Kyber Network Execution Review and Rating (SVET)
Kyber was one of the crypto craze early beneficiaries rounding about $50 mio in September 2017. It was added by an undisclosed amount (allegedly ~2 mio) in January 2020. Among Kybers contributors there are several boutique VCs from Italy (Iconium), Hong Kong (IOSG), USA (Amino Capital, 8 Decimal Capital) and China (Chain Capital).
One of the major issues facing public auditors like myself is that information about projects current financial state and its revenue stream remain carefully hidden from our eyes for the old sake of preserving corporate confidentiality.
In my view it is the complete nonsense in our age when all companies have to submit to authorities. Concealing the state of business finance from users, most of which are your investors anyway, only leads to an unwanted anxiety on the markets and pose a serious threat to project's reputation.
It is specially important for small, fledgling businesses like Kyber, which issue its own coins.
While big, centralized, already well established exchanges might temporary enjoy the luxury of being secretive on their internal finance without rising publics' suspicions and backlash (although this situation usually change precipitously after the hack or financial scandal), small ones have to be much more observant and forthcoming.
In fact, we all (big and small) have to admit that every company in our space is public by definition, that all users are our stakeholders and take on ourselves the responsibility to report to our worldwide shareholders regularly.
Until that happens, however, I'm left with my wild guesses on the 'Equity' side of the Kyber rating.
The mere occurrence that Kyber had to resort to the venture round at the edge of 2020 (despite its 50 mio ICO only two years earlier) tells me that unless the Summer rush would not have happened its financial situation would be frivolous (again, it is only my speculations - no facts).
Also it indirectly suggests Kyber's yearly burning rate of about $25 mio, which is pretty steep for the project with less than 10 team members, I would say (unless, of course, each member gets big corps CEO full package :) It also means that Kyber would have to net about 2 mio monthly just to survive if not for its coins constant appreciation.
Yes, this burning rate might be completely fake-factual. However, despite all its incongruity those wild assumptions (coupled with an absence of reliable info on the real state of its accounts) compels me to question Kyber's financial stability and only its coins' crazy valuation saves it from falling to 'c' level. "Equity" is 'b-'.
Kyber has two technical co-founders (Loi Luu and Victor Tran), which is always, as yo know, a delight to my eyes. At the same time, previous to Kyber Loi (PhD in Philosophy) didn't have much of exposure to real business and spend only a year as a CS research assistant in the National University of Singapore. Victor's career (he's 2013 graduate of Vietnam University of Engineering and Technology) in tech is a bit longer and includes, primarily, three years of lead engineering with 'SmartPool' company.
Nonetheless, strength of the founders is to surround themselves with undiscovered talents and let them roam the market in one cohesive unity. Additionally, Kyber results speak loader than its employees bios and CVs. Moreover, Vitalik is in their advisory board, so I have no basis to question Kyber's 'talent-management practices'. Hence, I compel to assign strong 'b+' to 'Team' part of the rating.
Despite my emotional adherence to everything DeFi I can't deny one thing, which is extremely handy with legit centralized exchanges - that they are literally legit and sometimes have official legal name available for everyones scrutiny registration and, even, available by phone :)
On the other hand, although, it is no difficult to find out from open sources that Kyber is headquartered in Singapore, neither its legal names nor its form are known (not to mention any other details like shareholders or affiliates). That always put me out of my comfort zone and as a result I tend to assign as low 'Validity' rating as I can ('c') to such types of projects. That exactly what I intend to do in the case of Kyber, unless, of course, somebody enlighten me on this subject.
Of course, I understand that asking for the legal registration from a DEX sounds strange but in case of Kyber we are still dealing with a fledgling network relying mostly on core group of developers associated with a particular company
(pls, correct me if you know for certain that it is now fully disintegrated on devs side)
Contrary to 'Validity' Kyber's 'Solution' (or business model) would deserve, imho, straight-forward 'a' for being, hmm, the straight-forward (fees based), if not for a fact that it is not clear from open sources how much (if at all) core devs take from that (as far as I know, Kiber DAO decides on the network fees). Hence, 'Solution' is 'a-'.
Result for Execution (Solution - Validity - Equity - Team): a-/c/b-/b+
[Please, do not forget that I am not your financial advisor and all above was not intended to be a financial advise, of course. You’ve got to use your own gray matter enclosed between both of your ears to take all important as well as unimportant financial decisions.]
For the original version of this article, please, refer to: http://svetrating.com/rating_text/34/ent/
Link (Kyber WhitePaper): https://files.kyber.network/Kyber_Protocol_22_April_v0.1.pdf
Image: The Courtyard of the Old Stock Exchange in Amsterdam, Kaspar Karsen