Kava has recently gained a lot of attention in the DeFi industry. Many people believe it could shake up the entire cryptocurrency ecosystem. The project aims to create the world’s first private DeFi platform offering collateralised debt and stablecoins for all major crypto assets. The project, built on the Tendermint Core and supported by Cosmos, successfully conducted a Binance IEO in 2019 and quickly went to market. In this article by Zatrun.com, you can find everything you need to know about the project.
What is Kava and How Does It Work?
Kava is a cryptocurrency project that is an important component in the DeFi space. This is because project allows people to borrow cryptocurrency without the need for centralised companies like banks. Everything happens on the blockchain and is executed by a decentralised computer network. Many applications in the market are built on the Ethereum blockchain. Ethereum is one of the most important blockchains for DeFi. However, Kava is built within the Cosmos (ATOM) ecosystem. This is because the team sees much more potential in Cosmos.
The project operates as a blockchain within the Cosmos ecosystem. This means it can use Cosmos’ framework but still develop its own blockchain. Protocol’s network operates according to the “Proof-of-Stake” consensus mechanism. This means that validators ensure the verification of transactions.
Users who want to borrow cryptocurrency must first deposit cryptocurrency on the platform. There are several cryptocurrencies supported by Kava, including Ripple (XRP), Bitcoin (BTC), and Binance Coin (BNB). They then receive cryptocurrency in the form of USDX. This is project’s USD-pegged stablecoin. When users decide to borrow cryptocurrency by holding other cryptocurrencies in the smart contract, USDX is minted.
Is KAVA Token a Good Investment?
KAVA token is the project’s native cryptocurrency. The token is used for various functions and is hosted on the Ethereum, BNB Chain, and Polygon blockchains. Users can become network validators by staking with crypto. They passively earn returns by doing so. The asset is also used for governance purposes. Owners of the cryptocurrency gain voting rights in the protocol’s governance. Finally, users who borrow USDX coins can benefit from incentives given in the form of native token.
Kava is an interesting DeFi project, but analysts are unsure whether we need another project similar to MakerDAO. However, it is good to have access to a collateralised debt position platform that can use any cryptocurrency asset. After its launch in 2019, the project was profitable for many investors. In return, it saw widespread adoption and currently ranks 97th in the market. Therefore, if DeFi continues to grow, it can be expected that KAVA coin’s price will also rise.