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.