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Introduction

Finance. The world can’t function without it. Governments dedicate tons of resources to steady the ship whenever there is turbulence.

Amid the intervention, savers end up suffering. With the wave of easing from central bankers, savers are now earning less and less. In some instance, the reverse happens, savers pay bankers for safekeeping.

As bonkers as it may sound, that’s the reality on the ground. And it’s about to get worse as the global economy hangs by the thread. But, there is a light by the end of the tunnel. Blockchain’s latest innovation, decentralized finance, or simply DeFi, is a viable and timely option for investors.

DeFi aims to decentralize finance and that means token owners can bypass middle men and trust the code of smart contracts. Smart contracts operate from an immutable, community preserved blockchain and is autonomous.

DeFi is broad and encapsulates applications as exchanges and lending. However, it is the concept of loans and lending that has picked up in recent times especially in platforms as Ethereum and Cosmos.

Interest in DeFi saw the total locked value of ETH spike above the $1 billion mark, a milestone, in February.

What is Kava?

Kava could be nascent, just like DeFi is, but offers an invaluable proposition.

At its core, Kava is a cross-platform DeFi platform which is based on Cosmos. As a result, it is interoperable with different blockchains yet secure and reliable.

Kava: How it Works

Kava is built on the Cosmos and Tendermint. This is the same technology that powers Binance Chain but the difference is that it is multi-asset and built from the ground up.

Like other lending DeFi applications common in Ethereum, users can borrow loans and lock up their crypto assets like Bitcoin (BTC), Ethereum (ETH), ATOM, BNB, and USDT, which act as collateral—or technically a collateral debt position (CDP), in exchange of the platform’s stable coin, USDX, which is algorithmically maintained.

CDPs anchor DeFi, and it is the same model that has been employed by the project’s founders. Meanwhile, KAVA is the platform’s native currency and can be staked for more gains. Holders of KAVA can participate in the network’s governance, voting for changes within the platform when needs be.

Simply, Kava is bringing DeFi to non-Ethereum holders and through the platform, they can earn interest from lending, participate in network security, and borrow against their collateral.

And it gets better.

Kava is built on Cosmos, an interoperable platform, and remains secure, stable, while promoting self-governance through KAVA.

Kava Token: Its Main Purpose

KAVA token serves three main purposes:

  1. It secures the network through validators who stake the coin in return for block rewards and transaction fees. Holders also benefit from burning of stability fees paid by CDP users. Many of these validators are Kava’s public partners.
  2. Stabilizes USDX peg. The coin is minted whenever the USDX–fiat peg is lost
  3. Governance since KAVA holders determine which proposals can be integrated and which parameters can guide loans and CDPs. Stability Fees, overcollateralization ratio, as well as voting for which assets to accept is decided by holders who can delegate their voting rights to validators or do so by themselves.

On a Deeper Level, Kava Functions as Follows:

To guarantee network stability and security, all rewards that are emitted per block are shared depending on the staking ratio by all network validators. Validators are like miners and aside from emissions, validators share transaction fees.

The amount of Kava received depends directly on first, the staking ratio mentioned above, the commission rate which are set by validators, and thirdly, the total transaction volumes. The higher the trade volumes, the higher the rewards received since it means more people/users interacted with the cross-chain DeFi platform.

At the moment, Kava issuance rate is at 6.33% but will fluctuate between 3% and 20% depending on whether two-thirds of the total coins in supply is staked.

For coin stability as aforementioned, the system automatically tracks collateral but concurrently incentivize liquidation of CDPs—collateral converted to USDX which tracks the USD, whenever collateral ratio falls below the minimum threshold.

However, should the slide of the price of collateral fall faster than the system can auction off pending CDPs, Kava is minted for the USDX—USD peg to hold true. In this case, Kava holders are liquidated.

Stability Fees will be paid in Kava tokens and destroyed. Burning reduces the supply of Kava tokens which in turn means holders of the token have an edge.

At launch, Kava Stability Fee was set at 5% per annum.

The Team

Kava Team

Kava was launched in 2017 and the team has expertise in blockchain, providing solutions for competing platforms as Tezos, Ripple, Tendermint, and MakerDAO amongst other leading projects.

Leading the team is Brian Kerr, the CEO. Before Kava, he advised Snowball–the world’s first smart crypto investment automation platform, and DMarket– a blockchain-based decentralized digital asset marketplace that enables publishers to create purchasable inventory of their digital items like skins, gold, and other in-game items.

Scott Stuart is the Product manager while Ruaridh O’Donnell is the co-founder and the Blockchain Lead.

Others include: Kevin Davis, the Lead Engineer, Denali Marsh, who is the software developer, Aaron Choi, the Head of Business Development in Asia, and Ticky Chen, the Marketing Manager.

Kava is advised by Robert Leshner, the CEO and Founder of Compound Finance. Compound is an open-source, autonomous protocol built for developers, to unlock a universe of new financial applications. Interest and borrowing, for the open financial system.

Advisors

Kava Advisors

Another advisor is Sunny Aggarwal, a research scientist for Cosmos, and Terry Chen, the VP of Engineering at Twine. At Twine he is responsible for an 18-person team and oversee all things technology: mobile, web, backend, infrastructure, quality assurance, system administration, desk side support, security, and compliance.

Noteworthy advisors include Jack Zampolin who is the Director of Product at Tendermint, Brian Fabian Crain, the co-founder of Chorus One, and Roderik van der Graaf, the Managing Partner, LEMNISCAP.

Partnerships

Kava Partners

Kava has collaborated with over 300 firms. Some of them are: Binance, OkEx, Ripple, Cosmos and Tendermint.

Ripple’s XPring, the investing wing of the $10 billion company that may IPO in the next year, has invested in Kava, and the platform now supports XRP as collateral.

Tendermint is the creator of Cosmos Hub and Cosmos SDK. ATOM is accepted as collateral by the platform.

Then there is Cosmos, BitMax, Cosmostation, Lemniscap, Coil, Chorus, Commun, and many others.

When announcing their partnership with Cosmos for example, Scott Stuart, the Product Manager, said he was thrilled and strongly believed in the importance of building a blockchain framework ready for mass adoption:

“Kava has admired Tendermint for a long time and believes in the importance of building a blockchain framework for mass adoption. We are thrilled to help Cosmos extend its reach to new markets, providing the ecosystem with access to new users, liquidity, and services.”

Tokenomics and KAVA Distribution

Kava was the 10th IEO on Binance Launchpad. Preceding this IEO were three Private Token Sales.

Combined, 40% of the total circulating supply of Kava tokens, at 100 million, were sold. During the first, second, and third private sales, each Kava sold for $0.075, $0.25, and $0.40, respectively.

Kava Token Crowdfunding: Private Sales and Binance IEO

The IEO price was sold at $0.46 and 6.52% of the total supply of Kava was sold raising $3 million. Only BNB was the accepted coin. It was done in Oct 2019.

As a result, token holders control 25 of the total supply while Kava Treasury has a 28.48% controlling stake.

  • 15% of all funds were used as follows:
  • 45% for Platform Development
  • 25% for Business Development and Marketing
  • 30% for Legal, Operations, and to cover miscellaneous costs
Kava Token Distribution

Kava is a BEP-2 token and has an inflation of 6.33%. Each coin is trading for $0.85 against the USD according to data from Coingecko. Most trading is from Binance.

Also, there are 102 million tokens in total supply but 87 million, or 85.12%, are bonded.

In addition, there are 90 validators but 84 are live at the time of press.Therefore, takes between 6 to 11 seconds to validate a block of transactions.

Tokens will be released depending on the amount staked by validators. The higher, the lower the APR rate, and vice versa. Maximum and minimum APR rates—dependent on staked amount stands at 20% and 3% respectively.

Eventually, by Oct 2022, all tokens will have been released.

Kava Market Performance

For private investors who got in at the first token sale, their ROI is at 12X in USD terms at market rates of $0.91.

Meanwhile, IEO investors have a 2X ROI.

Short Term Price Catalyst

  1. Kava team has the experience and the dedication needed to propel the project forward. Brian Kerr has previously worked in blockchain finance before his participation in Kava. Also, the Product Manager, Ruaridh O’Donnell, was a blockchain lead before joining Kava.
  2. In addition to this, the team is advised by Compound co-founder and other heavy weights who are directly involved in crypto finance or advise leading blockchain projects seeking to revolutionize finance.
  3. The projects liquidity continues to increase. Several months after crowd funding, the token is now trading at Binance and other exchanges including Bitrue, BitMax, and Gate, according to data from CoinGecko. However, the listing at Binance exposed Kava to high liquidity and investors.
  4. Binance now supports the deposit and withdrawal of Kava. A big boost considering the depth of Binance’s liquidity and their broad user base.
  5. Staking is also available Gate. Kava is a proof of stake coin and that represents another revenue stream aside from capital gains for holders. Besides, staking is also possible via Trust Wallet.
  6. They continue to market and an experienced content marketer, Sarah Austin, is the latest to join the team. Efficient dissemination of Kava-related news is crucial at this early stage. Content is also supplemented by the project’s executives’ live sessions and AMAs.
Kava Roadmap
  1. Kava is steady and adheres to their roadmap. They have since released a CDP system and developers continue to submit commits at GitHub. This is a mark of participation and community, a vital element in crypto and blockchain.
  2. Several blockchain explorers have been built by the community for coin tracking. With the ability to track transactions, user experience is improved, a net positive for the project.

Long Term Price Catalysts

  1. The concept of cross-chain DeFi is itself a massive idea. Amount of DeFi held in different apps is expected to rise in years to come as it becomes more popular. Already, over $900 million is held at different DeFi platforms according to stats from DeFi Pulse.
  2. Kava has the support of leaders including Ripple who invested in the project through XPring.
  3. Kava support different coins as ETH, Bitcoin, BNB, and even XRP as collateral, an opportunity for other users who would love to lend and borrow.
  4. Through USDX, users are shielded from market volatility as they can opt in and out between supported coins for the stable coin.
  5. The team governance is distributed and holders can vote should they want changes to terms of their CDPs and over-collaterization ratio for example.
  6. Kava’s community is growing and recently, the number of validators, mostly partner companies, rose above 150. This is the mark of distribution and a strength of governance.
  7. The project also plans to add other Synthetic assets including the Euro, JPY, and the Renminbi, a boost for Kava token. This is on top of increasing collateral assets needed when borrowing funds.

Catch Major Price Moves with MarketWizard App