What is Kava.io (KAVA)?

Kava (KAVA) is a DeFi lending platform that allows users to borrow and lend multiple cryptocurrencies without the involvement of financial institutions and other intermediaries. Kava is decentralized and is one of the most popular projects in the DeFi sector. Unlike many similar software protocols and DeFi platforms, Kava is not built on top of the Ethereum network.

Instead, Kava uses Cosmos as an underlying platform which supports the lending protocol. The dev team decided to use Cosmos because this blockchain platform relies on customization and interoperability, adding more functionality to the Kava protocol, whereas Ethereum experiences issues with scaling decentralized apps and hosted protocols during network congestion.

The Kava system uses Cosmos to mint a stablecoin known as USDX, which is pegged to the value of the US dollar, so whenever a user deposits supported crypto as collateral, USDX is created and other users can take loans in the form of USDX. Users who deposit their cryptocurrency funds to support the lending system are rewarded with KAVA crypto every week for their participation.

Kava integrates with other platforms and protocols through application-specific blockchains hosted on Cosmos, known as “zones”, which is how users can add a great number of different tokens to the Kava protocol for lending and borrowing.

How Does Kava.io Work?

The Kava lending protocol depends on the functionality of smart contracts used by the protocol to facilitate a peer-to-peer lending system. Users can lock their funds in smart contracts, which then results in minting new USDX tokens that users can take as a loan based on collateral. In this process, the next step is automated to create a special smart contract that locks up the value of USDX to match the value of the US dollar to neutralize volatility that is otherwise a characteristic of the cryptocurrency market. This is called a collateralized debt position.

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Users can create CDPs by depositing cryptocurrency into smart contracts through the use of digital wallets that can be connected to the system. Once the funds are deposited, the Kava system will automatically lock the funds in a smart contract. The system then mints new USDX stablecoins based on the deposited funds, so users can take a loan in USDX.

To close the CDP and retrieve the collateralized crypto, users need to cover their debt and pay a lending fee. When the user closes the CDP, the initial collateral is deposited back to the same wallet, and the Kava system burns, i.e. destroys, loaned USDX. The system also relies on a collateralization ratio to protect the protocol from volatility and ensure that USDX is over-collateralized to guard against the devaluation of the collateral. 

Who Are the Founders of Kava.io? (History of Kava)

Kava was developed in 2018 by Kava Labs, a for-profit foundation, and was co-founded by Ruaridh O’Donnell, Brian Kerr, and Scott Stuart. The team organized a public token sale for 6.5% of the total supply of KAVA coins. The token sale was organized on Binance exchange, while the team raised around $3 million.

In August 2020, the Kava lending protocol officially went live on the Cosmos platform, allowing BNB as collateral for crypto loans in USDX. Since then, Kava has recorded over $8 million worth of loans in USDX, and about $24 million in BNB locked as collateral.

What Makes Kava Unique?

Kava is not the only lending protocol in the sector of decentralized finance. However, it is unique thanks to cross-chain operations and interoperability that is facilitated through the Cosmos network where the protocol is hosted. Thanks to the Cosmos feature known as zones, users of the Kava lending protocol can deposit a wide array of non-native cryptocurrencies such as Binance Coin (BNB), Bitcoin (BTC), Ethereum (ETH), and other major cryptocurrencies. The “catch” is that all these cryptos need to be wrapped as BEP-2 Binance Chain standard assets, for now, to enable collateralization.

As the project develops, KAVA will introduce more possibilities for collateralization from various cryptocurrencies to USDX that users can loan within the KAVA lending system. Another thing that makes KAVA unique is the feature that allows users to earn a percentage yield based on the system of minting new USDX. Users can earn an APY while their deposited cryptocurrencies are being secured by Kava and their funds make a contribution to the Kava market, dubbed HARD Protocol.

What Gives Kava Value?

Kava value is determined by the strength and relevancy of its technology, technical capacity, use case, and mainstream use. The intrinsic value of Kava is directly tied to its technology and utility. However, the intrinsic value of Kava often doesn’t coincide with the market value of KAVA tokens.

The price of Kava is closely related to the effects of the volatile crypto market, which is why Kava price can often vary greatly with radical price changes within short periods. KAVA price is also affected by the activity of the dev team, developments, roadmap updates, upgrades, partnerships, new features, mergers, and in the case of KAVA, by adding support for more cryptocurrencies.

KAVA’s value in the sense of technical capacity and real-life value is what could ultimately push the mainstream use of the Kava lending platform along with the expansion and development of DeFi.

How Many Kava (KAVA) Coins Are There in Circulation? 

There are currently loading KAVA in circulation out of a total of loading KAVA. In order to pay staking rewards, the total supply of KAVA is not limited. Kava is thus described as an inflationary cryptocurrency, which means that its supply increases over time. The annual inflation rate varies from a floor of 3% when a large amount of KAVA is staked to a ceiling of 20% when a small amount of KAVA is staked.

The number of KAVA coins in circulation multiplied by the current price in the market equals the market cap. The market cap dictates the rank of KAVA in comparison with other cryptos in the market, and also determines its market share and dominance.

Other Technical Data

KAVA is the native token of the Kava lending platform and is a dual-purpose token that is used for network governance and staking. Kava holders have ownership of the Kava protocol and voting rights on system changes and parameter changes, depending on the amount of KAVA tokens they have.

KAVA holders can also have their own staking nodes, while only 100 nodes can earn rewards directly from the protocol as validators.

The total supply of KAVA coins may not be finite, but the system regulates the supply by burning KAVA tokens periodically.

How is the Kava Network Secured?

Kava protocol is hosted on top of the Cosmos platform which is based on the Tendermint Proof of Stake mechanism. The entire system relies on 100 nodes to act as validators and verify the integrity of all operations and transactions on the network. Validators can be rewarded for their participation in securing the network but can also be penalized in the case of malicious activity or failure to meet requirements.

Kava also performs regular security audits to ensure that smart contracts are operating securely and efficiently.

How to Use Kava?

Kava is used for lending and borrowing cryptocurrency-based loans that can be taken in the form of newly minted stablecoins, USDX. USDX value is pegged to the value of the US dollar and is over-collateralized by other users’ cryptocurrencies to keep the value stable.

KAVA can also be used for staking on the network and staking on other platforms, like Ethereum, thanks to the interoperability achieved through the Cosmos network. Users can earn an APY based on their stakes, while validators are incentivized to secure the network and verify network operations. KAVA can also be bought and sold on exchanges to generate profits based on the difference between buying and selling prices.

How to Choose a Kava Wallet

Since Kava protocol runs on the Cosmo network, one option for a KAVA wallet is Cosmostation. It is designed to store Cosmos SDK chains, which means that KAVA can also be stored and safely kept in this wallet. Cosmostation has a web wallet version and a mobile app for iOS and Android systems.

Another popular choice is Kava Math Wallet, which supports multiple cryptocurrencies that are available within the KAVA lending protocol, including KAVA, the native token.

There are also plenty of other places you could store your KAVA and the type of wallet you choose will likely depend on what you want to use it for and how much you need to store.

Hardware wallets or cold wallets like Ledger or Trezor provide the most secure option for storing cryptocurrencies with offline storage and backup. However, they can require more technical knowledge and are a more expensive option. As such, they may be better suited to storing larger amounts of KAVA for more experienced users.

Software wallets provide another option and are free and easy to use. They are available to download as smartphone or desktop apps and can be custodial or non-custodial. With custodial wallets, the private keys are managed and backed up on your behalf by the service provider. Non-custodial wallets make use of secure elements on your device to store the private keys. While convenient, they are seen as less secure than hardware wallets and may be better suited to smaller amounts of KAVA or more novice users.

Online wallets or web wallets are also free and easy to use, and accessible from multiple devices using a web browser. They are, however, considered hot wallets and can be less secure than hardware or software alternatives. As you are likely trusting the platform to manage your KAVA, you should select a reputable service with a track record in security and custody. As such, they are most suited for holding smaller amounts of cryptocurrencies or for those making more frequent trades.

Kriptomat offers a secure storage solution, allowing you to both store and trade your KAVA tokens without hassle. Storing your KAVA with Kriptomat provides you with enterprise-grade security and user-friendly functionality.

Buying and selling KAVA, or trading it for any other cryptocurrency, is done in mere moments when you choose our secure platform as your storage solution.

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Kava Proof of Stake

Kava protocol is supported by Cosmos, which is a Proof of Stake network, which means that Kava can’t be mined. Kava instead relies on staking in its validation process and for securing the network. Users can stake Kava to create their own nodes, while the best 100 nodes take the role of validators who are rewarded for their work.

Conclusion

Kava enables easy and seamless lending and borrowing based on a great variety of cryptocurrencies supported by the protocol. Users can enjoy cross-chain lending and staking with a straightforward and user-friendly system for collateralization.

Users can earn an APY based on their stakes, and can also make a profit based on the funds they stake for loans. In a decentralized system that values the opportunity to borrow and lend crypto, users can get easy access to a multi-currency lending platform.

Join the crypto revolution and start your Kava (KAVA) journey today!

Kava FAQ

How to buy Kava?

Buying KAVA is as easy as visiting Kriptomat’s how to buy Kava page and choosing your preferred method of payment.

How to sell Kava?

If you already own KAVA and hold it in a Kriptomat exchange wallet, you can easily sell it by navigating the interface and choosing your desired payment option.

Kava Price

Kava price is subject to frequent changes and trend reversals due to the volatility in the cryptocurrency market. Kava price can change dramatically within a relatively short time frame. You can check live KAVA prices on Kriptomat. 

As well as traditional factors such as market sentiment, the flow of assets on exchanges, and the economy in general, KAVA price is also affected by the token’s variable inflation rate and demand for governance rights and staking rewards.

The current KAVA price is loading EUR.

The 24-hour trading volume of KAVA is loading EUR. KAVA is currently ranked of all cryptocurrencies by total market cap, with a market cap of loading EUR. It has a circulating supply of loading.

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