This DEX Is Enabling Merchant Payments in Any Ethereum Token

119,876 - that's how many ethereum ERC-20 tokens are currently in existence.

It's a number that is growing by the hundreds every day, but the trouble is, according to Loi Luu, the CEO and co-founder of decentralized exchange Kyber Network, the majority of those tokens fall short of a practical use case.

Luu wants to change that and unlock the potential of ERC-20 tokens to be used for payments.

In practice, this means businesses can accept payments in any ethereum token, and that token can be instantly converted into any other token as well.

For one, he's known for founding ethereum security tool Oyente and building a protocol that uses a scaling solution, sharding, for the enterprise blockchain Zilliqa, before going on it found Kyber Network, that facilitates instant ethereum token swaps on its decentralized exchange.

"With Kyber we aim to connect between ERC-20 tokens and use cases, so tokens can be seamlessly used for payments, as collateral for lending, investing in funds and so on," Luu said.

On the one hand, there's the aspect of the contract that deals with instant conversions between tokens, and on the other, there's what is known as the "Kyber reserve." So-called "Liquidity providers" commit tokens and ETH, the native cryptocurrency of ethereum, into a pool that is used to fuel the remainder of the contract.

While this might seem worrisome to crypto enthusiasts, especially after decentralized exchange and token creation platform Bancor suffered a $13.5 million hack, according to Luu, the Kyber contract has undergone rigorous security testing to ensure funds are safe in the code.

Making it so that commerce can accept multiple tokens simultaneously and seamlessly convert these tokens into other crypto tokens, Luu anticipates the technology will be highly useful for the decentralized applications in the ethereum ecosystem as well.

"Since the vast majority of interesting payment patterns and financial use cases require multiple token swaps between several parties, this mechanism is critical in enabling innovation in many classes of dapps," Luu said.