Yes the Kandies will fade over time and it is indeed due to the dyes deterioration.
When applying the kandy it is recommended to use 6 coats of kandy and then 4-6 coats of klear over them.
I only use the HOK Klear over kandy because the UC-35 and UFC-19 have the highest UV protection content of any clear on the market. It does not stop the deterioration completely but it does prolong it.
Applying over a darker base does appear to help longevity, but it is due to the dark color hiding the amount of fade more than a light color does. Take the 2 examples below.
My Big Orange truck was sprayed with Kandy Tangerine over Pewter base with multiple pearls for the graphics and flames way back in 2001. it sets outside 24/7/365 due to it not fitting in a garage (not to mention not space in the garage for it). I laid 8 coats of Kandy on it, blocked it smooth and another 6 coats of UFC-19 Klear over that, then blocked it smooth and polished it. It has begun to show some fade the last couple years, but then again the rockers have also been disappearing. It still looks good going down the road and up close as far as quality of the paint, but with 250k miles on, it's the rust I'm more concerned with.
My 1990 GMC Sportside was done in Deep violet over black with silver fade graphic stripes way back in 1990. Also with 8 coats of Deep Violet over the black and graphics, then 6 coats of Klear over that. It still appears to look great to everyone, but I can see some fading has occurred to that also, just not as prominent as the kandy over a lighter color. Especially if it's out in the bright sun. Most people can't see it, but I can.
With that being said, you can also use the KBC (KANDY BASE COAT) to achieve the color you want, and then apply the Kandy over that to give it more depth of color. It's all up to you and how much time, effort, and money you want to put into the paint.
Using a UV protectant polish also helps the longevity of the Kandy finishes. The one I used for the past 38 some years is no longer available, so I'm searching for a suitable replacement polish.