Kava.io

KAVA is a multi-chain DeFi lending platform that seeks to allow users to deposit or borrow all major crypto assets.

What is KAVA?

  • KAVA is the native utility and governance token of the KAVA Decentralized Finance (DeFi) ecosystem, of which it is the most renowned for its digital asset lending and borrowing capacity.
  • KAVA allows users to mint USDX – the KAVA ecosystem stablecoin – by collateralizing other digital assets. Once the USDX tokens are minted, they can be circulated into Kava’s money market through its HARD protocol to allow other users access to funds in return for an interest rate (APY).
  • On the other side of the loan, users borrowing USDX are granted leverage to increase their exposure to digital assets of their choice. This is completely facilitated through smart contracts that allow this to occur without the interference of any third parties (as conventional banks or financial institutions do in conventional finance).
  • KAVA uses the Tendermint consensus mechanism which powers Cosmos (ATOM). This also means that it is Proof-of-Stake; securing the network and producing new blocks without energy-expensive mining.
  • Unlike most other DeFi lending markets, KAVA has cross-chain support allowing users access to assets upon a myriad of blockchains including household names like Bitcoin (BTC), Binance (BSC) and Ethereum (ETH).

Key Metrics

TickerKAVA
Token NameKava.io
Token Type/ProtocolCosmos blockchain
Total Token Supply140,926,935
Current Circulating Supply See Coinmarketcap
Market CapitalisationSee Coinmarketcap
Token Creation DateOctober 2019
Can it be mined?No

Who is behind KAVA?

KAVA’s team consists of talented individuals such as the likes of Brian Kerr, one of the three co-founders who was previously an advisor for a variety of blockchain-related platforms including Snowball and DMarket. Kerr also had previous experience as the co-founder of Fnatic Gear, as well as marketing and account management.

Ruaridh O’Donnell and Scott Stuart are the last two co-founders of KAVA, bringing in engineering and data analytics, and product management skills respectively. Holistically, their experiences bring variegated but synergistic core competencies together to Kava.

KAVA Labs also employs a dozen other employees including the likes of Denali Marsh – the chief blockchain engineer  with rich experience in both smart contract development as well as audits.

What is the purpose of KAVA?

KAVA brings a full-suite of DeFi lending and earning possibilities. Functionally, the KAVA ecosystem acts as a decentralized bank for various digital assets, enabling users access to financial services such as their USDX stablecoin as well as synthetic assets and derivative securities. This consists of both borrowing and lending services as well as a decentralized exchange where users can swap assets with one another without a third party.

The KAVA token functions in a manner akin to bank reserves – collateralization when the system has insufficient funds to meet all borrowing/lending needs. Hence, as the ecosystem grows, more KAVA will be required to support its reserves. Additionally, like many utility tokens, KAVA also functions as a governance token used for voting on improvement protocols.

Insights

  • As KAVA is built upon the Tendermint protocol that also powers Cosmos (ATOM), users are able to run their own staking nodes to secure the network and earn rewards. Notably however, only the top 100 nodes are eligible to receive rewards. 
  • KAVA launched in a very successful Binance IEO held in October 2019 at a price of $0.46 for a total raise of $3 million. The project price has since rallied monumentally from just over $1 to an all-time high of over $7 in May 2021.
  • KAVA has multiple burn mechanisms designed to reduce the circulating supply of the token (and therefore incentivize holding of the native KAVA token). 
  • KavaSwap, a decentralized exchange (DEX) as well as KAVA’s robo-advisor are both highly anticipated developments for their 2021 roadmap that further flesh out KAVA’s utility as a DeFi ecosystem.

Risks

  • Although KAVA has multi-chain support, some Ethereum assets are currently only supported in ‘wrapped’ form (e.g. WETH) as Binance Chain (BEP2) assets.
  • The DeFi lending space alone currently has just over 80B USD total value locked (TVL). This is a huge potential market, but as such is also highly competitive, with various other smart contract-based lending and borrowing platforms with the likes of Aave, Maker, and Compound, each vying for a share of the space.
  • As KAVA only launched in late 2019, it lacks the same track record of the OG’s which survived prior bear markets – although its performance and roadmap are looking bright.
  • Of KAVA’s total supply, 25% were allocated to KAVA Labs shareholders, with an additional 28.48% allocated to KAVA Treasury for growing the network (as staking rewards, among other things).  This exposes holders to supply shocks when their vesting schedule comes, allowing shareholders to possibly dump tokens on the market (although many tokens also have similar risks)

News and Updates

  • As of August 8th 2021, KAVA has just over 55% of all tokens minted staked in the network, for a total value locked of over 500 million USD. This is representative of the positive market sentiment of KAVA token holders for the future.
  • KAVA’s Roadmap shows the impending Ethereum Bridge as well as Robo Adviser, which will provide domestic ERC-20 and ETH collateralization options for the KAVA ecosystem as well as a retail, mom and pop robo-advisor option for the masses. Both will further add to KAVA’s arsenal as one of the leading DeFi ecosystem providers.
  • KAVA’s stablecoin USDX just reached a milestone market cap of USD100m as of the 8th of August 2021, reflecting the increasing adoption of the protocol.

Community & Whitepaper Links

Disclaimer: 
All investment is speculative and involves substantial risk and uncertainty. Investors should understand the nature of digital assets including the terms of return and the risk of assets. We encourage investors to fully understand the assets and the risk associated with them prior to making any investment. 

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