Loi Luu, founder of Kyber Network talks about how he started the DEX (decentralized exchange) and how it’s different than the existing DEXs on the market in our interview at Token2049. With Binance and NEO announcing their DEX, Loi also shares the core value of Kyber Network in the video below. Watch it to find out more.


We’re here with Loi Luu, founder of Kyber and we’re at Token2049.

Do you want to tell us a fun fact about yourself?

So I just got my PhD three months ago. The thing is I started Kyber before I finished it. When the school found out, they realized I didn’t have time for my PhD anymore, so they pushed me up the school and asked me to graduate early.

So the moral of the story is, if you want to finish a PhD early, you should do an ICO. 🙂

Can you start by giving us a background about yourself?

I moved to Singapore about five years ago. I was doing research with Applied Cryptography – encryption, decryption and stuff like that. By early 2014, I got to know about Bitcoin and Blockchain. Everyone was talking about it because of the price crash. So it got my attention, I got interested in it, did a little bit more research into it. I found there are a lot of opportunities in it for me in terms of research. We write a couple of research papers about BTC and blockchain.

And in 2015, I got to know ETH through their whitepaper and I got interested immediately because of their potential. So I approached it from an academic point of view. So we did more research – sent it off to Vitalik to get his feedback and he was kind enough to reply and give us a long and detailed response. So we got talking since then and we continued to exchange ideas.

And when we started Kyber, I asked if he would be happy to be our Advisor and he agreed.

So obviously now, people see the benefit of a DEX (Decentralized Exchange) but you were one of the early ones to come out with it. So what brought you the idea to do a DEX?

We were working on a few other projects as well before Kyber Network. One of them is a Smart Contract Analyzer that serves developers. The other one is a Smart Pool. After these projects, we saw the target audience that we had – it was pretty niche and small. Not many developers really use our tool. The miners don’t care about the Smart Pool being centralized or not. So we decided to work on something more impactful that can benefit millions of users.

So in this decentralized ecosystem – there’s still one major component which is still centralized, which is in exchanges so we looked to decentralize it.

Can you talk a little bit about what marketing making is or what a liquidity provider is?

We wanted to make Kyber really usable for mainstream users – even those who have no understanding about a private key etc. So usability is our main focus.

If you look at other DEX – liquidity is a a major problem because adoption is low. Even when you want to trade it’s hard to find the other counter party to trade with you.

And why is liquidity low on those DEX’s?

I think it’s because the UI isn’t good enough. The users aren’t familiar with the Decentralized Exchanges, they’re more familiar with Binance or Bittrex. So that’s why we wanted to make it really easy for the user to use. So we don’t focus on the decentralized aspect of it. We focus more on the usability aspect of it.

That’s why we bring all the market makers on our platform. So these market makers ar the people who are going to trade directly with the users. Kyber network is a platform that connects all the market makers to the end users.

So the difference between you and other existing DEX’s out there is that you’re in touch with these market makers? So I want to buy or sell a particular coin, there’s someone there to take the other side of the trade? And I saw one of the Market Makers is called Prycto? Can you explain what is attracting a market maker to come onto the platform?

Like any other market makers – they earn a lot of profit from the trading spread, so say I sell something for $1.1 to you and I buy it back from some other users at like 0.99cents, the difference between the buy and sell prices is my profit. So we bring a lot of users to our platform. And these market makers only need to focus on feeding the prices and maintaining their reserve.

And if I wanted to buy, say, Kyber Network and obviously I can do it on your DEX, the benefit versus the other DEX, is that there’s a market maker there so there’s a price for me. How does the price compare to other Centralized Exchanges – Is it the same, is it different?

So the price on our exchange is a little bit worse than what they see on Centralized Exchanges. But one thing users need to note is the price they see on Centralized Exchanges, isn’t the final price they’re seeing because they still need to pay hidden fees. And after the trade, if they want to withdraw from there, there are withdrawal fees too. Whereas on Kyber, what they see is what they get. So, actually, our price is typically better than on Centralized Exchanges

Now obviously you were one of the market leaders in the Decentralized Exchange space. Now, you have some big names like Binance and Neo announcing their DEX. Do you feel there is a recognition in the industry that this is where the Exchange direction is moving? And how does that affect Kyber?

It’s good because it helps educate users about Decentralized Exchanges and the benefits of using these to trade and convert their coins.

We’re slowly realising the challenges because when Binance say they’re going to do something, they will do it. They already showed they can build the best Xchange in a few months. But we already have a headstart so we’re focusing on other features. Part of the core product of Kyber is the payment features because we run everything on chain. So we can operate as something like Visa or Mastercard for all the other applications on the ETH blockchain. So if you’re a merchant and you only want to accept ETH and your customer has OMiseGo – how do they pay you? It’s really inconvenient for them. However, with Kyber, they can send their OMiseGo directly to us and we convert this to ETH immediately and divert the payment to you. And that will happen in one single transaction.

Moving a little bit towards regulation – there’s a been a lot of news in the space now about regulation. Traditionally in the Equities market, Exchanges do get regulated. Do you feel that there’s going to be a move in that direction and especially for Centralized – how will do they do it?

Regulation is good and needed to protect the people and eliminate scammers from this ecosystem. But in Singapore we need to talk to our regulators frequently in order to guide them on how to regulate in this space. We need them to guide it in a way where people still have enough room to innovate and build new stuff. I think regulation will come everywhere, Singapore is working on it, Japan already has it.

As long as we work closely with them, then I don’t think there’s a problem.

Are you able to talk a little bit about Trading Volume in Kyber and do you guys have a set goal – medium term, long term?

It’s really hard to quantify the exact volume on Centralized Exchanges. Recently there was some report saying that on some major Exchanges, 95% of the volume is fake. But with DEX’s everything is so transparent, you can see it on the blockchain. So for us, the current volume is $100,000-$150,000 per day. It’s pretty small but we just launched. And we’re working more on educating the users to really see the benefit to using a DEX.

And for the final question, what are you most excited about, this year for Kyber?

Mainnet – Supporting other Cryptocurrencies like BTC, ZCash and Litecoin. So we already work with ICON, WanChain and in the future probably work with Cosmos as well. So we can deploy a different version of Kyber on these blockchains, so users can just trade between different coins. We also want to work with more wallets and more platforms that accept Crypto payments so we can get direct access to the users.

Thank you for your time!


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