Kava —— A Cross-Chain Platform for Decentralized Finance
Kava is a cross-chain DeFi platform offering collateralized loans and stablecoins to users of major crypto assets, including BTC, XRP, BNB, ATOM, and others.
Kava utilizes Cosmos and operates with a Tendermint-based Proof-of-Stake (PoS)consensus mechanism. At its core, Kava relies on a system similar to MakerDAO with CDPs but leverages the zones from Cosmos to add cryptocurrencies running on independent networks.
Its native USD-pegged stablecoin USDX, as well as synthetics and derivatives. Through Kava, users are able to borrow USDX tokens by depositing collateral, effectively leveraging their exposure to crypto assets.
In addition to Kava's USDX stablecoin, the Kava blockchain also includes the native KAVA token. This is a utility token used for voting on governance proposals and also functions as a reserve currency for when the system is undercollateralized.
Kava Key Metrics
Kava is a cross-chain DeFi platform offering collateralized loans and stablecoins to users of major crypto assets, including BTC, XRP, BNB, ATOM, and others. Users can collateralize their crypto assets in exchange for USDX, Kava's stablecoin.
Kava is a Layer 1 DeFi hub. Developers can use Kava's security, cross-chain bridge, and adapted Chainlink oracle to quickly create new cross-chain DeFi applications and deploy them to Kava's global user base.
The Kava platform has two types of tokens: the KAVA token and the USDX stablecoin. The KAVA token is the native token of the Kava blockchain: it is integral in the security, governance, and the mechanical functions of the platform.
There are three main use cases for the KAVA token:
Security: the top 100 nodes validate blocks by weighted bonded stake in KAVA tokens. Economic incentives for validators come in the form of earning KAVA as block rewards, in transaction fees, and face losing KAVA. This is based on strict slashing conditions such as failing to ensure high uptime and double signing transactions.
Governance: KAVA is used for proposals and voting on critical parameters of the collateralized debt position (CDP) system. This includes but is not limited to the global debt limit of the system, types of supported collateral, their debt limits, collateral ratio, fees, and the savings rate for USDX.
Lender of last resort: KAVA functions as a reserve currency in situations where the system is undercollateralized. In such cases, new KAVA is minted and used to buy USDX off the market until USDX becomes safely overcollateralized.
Similarly, there are three core use cases for the USDX stablecoin:
Margin trading/leverage: users that receive USDX from the platform primarily use it to purchase additional cryptoassets, effectively leveraging their exposure.
Hedging with interest: traders can hold USDX as a stable asset when seeking to limit exposure to volatile crypto assets. Holders can bond their tokens and receive accumulate interest equal to the current USDX savings rate.
Stablecoin payments: the quick block-times and fast finality of the Kava blockchain enable USDX to be used for general payment use cases.
Kava Project Team
Brian Kerr is the current CEO of the platform and previously worked as an advisor for several blockchain and crypto platforms, including Snowball and DMarket. Kerr has had a varied and successful career and was educated in business administration.
Ruaridh O'Donnell, an MSc Physics graduate, is listed as Kava's second co-founder and is a former engineer and data analyst at Levelworks. The final Kava co-founder is Scott Stuart, a former professional poker player who currently works as a product manager at Kava Labs.
Kava Labs also lists a dozen other employees and contractors, arguably the most prominent of which is Denali Marsh — an experienced smart contract developer and auditor who occupies the role of blockchain engineer at Kava.
Kava Technical Features
Cosmos SDK and Tendermint Core
Tendermint Core consensus engine: Kava relies on a Byzantine Fault Tolerant consensus engine designed to support Proof-of-Stake systems.
Cosmos modularity: as new open-source modules are developed for the Cosmos ecosystem, Kava can quickly implement desirable modules. For instance, the Inter Blockchain Communication (IBC) (from Cosmos) module enables all Cosmos-SDK blockchains to communicate.
On the application side, Kava has created two applications, the lending platform CDP and the cross-chain currency market HARD Protocol, providing stablecoins, loans and interest-bearing accounts, allowing users to use digital assets to obtain more usage scenarios and value. Specifically, Kava allows:
Decentralized loans and leverage: Kava provides the users of major cryptocurrencies with open access to loans, leverage, and stablecoins for hedging.
Stablecoin hedging with interest: Kava's USDX stablecoin can be bonded, providing holders of USDX with a yield.
Extensible synthetics and derivatives: Kava is capable of growing to support a wide range of new cryptoassets and offering new synthetics and derivative products.
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