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What Is Kava.io? How To Buy, Expectations And Predictions. Everything You Need To Know About KAVA

With the development of the crypto market and the world of decentralized finance (DeFi), there are more protocols that exclude the intervention of third parties. Borrowing money through institutional organizations is only possible with your physical assets as collateral. That is why there are more protocols that make it possible to provide credit with their crypto as collateral. Kava is a multi-chain DeFi lending platform that uses multiple cryptocurrencies to allow users to borrow and lend assets without the need for a traditional financial intermediary or organization.

What is KAVA?

Kava is the first DeFi platform built on the Cosmos network . Cosmos describes itself as a decentralized network of independent and parallel blockchains. The goal of the ecosystem is to create an internet of blockchains, the Blockchain 3.0.

Traditional banks offer customers the option of taking out loans using their existing assets as collateral. With Kava, the world’s first cross-chain money market, you can borrow with your crypto as collateral. For example, you should not unnecessarily sell your crypto for fiat money before you can take out a loan. You make your current crypto assets available as collateral to take out loans with the protocol of Kava.

It is a multi-chain DeFi lending platform that offers USDX stablecoin lending where users earn KAVA tokens. This way you can earn more by making your capital available whenever you want without having to sell your digital currency. Kava can be seen as a decentralized bank that facilitates the borrowing and lending of currency through the use of crypto as collateral.

Unlike centralized banks, which profit from the interest by making loans themselves, Kava’s open decentralized bank returns the profits to the users. This is done through attractive APYs and rewarding users in the protocol’s native token.

This technology and application is enabled by its open-source nature that creates an open and decentralized network capable of delivering financial services to users regardless of their location or physical assets. This global network is operated by thousands of people, companies and institutions from all over the world. Token holders are responsible for security and management and represent ownership of the protocol through the governance token.

Third-party services using crypto assets can integrate Kava as a dApp to offer their users financial services such as lending and offering attractive interest rates. Users, developers or organizations using Kava will be rewarded by the platform with the native token KAVA.

The goal of the Kava protocol is to be a decentralized and global platform for financial services that allows users around the world to earn more from their digital assets. To achieve this goal, there is the native KAVA token that gives users ownership and decision-making rights about the future of the platform. By rewarding users with the governance token, the network gets a secure environment for financial applications. Below is a quick video explaining KAVA in 5 minutes.

How does KAVA work?

Users of the network can pledge their crypto currencies in exchange for USDX. It functions as the stablecoin of the Kava network. To receive USDX loans, users only need to commit their crypto to the platform. This is done on the basis of smart contracts . This crypto is blocked and serves as collateral for your loan.

The number of stablecoins you can borrow depends on the borrowing ratio determined by the protocol. Suppose Binance Coin ( BNB ) has a borrowing ratio of 67%, which means that you can live up to 67 cents for every BNB you have blocked on the Kava platform. When you borrow on the platform, you are automatically rewarded with KAVA tokens in proportion to the amount you borrowed. This distribution of the governance tokens ensures that the network always remains in the hands of the users.

Users can even take out multiple loans with collateral. This way you create synthetic leverage for every crypto supported in the system. For example, you can choose to lock Ripple or Bitcoin . You will receive an equivalent amount of newly minted USDX to then be able to buy more Bitcoin. In this way you get a leveraged position in the market.

Kava also has an extensive range of dApps. Each of these decentralized applications contribute to the entire user experience of the platform. The interoperability allows you to store your assets through different hardware portfolio and institutional custodians. This flexibility is one of the main advantages over the competition, according to Kava.

kava-how-works

KAVA Token

The distribution of the native utility token depends on the activity of the network. All users are rewarded through native tokens. The more users on the network, the scarcer the token. By dividing the distribution equally, the protocol ensures that it remains in the hands of the users.

Governance

By owning KAVA tokens, you as a user also have the right to vote on changes to the platform. You can submit improvements and thus help determine the system parameters that keep the protocol healthy and operational. We see more often that the function of a governance token is native to a DeFi protocol to keep power as decentralized as possible, ensuring a secure ecosystem for financial transactions. This security is essential for a platform where loans are paid out by and for users.

Safety

In a decentralized network, security is maintained by the users and participants of the network. Kava works on the basis of Proof-of-Stake ( PoS ). Discontinuing your KAVA tokens thus contributes to the security of the network. Only the top 100 nodes in the network validate blocks in the system. Who these top 100 are is determined using an algorithm that looks at the bet of each user.

Strike

Much of the rewards come from the strike process. In doing so, users not only validate the network, but also get attractive rewards by providing liquidity to the protocol. The rewards are variable and have an APR between 3% and 20%, depending on the amount of tokens held. The greater your share of the platform, the greater your responsibility and rewards.

You pay a transaction fee for all transactions in the network. At the end of a block, the transaction costs are split between the validators in the network, depending on the amount of tokens they stake. In the network it is therefore possible to receive fees as a reward. It could also be that the protocol decides to burn these fees to reduce the amount of tokens. This is to ensure correct pricing of the token.

COSMOS blockchain

Kava operates on the Cosmos blockchain. This one is a generation of blockchain that aims to categorize the growing number of blockchains in the market. The platform is built using Cosmos SDK. This protocol is an open-source framework that allows building blockchains using a Proof-of-Stake mechanism. The decentralized network of independent blockchains also has a native token of its own, namely ATOM and is in the top 40 crypto coins described by CoinGecko.

Consensus mechanism

Kava works with Proof-of-Stake (POS) consensus mechanism based on Tendermint. This is a blockchain engine based on the BFT consensus. This Byzantine Fault Tolerance (BFT) is a consensus that states that the protocol can continue to function correctly as long as 2/3 of the network’s consensus is reached. This current mechanism is much more energy-efficient than the blockchain that we know from Bitcoin, among others.

ICO – Launch

Kava’s Initial Coin Offering took place in October 2019 with the token being offered with an initial price of $0.46. 100 million tokens were made available with a fundraising goal of 3 million. The protocol managed to raise this amount through this ICO . At the time of writing, the current price is x12 of the initial offering price.

Kava was also included in Binance’s launchpad. This is a launch platform on the Binance exchange where users of Binance can make tokens available to the platform, receiving tokens from the new project in return. After the ICO, the project went live on Binance. Only 6.52% of all tokens were distributed via the launchpad.

Token distribution

  • Private Sale Round 1: 30.05%
  • Private Sale Round 2: 5.02%
  • Private Sale Round 3: 4.93%
  • Launch pad: 6.52%
  • Kava Shareholders: 25%
  • Token Treasury: 28.48%

Roadmap 2021

With the arrival of decentralized finance (DeFi) and all new projects, it is important to keep developing. Kava does this by guaranteeing even more security in the decentralized network and by focusing even more on the interoperability between the different blockchains. By providing interoperability, the protocol will gain more interest and also more users.

Kava SAFU Fund

The Kava SAFU Fund is an on-chain community pool that will ensure and increase the overall security of the platform by providing protection against unforeseen events. All this while giving users the assurance that their assets are safe on the network. In the past, there have been no bugs, hacks, or liquidation failures on the platform due to the solid architecture of Kava’s network. Nevertheless, Kava wants to guarantee security and therefore introduces the SAFU fund to counter unique threats.

The Kava SAFU fund will be created through a one-time inflationary event where 10% of Kava’s current token supply will be minted and held within the Kava SAFU fund.

Autonomous Market Making (AMM)

Specific to the DeFi ecosystem are the AMMs, where users are given the option of trading tokens and staking certain coins via an external wallet. Kava will integrate an AMM service on the platform in the near future. It will serve as an on-chain liquidity pool for Kava users to swap various digital assets for use in other financial services.

The Kava SAFU fund will be used to provide an additional level of protection to Kava users by securing the cross-chain activities on Kava. The discontinuation of KAVA provides more liquidity and can then be used in various applications on the network, without compromising security. Users can then earn further interest by staking their tokens without any problems.

Interoperability

Kava has already shifted more than $100 million between the Binance Chain and Kava’s blockchain. There have already been requests from users to apply the same technology to Ethereum assets. In doing so, all project partners built on Ethereum will have access to the decentralized financial applications and services that Kava has to offer. This is therefore an important part of their roadmap.

Kava – Application Programming Interface (API)

Kava aims to give more users worldwide access to decentralized financial applications and services. They want to do this by creating an interface that is as user-friendly as possible that is accessible to everyone when using the DeFi loan platform.

This Kava API is launched as a standard plugin for app developers and financial institutions to provide access to services in the DeFi ecosystem. This way, the Kava functionalities can be seamlessly integrated into all possible dApps. Currently prototypes have already been successfully integrated with partners such as Binance and Bitmax. More collaborations are planned in 2021 that will give the platform even more support on a large scale.

Kava (KAVA) Chart

 

Conclusion

The Kava protocol competes with traditional financial organizations through their new loan system. Operating as a decentralized bank, the multi-chain DeFi lending platform can revolutionize the financial industry by bypassing intermediaries and unnecessary transactions. Providing loans yourself, without the intervention of these organizations is a big step in the world of DeFi. In addition, the platform gives users the opportunity to earn more through attractive interest rates and, through the governance function, users also have a say in the future of the project.

Kava puts financial power in the hands of the people and allows users to borrow and lend credit by using their cryptocurrencies as collateral. This new loan system is seeing a lot of interest in the market and offers many opportunities, both for lender and borrower.

 

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