Binance to Start Staking KNC Today But Does it Really Serve its Purpose?
The leading spot cryptocurrency exchange Binance will start supporting Kyber Network (KNC) staking, starting today.
The exchange will begin taking live snapshots of user KNC balance from 2020/07/15 at 00:00 AM UTC.
The staking rewards will be denominated in ETH calculated by multiplying the total KNC staking rewards received by Binance to user KNC holdings ratio, which is average user KNC holdings / average total KNC staked by Binance. These rewards are actuated daily and distributed monthly.
To qualify for staking rewards, the users must hold at least one KNC.
With this announcement, Binance also announced an additional $100,000 worth of rewards in KNC. These rewards will be distributed as an additional bonus pro-rata to the users who stake KNC through the first three months.
“To celebrate the launch of Binance Staking, Kyber will sponsor an additional 100,000 USD worth of KNC in rewards.”
The good thing here is Binance won’t be locking up KNC like KyberDAO, which is convenient for users that want to take advantage of the market conditions. But in the long run, “this is a concern for Kyber itself, as it essentially defeats the purpose of staking,” states Santiment.
KNC, which is up 800% YTD, responded to this news by jumping about 13%. Currently, the digital asset is trading at $1.65 and is also up 865% against BTC but still down 79% from its all-time high of $8.
“Binance has introduced staking for KyberNetwork. If we see exchange inflow spikes for KNC, it isn't necessarily a bad thing, creating strong sell pressure.”
Just last week, the fully on-chain liquidity protocol Kyber Network successfully launched the “Katalyst” protocol upgrade and KyberDAO on mainnet. This enabled token staking and governance voting to generate ETH rewards.
DeFi traders, almost $20 million worth of KNC flooded the Kyber Network after its revamp. Within a day of its launch, about $18 million worth of KNC was staked on KyberDAO.
The decentralized exchange (DEX) is also sharing trading fees, 0.20% on each trade made on the network, with the KNC holders. 65% of the network fees are currently set to be distributed to staked KNC tokens. 30% of it will go to entities providing liquidity on-chain while 5% to buy and burn KNC to increase its value gradually.
All of this has Kyber’s ‘real’ trading volume surging to $53 million, up from $9 million earlier last week.