The team behind NKN (NKN) – described as “a new generation of highly scalable, self-evolving and self-incentivized blockchain network infrastructure” in its whitepaper – have proposed a one-to-one token swap from the extant NEP-5-compliant NKN token to one that is compliant with the Ethereum network’s ERC-20 standard.
NKN’s decision, according to their announcement published on Friday, was “based on feedback from community members, institutional investors and leading digital asset exchanges.” Without knowing for certain, one would suspect that much of this feedback concerned a lack of liquidity regarding NKN’s token. Indeed, NKN made a point of suggesting “improved liquidity” would come about as a result of the token swap.
Until today, just five cryptocurrency exchanges – gate.io, Switcheo, BCEX, Bitrue, and LATOKEN – had listed NKN’s NEP-5-compliant token. For one reason or another, a lack of liquidity appears a common problem facing projects who decided to conduct their initial coin offering (ICO) on top of the NEO blockchain.
When one takes a look at the listed digital assets on top-tier crypto exchanges like Binance, Bithumb, Huobi Global and Coinbase, the dearth of NEP-5-compliant tokens quickly becomes telling.
It is worth noting that the liquidity of the NEP-5 NKN token – a so-called ‘placeholder’ token (i.e., another token swap will occur once NKN launches on mainnet (planned for June 2019)) – was close to being a non-issue for the NKN team and its investors.
Indeed, last July, NKN featured in the controversial eighth round of Binance’s Community Coin of the Month event whereby Polymath (POLY) was declared the winner despite tallying less votes than each of Mithril (MITH), NKN (NKN), and Libra Credit (LBA).
NKN stated on Friday that NKN token holders can swap to the ERC-20 variety up until March 31st, pending any change “due to demand.” Importantly, holders of the current NEP-5-compliant token are not required to partake in the token swap. For those that wish to, we encourage you to check out this step-by-step guide created by NKN.
The NKN team also reinforced that, because the optional token swap is to be executed at a ratio of one-to-one, “there [will be] no change to total number of NKN token issued or token economics.”
NKN announces 1:1 token swap: NEP-5 to ERC-20, based on feedback from community, investors, & exchanges to improve liquidity and expand ecosystem. Please read the timeline and guide published on Medium.https://t.co/wb4Crxhvv1
— NKN (@NKN_ORG) January 4, 2019