DamoTalks episode18| Interview Recap: How Kava, the Top DeFi Platform, Exploded into Unlimited Potential
Original Damo Talks Token Damo March 31
DamoTalks Issue 18
Topic: How Kava, the top DeFi platform on the COSMOS ecosystem, exploded into infinite potential
Guest: Aaron, VP of Global Business Development, Kava
Moderator: Lu Fei, TokenDamoCo-Founder
Live Streaming Time: March 30, 15:00
Hello, my name is Aaron and I’m the VP of Global Business Development at Kava.
I’ve been involved in blockchain since around 13 years, and previously had over 14 years of experience in digital advertising, gaming, brand marketing and blockchain industries. I joined Bitcoin China, China’s first bitcoin exchange, as VP of International Exchange in ’16, and later as CEO of GJ.com, a cryptocurrency exchange in Singapore.
I’m excited to be part of this AMA and share with you about Kava and HARD.
Luffy: Okay, thanks Aaron for introducing yourself, so let’s officially start today’s AMA now.
Q & A
Luffy Q1: Tell us about Kava project and its recent status?
Kava is a Layer 1 cross-chain platform based on Cosmos cross-chain ecology and developed through Cosmos SDK module.
As the world’s first project to support cross-chain DeFi applications and services, Kava released the Kava cross-chain lending application and HARD Protocol currency marketplace in June and November last year, respectively. more decentralized cross-chain bridges, and more financial services infrastructure.
Our newest Kava 5 mainnet will be upgraded tomorrow, March 31 at 11pm BST with a new HARD Protocol V2 version that will support the borrowing capabilities of the HARD platform pool, including variable rate borrowing, and the distribution of HARD token rewards to asset providers and borrowers. community participation and timely updates with more protocol parameters, which you can keep an eye on.
In addition, Kava has several important products we are planning to launch this year, and at the beginning of the year we released our project roadmap for 2021, specifically you can follow our public number: Kava Chinese Community.
In the near future, review the results and progress Kava has made in the recent month of March. First of all, in terms of total locked-in funds, Kava DeFi Hub crossed the $300 million mark in March. It took Kava nearly 6 months to go from a $1M lockup to a $100M lockup, and only 2 months to go from $100M to $300M, which is a TVL growth rate worth celebrating and shows to some extent that the market is starting to favor the more secure DeFi product.
In addition, Kava also joined forces with Firecoin DeFi Labs in March to launch the HBTC Staking campaign, supporting millions of Firecoin users to seamlessly access Kava’s DeFi applications Kava CDP, HARD Protocol and services running on the Kava platform, a partnership that symbolizes a new milestone for DeFi + CeFi, and Kava will continue to work with CeFi in the Kava will also continue to explore more in-depth partnership opportunities with CeFi leaders in the future to provide users with more revenue options and jointly improve the efficiency of the use of market capitalization.
Back to Kava Labs itself, we are also pleased to welcome our new COO Terry Chen, who led and helped take Pivotal Labs to IPO, and will help Kava further expand its market presence, help the company prepare for IPO/SPAC, and lead Kava to become a world-class fintech company and platform. company and platform. Currently, Terry has led the team to take the first steps towards an IPO and SPAC — leading and facilitating Kava’s acquisition of Crank Studio.
These are just some of the latest developments at Kava.
Luffy Q2: Ok, thanks Aaron for sharing, Kava has been the star of the cosmos ecosystem and has made such progress recently, we know this is inseparable from Kava’s team, so can you tell us a little bit about Kava’s current team?
The Kava Labs team comes from Silicon Valley, with the product and technical teams currently located in San Francisco, U.S. CEO and co-founder Brian Kerr is a serial entrepreneur who is highly sought after by venture capitalists, and was previously one of the founders leading the world-renowned esports team Fnatic.
The Kava Labs team was involved in the development and layout of the blockchain industry in 2018, and started to focus on the DeFi track in 2019, which was recognized by multiple investments from IOSG, Lemniscap, SNZ, Arlington Capital, Node Capital, Framework Ventures and others, and is currently working with Coin Security, Firecoin, OKEX, Ripple, Tendermint and other well-known blockchain institutions have close cooperation.
Luffy Q3: Thank you Aaron, with a strong team and institutional support, I believe Kava can gradually open up the market and continue to grow and develop. So let’s go back to Kava itself, what specific problems can Kava help users solve in the digital asset space?
Kava is the world’s first decentralized Layer1 hub supporting cross-chain DeFi applications and services, and we are mainly solving the problem of capital utilization for mainstream digital asset holders. At present, DeFi for ethereum has been developed relatively mature, but there are other mainstream assets with up to trillion market capitalization outside of ethereum, such as BTC, BNB, XRP, etc. The cross-chain lending platform and HARD currency market built by Kava is for users of these assets, so that they can get more usage scenarios and values with digital assets.
At the same time, many developers of DeFi are currently facing the problem of high development cost and long development cycle. The services built by Kava including cross-chain functions, prophecy machine data and other DeFi infrastructure financial facilities are available for DeFi product applications and developers.
Luffy: Okay, let’s move on to the next question.
Luffy Q4: What impact will the launch of IBC have on Kava and the entire COSMOS ecosystem?
Kava is a blockchain built on Cosmos SDK, so it can also quickly take advantage of the combinability of IBC to introduce DeFi to all Cosmos ecosystem projects. Based on the integration of IBC, Kava is able to quickly scale to hundreds of new blockchains and their users. Thus, IBC will be a huge catalyst to drive the growth of the Kava platform.
With the release of the Cosmos cross-chain IBC module some time ago, more than 100 new assets will be unlocked afterwards. These assets require DeFi products to lend and earn revenue.
Kava already has several applications in place and growing nicely, including the Kava cross-chain lending platform and the cross-chain currency marketplace HARD Protocol, both of which will be DeFi platforms supporting these new assets.
As the primary decentralized financial protocol supporting the Cosmos network, Kava already allows users to earn rewards on cryptocurrency deposits such as BNB, XRP, etc. The Kava team is working to build decentralized cross-chain bridges with Bitcoin and Ether and improve security measures in this area.
In addition, Kava has brought the Chainlink prophecy machine’s technology to Cosmos as an exclusive provider, bridging access to price feed data for over 100 blockchains within the ecosystem. with the launch of IBC, Kava will strengthen its position in decentralized finance for Cosmos-based blockchains and other blockchains.
Luffy: OK, thanks Aaron for your answer. Linking over 100 new cross-chain assets is an exciting number and shows us that Kava has unlimited imagination! Let’s move on to the next question.
Luffy Q5: Many partners in the community feel that Kava is very similar to MakerDao on Ether, what are the differences and advantages of Kava compared to Maker, and what are the core advantages of Kava cross-chain DeFi?
Kava blockchain is the only DeFi platform with multi-chain capabilities currently in operation in the market. This allows Kava-based applications to support a wider range of assets, such as BTC, XRP, BNB, BUSD, HBTC, and more.
Unlike other DeFi applications, Kava is optimized specifically for financial applications, which makes Kava arguably one of the most capable and secure environments for DeFi today. $1.3 billion in assets are managed on the Kava chain and in over a year of operation, Kava has never had a single hack or money security issue due to its tight security design.
Following Kava’s recent mainnet upgrade, the HARD multi-chain money marketplace with new lending capabilities will continue to be of great value in the Kava DeFi ecosystem, including other DeFi facilities Kava is planning for the second half of the year, including AMM as well as smart investment applications, all creating a more complete DeFi service for the Kava DeFi ecosystem. In a nutshell, what Kava is going to do is not a single DeFi application product, but a Layer 1 platform that is benchmarked against the Ether ecosystem and dedicated to DeFi services.
Luffy: Well, Kava has a bigger goal and vision, and we also praise Kava for its tight security design. Speaking of security.
Luffy Q6: Last year there was a massive liquidation of the entire Defi market in the midst of the 312 market volatility, how did Kava protect its users’ assets from liquidation in such an extreme situation?
The most important parameter on Kava’s lending platform is the minimum collateral ratio, which is the ratio of collateral assets to lent assets, and this data determines whether the system triggers liquidation. Currently for BTC, BNB, XRP, KAVA, and HARD, the system sets the minimum collateralization rate at 150%, which means that a user who pledges $100 in assets can only lend a maximum of $66 in USDX. For lending on the stablecoin BUSD, this collateralization rate will be relatively low, at 110%. We would advise users to set a higher collateral rate when instructing them to use Kava.
The previous liquidation problem that occurred in the market when 312 happened was that the asset crash caused a sharp increase in the number of transactions in the ethereum network and network congestion crashed the prophecy machine. This is something Kava has upgraded and optimized when integrating Chainlink prophecy machine, so that it will not be triggered by market volatility at a certain point of time to clear the market, while Chainlink also released the off-chain reporting OCR function last month to further improve the scalability and avoid the prophecy machine problem triggered by Ether congestion in extreme quotes.
However, liquidation triggered by black swan events like 312 is inevitable, so we also have a complete auction process on the Kava platform, users can participate in the auction of liquidation assets, and after the auction of assets, return the system debt, so as to reduce the risk, the specific auction process that you are interested in can be understood here: https://docs.kava.io/tools/ auction.html
Luffy: understand, about liquidation which is unavoidable, liquidation also belongs to an important part of the maintenance of the normal lending system. Let’s move on to the seventh question.
Luffy Q7: What are the upgrades after the Kava 5 main web launch and what is the relationship between Kava and HARD Protocol?
The Kava 5 mainnet will be upgraded at 11pm BST on March 31. The new mainnet will support HARD Protocol V2 version, open up the borrowing function of HARD platform, as well as optimize the cross-chain bridge function and enhance scalability and performance of Coinan.
Regarding the relationship between Kava and HARD Protocol, simply understand that Kava is a product where users and the system do lending counterparties, users pledge assets on the platform to lend Kava’s stablecoin USDX, which can be a light leverage or hedge, but need to set their own pledge rate, and need to pay attention to the possible liquidation risk when the market fluctuates drastically. HARD is a product where users and users in different asset pools for asset supply and lending. Some people deposit assets into the pool and others do lending from the pool, creating a liquid lending market.
The relationship between Kava and HARD on the application we also made a clever nesting, people in these two platforms mortgage or lending, in addition to get KAVA and HARD token rewards, respectively, more importantly from Kava lending stable coin USDX can also be deposited into the HARD application to gain revenue. This nested compound interest model is currently a popular way to get high returns.
In the future, Kava will plan more applications and trading scenarios based on these two products, so that users can get more income opportunities from the coin holding assets themselves.
Luffy Q8: Kava 6 will bring AMM services after the main web launch, what are the specific benefits for users? Also what is the role of Kava SAFU fund?
The next phase of the Kava 6 launch brings an automatic market making service (AMM) based on the Kava chain, which serves as an on-chain liquidity pool for Kava users, ensuring the exchange of various assets on the Kava network and facilitating the use of assets for other financial services. In addition Kava 6 will also launch KAVA Pledged Derivatives, an asset derived from KAVA tokens pledged on the network ensuring PoS security consensus, ensuring that more KAVA (in the form of derivatives) is given liquidity and applied to various financial services on Kava, without giving up the security and rewards that come with pre-pledging KAVA POS.
In addition, the Kava SAFU Fund, which will be launched at the same time as the above two, is called Secure Asset Fund for Users, which can be understood as a fund for the security of users’ assets, and the Kava DeFi platform has always made the security of users’ funds a top priority. The Kava SAFU fund provides additional protection for Kava users’ assets while earning revenue.
Okay, thank you Aaron for your answer, and our ninth question, a more sensitive one.
Luffy Q9: We have seen that Kava 5 had a security incident in March, how does Kava ensure network security and user assets after this incident?
Yes, there were some twists and turns during the last upgrade of Kava 5. The Kava core development team found a bug in the HARD Protocol, but it did not have any impact on the user’s money security, the security committee set up by Kava found the problem at the first time and suspended the main network upgrade and operation, we also did a rollback post-incident analysis for this, you can check the whole You can see the whole incident analysis in this article.
We will then mitigate the lack of estimated time to fix the audited code during the audit process by allocating more time up front, and secondly by ensuring that the code is frozen for the duration, and that if the core state machine code is “unfrozen” for any reason, then the release schedule is updated accordingly. In this case, we have an incentivized test net that runs concurrently with the audit. After the audit and fix are combined, the additional incentivized test net will most likely catch the bug, and this is something we will add in future development.
In addition, we will develop a “rollback” manual for each release and communicate it internally so that participating nodes have a routine to follow in the event of a release rollback.
Building decentralized financial applications presents many development challenges, and we will continue to learn from our mistakes, evolve best practices, and study the experiences of industry-leading applications to see if there is room for improvement.
Luffy: Yes, the road ahead will not be easy, and I believe that after this event has added more experience in governance and development to the team and the community, Kava will be more robust and the Kava community will be more mature! Let’s move on to the next question.
Luffy Q10: How does Kava community governance unfold, and what is Kava’s philosophy of community governance?
About Kava community governance, you can first understand that Kava network has 3 native tokens, equity and governance token KAVA, HARD and decentralized stable coin USDX. KAVA token is the equity and governance token of the network, which is used to ensure network security and governance voting.
When the lending side of HARD Protocol version V2 goes live on March 31, borrowers will be able to pledge tokens backed by the platform and borrow at variable rates. Both liquidity providers and borrowers will also receive the protocol’s governance token, HARD, as a reward for their contributions to the platform. HARD holders will also be given access to the governance of the platform and will play a key role in the governance of the agreement, such as they can vote to change the interest rate, the number of HARDs allocated to users and add backing tokens.
Both KAVA and HARD holders will be able to vote on the system parameters of their respective applications.
Luffy Q11: What other project developments and progress can Kava share with you in the near future?
Kava is a growing team, and is also developing new technical operations forces based on product and development needs. In addition to the new financial modules such as AMM and smart advisor applications and the ethereum cross-chain bridge, as we mentioned above, we will also establish connections with other leading DeFi lending platforms in the near future to allow more assets to participate in the Kava application.
Meanwhile, a huge advantage of Kava over other DeFi platforms is our integration with centralized financial institutions. From last year to March this year, Kava has developed a series of innovative DeFi+CeFi products integrated with Coinan and Firecoin. The first 500 HBTC credits were sold out within 5 minutes.
Kava will also maintain this development strategy in the future, establishing more value circulation scenarios with centralized financial institutions and providing seamless and smooth DeFi products for those transaction users who have never participated in DeFi before.
@ChaseBoy: How does Kava plan for the traditional financial markets? How to achieve the interface between cryptocurrency market and traditional financial market and attract traditional financial market to join?
First of all, Kava has recently cooperated with some foreign fiat channels such as moonpay and crypto.com. After that, there will be more supported fiat platforms, so there will be more opportunities to cooperate with traditional finance.
Then we are also working with some foreign banks and more centralized platforms, such as blockfi and Celsius, to study cooperation opportunities, so that we can bring defi to cefi platform to let their users experience some DeFi.
@Fatty: How do you plan to improve the existing efficiency and reduce the cost of DeFi in the market in a decentralized way, considering how affordable traditional finance is at the moment?
At that time, we considered whether to issue new coins or put all the features in KAVA, but we felt that because KAVA is the governance of the main network and CDP products, and the governance of HARD may be in conflict.
This may cause some governance problems regarding the future development of HARD, so we decided to separate the rights of governance so that it will be the best.
@SunshineatStormAfter2021: May I ask how big is your current user base?
We hold more than 100,000 KAVA tokens. This is last year’s data because it includes data from centralized exchanges. The number of holdings is definitely higher now.
We have opened more than 2,000 CDPs for our products, and all our TVLs are approaching $350 million.
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