- KAVA coin has given an outstanding return of 1910.5% since its inception.
- The 24-hour trading volume is at $131 million.
- KAVA/BTC pair is trading negative by 6.2% at 0.00015220 BTC.
KAVA coin price today is US$5.76, and the 24-hour trading volume is US$131,009,764. The price of KAVA has fallen -8.2% in the past 24 hours. Its circulating supply is 70 million KAVA coins, and the total supply is 141 million.
Kava is a cross-chain decentralized finance (DeFi) lending platform that allows users to lock up collateral in exchange for the stable currency USDX for lending—linked to the U.S. dollar. The protocol is built on Cosmos and uses the ecosystem region function to provide interoperability and support for cryptocurrencies on different blockchains, such as Bitcoin and XRP.
Kava seeks to use its decentralized lending function and USDX stablecoin to become a de facto DeFi lending protocol, thereby providing its users with more types of crypto assets. Kava coin (KAVA) is the local governance coin and shared asset of the Kava protocol. The coin holder is responsible for managing the agreement, voting on smart contracts and operating parameter proposals, protecting the network, and acting as the lender of last resort.
How Does KAVA Protocol Work?
Essentially, the Kava protocol works like a bank. It allows users to deposit their assets, obtain loans, and collect interest on loans and savings in USDX. Traditional financial institutions only provide these services after a cumbersome registration process, strict credit score checks and compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. However, due to Kava’s decentralized nature, users only need to provide their wallet address and any supported cryptocurrency to enjoy similar services.
To obtain a USDX loan, users need to go to Kava.io and provide supporting crypto as collateral to lock Kava’s smart contract. Kava currently supports BNB, BTC, BUSD, XRP, KAVA, and HARD as collateral. The amount of USDX loan generated will depend on two factors:
- The amount of collateral
- The collateral ratio of the selected collateral.
For example, if BNB is selected as collateral and the collateral ratio is 150%, an individual needs to lock in at least $1.50 of BNB to mint $1 of USDX.
This loan will generate an interest rate called a stability fee, which is payable in KAVA. If a person fails to maintain their collateral ratio above the asset’s specified liquidation ratio, will confiscate the fixed asset, and a 7.5% settlement fee will be levied.
Different assets will have different mortgage rates, stability fees, and liquidity ratios based on their respective volatility and risk status. In order to ensure that these loans are over-collateralized, Kava uses four key modules in combination with KAVA coins:
- Price feed module
- Auction module
- CDP module
- Settlement module
In essence, these mechanisms help coordinate economic incentives and market dynamics to ensure that the agreement remains stable, secure, and trustless.
What can Kava.io (KAVA) Coin do?
Kava coin provides three main functions:
- Governance
- Safety
- Capital Restructuring
For governance, KAVA holders can participate, vote, and propose changes to the Kava protocol. These changes can take the form of smart contract modification, global debt limit adjustment, or the addition or removal of mortgage assets. Voting can be conducted directly or delegated to the verifier. Many of the changes that have been implemented and proposed can be viewed for free on the Kava governance page.
In terms of security, KAVA is used to verify transactions on the network. The Proof of Stake (PoS) consensus mechanism of the protocol allows KAVA coin holders to stake their coins and verify transactions. The top 100 Stakers determined based on the proportion of their stakes on KAVA are designated as validators.
Rewards are paid to these validators in KAVA. These rewards come from transaction fees and block rewards to incentivize correct verification of the system. Non-compliance or incorrect verification will result in reduced rewards. Finally, there is the role of KAVA as a reserve currency for recapitalization. If the Kava protocol does not have enough collateral, the agreement will mint additional KAVA coins, which will sell USDX through auction.
This will happen until the system returns USDX to its target exchange rate of 1 USD. Similarly, if the Kava protocol is fully guaranteed, the loan/secured debt position (CDP) stabilization fee (paid in KAVA) will be burned. This reduces the supply of coins and increases their scarcity and value. In this way, proper governance will cause KAVA to appreciate, and vice versa.