youtube here.
These discussions are part of Kyber’s commitment to transparency and community engagement on the path of progressive decentralization.
Epoch 2: What if I didn’t stake any KNC in Epoch 1? Can I vote now?
You cannot vote on any proposals in Epoch 2 if you didn’t stake KNC earlier. However, to prepare to vote in Epoch 3, you can start staking KNC anytime in Epoch 2. Epoch 2 lasts two weeks, ending on 12th August (Do note that the BRR-2 proposal lasts only 10 days and ends earlier). In Epoch 3, you will be able to vote on the next batch of KyberDAO proposals, and claim ETH rewards in Epoch 4.
What happens if I withdraw my KNC after voting?
You can withdraw your KNC at any point during the Epoch. Kyber does not hold your funds. However, your voting power (and hence rewards) for that Epoch will be counted as the lowest amount you had after voting. Example: In Epoch 1, Tom voted while having 15K KNC, then midway through the epoch he withdrew 3K KNC. Although he voted while having 15K KNC, his voting power will only be counted as 12K KNC. So in Epoch 2, he will receive rewards only for 12K KNC. Read this for more information.
We have previously highlighted that in Kyber’s transition to community-driven governance, emphasis will always be placed on network stability, security, and transparency. As the current KyberDAO maintainer, the Kyber team presently oversees all protocol development and is responsible for moderating all KyberDAO proposals. This arrangement ensures Kyber’s stability and security, preventing any malicious actors from compromising the network. In addition, KyberDAO smart contracts had gone through multiple audits by PwC (ChainSecurity) and other third-party auditors.
We encourage all community members to discuss and propose ways to improve the protocol. Some of these suggestions may serve as a basis for new KIPs, that will be approved by the DAO maintainer (Kyber team) before being scheduled for formal on-chain voting on the KyberDAO.
We would like to say a big Thank You to our community members for their strong support and giving us valuable feedback about the KyberDAO on Twitter, Discord, and Reddit:
Westwood, decuneiform, Martina Krung, 0xNick, HashSpike, Ugur, Gaetano, Blkhammrr, Zky, Eric Dadoun, monetsupply.eth, Minepi, BitMani, Martin Fliess, 富 福, Tyler Mrpuffnstuff, BanBull, Steve Kang, HelpfulBrother, Rob, Itsnotthatdeep, No longer bag holder, Federico, Colbert Low, Mark, Arthur0x, DeFi Dude, Anoniminis, Ecent, The Hound, John, Leoel Chang, asnad trebla, Rahsaan022, Grant, Brian_The_Viking, SpockNimoy, BurninDownDank, jpcrypto, LucasP, jabulon, NOPE, Schlammvieh, Orren Lilly, Irate (ᵟຶ︵ ᵟຶ), Graeme, Guncheck, Paradox, chessmany3k, Akatsu, jigs, Dr.Ankin, Heilmao, CryptoTube, cryptocorda, Canada Goose, Joao Costa, JuztMyStyle, Empy, Gregor, crypto”Daddy Cyberbucks”watchman, Crypto Culture, Louise Elizabeth, Jason Choi, magnus Dex.blue, Antony SwapSpace, Betty MEET.ONE, Alexintosh | PieDAO, Alex Svanevik nansen.ai, Emiliano HALBot, Lincoln, Mirko, and many others!
Moreover, it was great to see community-led initiatives such as our Community Staking Pool and Staking Reward calculators. A community member even created a Gnosis Omen prediction market at the start of Epoch 1, on whether 10M KNC would be staked after 7 days on the 10th of July (We hit 10M KNC within ~24 Hours!).
We are just getting started! We aim to progressively decentralize important decision-making over time. Let us navigate this new governance process and continue fine-tuning it together as one Kyber community.
Stake and vote in Epoch 2!