Kava.io Review: Is It Worth Investing? Here is All You Need to Know
Many cryptocurrency users think that Kava.io will influence the entire crypto ecosystem. This is because of the interest the platform generates lately in the DeFi industry. The project aims at creating the first DeFi platform dedicated to offering stablecoins and collateralized debt.
The Kava.io team plan to integrate different proprietary technologies and make the decentralized lending sector more efficient.
They developed Kava.io to provide decentralized lending and stable coins to popular crypto assets simply and more transparently. This idea made Kava.io a pioneer drawing both media and international attention.
This Kava.io review contains all the necessary information that one needs to know about KAVA. It can also serve as a guide for individuals that wish to make use of the platform.
- 1 What is Kava.io?
- 2 Kava.io in a Nutshell
- 3 How Does Kava.io Work?
- 4 The KAVA Token
- 5 Team Behind Kava.io
- 6 Why Does Kava.io Have Value?
- 7 What Makes Kava.io Unique?
- 8 Why Use Kava.io?
- 9 Modules Used In Kava.io Ecosystem
- 10 Kava.io Price Live Data
- 11 Kava.io Review Conclusion
What is Kava.io?
KAVA is a protocol or software that allows users to lend or borrow assets with multiple cryptos without a traditional intermediary. It is a ‘cross-chain lending platform in Defi that permits its members to borrow ’USDX’ stable coins. They can also deposit varieties of cryptos to earn a yield. Kava.io protocol offers services that are similar to Maker DAO.
The protocol is recognized as one of the emerging Defi (Decentralized) projects. It runs on ‘Cosmos’ unlike most Defi projects that are Ethereum built.
Running Kava.io on Cosmos is a design choice the Kava.io team argued will increase the functionality. Kava.io users must lock up their crypto assets into the ‘smart contracts’ on Cosmos before they can take loans in USDX.
Kava.io Defi ecosystem for cryptos works like that of a decentralized bank giving users access to a variety of Defi services. It allows users to borrow its native stable coin USDX, synthetics as well as derivatives. The Kava.io protocol uses a CDP (collateralized debt position) system to make sure loans from stable coins are sufficiently collateralized always.
The protocol liquidator module seizes and transfers collaterals of borrowers to the ‘auction module’ for sale. This happens only when they can not maintain the collateral above the standard threshold. Kava.io introduced a native token known as KAVA in addition to its USDX stable coin.
KAVA token functions as Kava.io’s utility token. It serves as a ‘reserve currency’ when the platform is under collateralized. It is also a governance token for deciding on proposals in the system.
Kava.io in a Nutshell
In a nutshell, Kava.io increases the number of digital assets crypto users can borrow, including BTC, BNB, and XRP, among others. Users earn rewards weekly in the form of KAVA by collateralizing their cryptos to mint the USDX. The total volume of KAVA rewards depends on the amount and type of collateral the user minted.
Kava.io aims at launching a Ripple-backed stable coin that will power its CDP (collateralized debt positions) like Maker DAO. The protocol is currently being supported by Cosmos, Ripple, and hedge funds like Arrington Capital. The Kava.io blockchain recently launched its mainnet. This blockchain is supposed to include various cryptocurrencies that are Cosmos based to increase the efficiency of DeFi services.
How Does Kava.io Work?
Kava.io allows its network users to lock up their digital assets in ‘smart contracts’ and borrow the stable coin USDX. This creates a CDP (collateralized debt position) on the back-end. The locked digital assets now serve as collateral for the loan borrowed.
Kava.io members are allowed access to many collateralized loans. This helps them to create ‘synthetic leverages’ for all the crypto assets supported by the system. E.g., users that locked up XRP or Bitcoin in the network will receive the equivalent amount in USDX that is newly minted. They can use this newly minted coin to buy more Bitcoin or XRP and gain leveraged position in the crypto market.
Kava.io also combines a variety of community-built applications, which adds to its general user experience (UX). Users via this interoperability are enabled to access varieties of assets in hardware wallets. The process of using the Kava.io platform include;
Deposit Cryptocurrency: Users connect their digital wallets to deposit their cryptos.
Creat a CDP: The deposited cryptos are locked in a ‘smart contract.’
Creat USDX: Users are given USDX loans equivalent to their CDP value.
Close a CDP: Kava.io users pay back the loan plus a transaction fee to access the locked (collateralized) crypto.
Withdraw Crypto: Kava.io initiates USDX burning once the collateralized crypto is taken by the user.
This is a mechanism that protects the network from volatility that can reduce the borrower’s collateral value. USDX on Kava.io is usually over-collateralized. This implies that borrowers are requested to deposit a higher amount than the USDX value the protocol minted. The debt-to-collateral ratio is then applied to determine the liquidation value.
For instance, a 200% collateralization ratio means that the user will be liquidated if the locked crypto value is below 2times that of the borrowed USDX. The collateral stored in the smart contracts will be liquidated automatically and burned If the ‘debt-to-collateral’ ratio falls below a given threshold.
The KAVA Token
KAVA is the utility and native token of the Kava.io blockchain. It is used for governance and staking or validation.
For governance, KAVA works almost like the MKR token in Maker Dao Ecosystem. Users holding KAVA can vote on major parameters like network upgrades. The token empowers users to vote on proposals and other items of the CDP (collateralized debt position) system. These items or parameters include collateral-to-debt ratios, accepted collateral type and the total amount of USDX, etc.
In addition to governance, the KAVA token serves the following purposes:
The KAVA token helps to maintain security in the platform. The network users stake the coin to achieve this purpose. It is only the highest 100 nodes in the platform that validates blocks in Kava.io. The protocol algorithm determines these top nodes by the weight of their bonded stake tokens. They are later given some cryptocurrencies as a block reward.
Stakers in the Kava.io platform, aside from securing the network, can also stake their tokens using curves of network validators. Malicious users may lose their tokens as KAVA has zero tolerance for such users. Action like signing a transaction twice and failure to keep to high uptime lead to the removal of a participant.
Last Resort Lender
The KAVA token is also the network’s reserve currency. The Kava.io protocol mints new tokens for the purchase of more USDX when it is over collateralized. The network uses this mechanism to retain the value of its stable coins.
However, KAVA holders receive the equivalent of their staking amount as staking returns. If the amount staked is low, the APR for validating the token rises to the highest point of 20%. But if many users are staking, the rewards will then decrease to a minimum of 3%. There may be an additional charge from those running the validator.
The staking pool developed by Binance Exchange is the best-recommended validator. This pool is currently giving about 14-16 percent yearly yield to members staking on it. It is also more secure than others as they use Binance storage.
Kava.io network has a stable coin known as the USDX. It is the coin users receive and also pay back loans with. USDX features make the transaction process faster. This makes it ideal for payment purposes and other related corporate payment processes. It also serves as the general payment system.
Margin Trading/ Leverage
Kava network users also make use of USDX KAVA in buying additional cryptocurrency assets. This allows experienced investors to adequately leverage their exposures in new and better ways.
Hedging with Interest
Users can hold USDX as a digital asset. USDX, in this regard, serves as a ‘haven’ during the period of market volatility. Holders receive the accumulated interest that equals the recent saving rate of USDX when they bond their coins.
Team Behind Kava.io
Ruaridh O’ Donnel, Brian Kerr, and Scott Stuart co-founded Kava.io in 2018. They first founded Kava.io Labs Inc, the parent company of the protocol. Kava.io labs is a profitable company aimed at developing and driving the establishment of the Kava.io.
Brian Kerr is presently the CEO of the platform. He has a lot of experience in the crypto market as a blockchain advisor. Brian has also worked as an advisor for other cryptos, including DMarket and Snowball. He studied business administration and has a successful carrier.
Ruaridh O’Donnell is a Master’s degree holder in Physics. He is formally a data analyst and an Engineer at Level works. The third Co-founder of Kava.io is Scott Stuart, formerly a professional player in poker. He is currently working with Kava Labs as the product manager.
Kava.io Labs has a dozen of other employees the made up the team, including the contractors. The most popular is Denali Marsh. Denali Marsh is a ‘smart contract’ developer currently occupying the position of KAVA’s blockchain engineer.
The Kava.io team officially launched its decentralized lending protocol in June 2020. At the time, the Binance coin (BNB) serves as collateral for borrowing USDX. The team launched a coin sale on the Binance exchange in 2019. They were able to raise $3 million from selling 6.5% of KAVA’s total supply.
Why Does Kava.io Have Value?
The volume of KAVA supplied to the crypto market is limited like all other tokens. This implies only 100 million KAVA will ever be supplied in line with the rules of the software.
The KAVA token helps in governing the network. It also serves as a reward for USDX minting.
The users of the token can hand over their assets to validators managing the network. This enables them to compete for the KAVA that is newly minted. It allocates votes to them to gain a portion from the ‘stability fees’ users paid for closing their collateralized debt position (CDPs).
Moreso, KAVA allows users to participate in managing operations in the system. It enables holders and stakers of the crypto to vote on both its software rules and policies. This implies that by holding and staking KAVA, members can propose to change certain software parameters by voting. These parameters include borrower’s fees, required collateralization ratio, and the assets the protocol accepts as collateral.
What Makes Kava.io Unique?
Kava.io supports ‘cross-chain assets, unlike other ‘decentralized lending’ platforms of like manner.
It adopts a technology known as the ‘Cosmos zones’, enabling users to deposit a wide range of assets like Binance Coin (BNB), Bitcoin (BTC), Binance USD (BUSD), and XRP. Cross-chain assets are compulsorily wrapped as BEP2 (Binance Chain) assets.
Kava.io allows users to operate their staking node to make a direct profit from the platform. Users can also earn normal token rewards via minting USDX on the network. The protocol also uses various mechanisms to reduce token circulation supply by burning them.
The Kava.io system also gives users the opportunity of earning a yield via USDX stable coin minting. These coins can be paid to the protocol’s money market once they are minted. The process is called HARD Protocol. It earns members variable APYs while Kava.io secures their collateral.
However, only the validators (top 100 nodes) are qualified to earn these rewards. In addition, users holding KAVA can stake them on different exchanges that are compatible with the platform, like Huobi Poo and Binance.
Why Use Kava.io?
Kava.io provides crypto owners access to a unique service which is decentralized lending.
KAVA’s mechanism of borrowing using one’s crypto allows investors to remain the owners of these digital assets. At the same earn other collateral which they can use for other transactions.
Investors that belief in the DeFi promises and the protocol’s ability to operate without the services of traditional finance may decide to buy KAVA.
Modules Used In Kava.io Ecosystem
The Kava.io modules aids in the effective functionality of the network. It also allows users access to some special financial tools. Kava.io uses 4 main modules for its operation as stated below;
This is the first module that was integrated into the protocol. It is simply a price oracle, the ‘off-chain’ sensors that supply data to all blockchains. Kava.io is made up of a combination of oracles that are white-listed. They are responsible for posting the prices of various crypto assets on the platform.
Then, the protocol determines the ‘median price’ of all the valid prices posted by the oracle. This data is also a tool for ascertaining the current price in the Kava.io system.
This module allows members to utilize 2 types of protocols during the auction process.
The first is the Forward Auction. In this mechanism, the system converts all the surpluses to a more stable coin. The buyer in this traditional auction solicits to raise a bid for a digital item. This auction module mechanism is applied anytime the platform records a surplus in the collected fees.
The second type of auction is reverse auctions. It is the decreasing bids of an item or items. This auction type sells the governance tokens to create new, more stable coins. This is a make-up process for the variations between debts and auctions with failed collateral.
Collateralized Debt Position(CDP) Module
This module allows users to create CDPS, modify and even close any collateral CDP type. It is also the coding for setting the system’s global parameters. The global parameters to set are the total stable coin circulation and the debt limits in the crypto market.
This module is referred to as the reporter. It seizes collaterals from CDPs with a collateralization ratio less than the set threshold for the collateral type. It tracks the CDPs status always to be able to make prompt decisions. The Liquidator module takes its final decision based on the information it gets from the Price-feed module.
Kava.io Price Live Data
KAVA has a total supply of 70,172,142.00 KAVA coins in circulation with no stated max supply. The current value is USD $3.30 with 76,039,114 24-hour trading volume. It has a live market cap of $231,918,343. The token seems to be preparing for a bull run as the market rebounds. Thus, it’s the best you buy KAVA.
Kava.io Review Conclusion
You can rate Kava.io with its unique features as an interesting Defi protocol. It enables investors to access a CDP (collateralized debt position) platform that can utilize any digital assets. The CDP platform joined the market during the first quarter of the year 2020. Investors holding the KAVA token are earning good returns till now, and the value of the coin has been stable.
Analytically, there is no certainty in the growth of another project with similar features like Maker DAO. There are scanty pieces of information regarding the project founders and advisors.
The project supposedly started in 2017 with nothing to show forth before Binance IEO was announced. Also, the project website (Kava.io) contains little information, though; their white paper is a bit better.
However, individuals and investors who wish to invest in KAVA tokens must do thorough research and investigation before doing so. But we hope that this Kava.io review has helped you to understand the protocol better.