Kyber Network – Dynamic Market Maker (DMM) Security Audit

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Summary

Kyber Network’s Dynamic Market Maker (DMM) smart contracts have been audited by ChainSecurity. The suite of contracts implement a Dynamic Market Maker (DMM) based on UniswapV2. The main changes are the use of an amplification model for the pools inventory function and fees based on the recently traded volume.

“Automated market-making (AMM), initially introduced by Bancor and Uniswap, has recently gained extreme adoption, thanks to DEFI and liquidity mining’s notable growth. However, there is still room for further development. With DMM, Kyber Network wishes to improve various aspects of AMM, including reducing capital requirement, preventing front-running, and mitigating impermanent loss. This novel approach called Dynamic Automated Market Making (DMM) allows both flexible fee adjustment and dynamic pricing curve setups. DMM helps reduce the impact of impermanent loss as a result of its flexible fee approach while allowing better capital efficiency using different pricing curve setups tailored particularly according to the tokens pairs in the pool.” (Source: Kyber Network DMM white paper, February 2021)

ChainSecurity uncovered 4 medium severity findings and 6 low severity findings.

About Kyber Network – Dynamic Market Maker (DMM)

“Kyber Network is an on-chain liquidity protocol that aggregates liquidity from diverse sources for the best prices, enabling decentralized token swaps to be integrated into any application. Using this protocol, developers can build innovative payment flows and applications, including instant token swap services, decentralized payments, and financial DApps — helping to build a world where any token is usable anywhere.

Kyber is the most used and integrated protocol in decentralized finance (DeFi), with over US$1 billion worth of transactions facilitated since its inception. Kyber supports over 80 different tokens, and powers over 100 integrated projects including popular wallets Trust, Enjin, Argent, Eidoo, and the HTC Exodus smartphone, as well as DeFi platforms Nuo, DeFiSaver, InstaDApp, Set Protocol, Melon, and many others.”

(Source: Kyber Network media kit, April 2021)

“With their thorough and high quality audits, ChainSecurity has been one of Kyber Network’s primary auditors for years now. We look forward to continuing our partnership with them for many more years to come as we keep growing the frontiers of blockchain.”
Loi Luu, CEO of Kyber Network