What is Kava Protocol?
Kava Chain is a decentralized, permissionless, censorship-resistant blockchain built with the Cosmos SDK. This means it operates much like other Cosmos ecosystem blockchains, and is designed to be interoperable between chains.
Learn more about Kava
Kava Protocol is the set of rules and behaviors built into the Kava Chain that enables advanced Decentralized Finance (DeFi) functionality like permissionless borrowing and lending.
The KAVA token is an asset on the Kava Chain. Kava Chain is secured by its token KAVA and it is used across the full chain as a transport and a store of value.
What is Kava Lend?
Kava Lend is an application that runs on Kava blockchain. It builds upon the Kava Protocol and adds new functionality, expanding the Kava Ecosystem to include an autonomous money market protocol.
The HARD token is an asset on the Kava Chain. It is given as a reward for supplying and borrowing on Kava Lend.
What tokens and assets can be use on the Kava Blockchain?
Native assets are tokens that originate on the Kava Chain. These currently include KAVA, HARD, SWP and USDX.
KAVA and HARD are governance tokens, meaning holders can vote on the rules of the protocols. KAVA is also used as a Proof of Stake staking asset, which ensures the finality and safety of loans on the protocol and also acts as the ‘lender of last resort’ in certain situations. USDX is a stable coin loosely pegged to the US Dollar. It is minted when a Kava CDP is opened. The exact value of USDX is determined by market forces. Read more
Other tokens can also be issued on the Kava Chain. These non-native asset tokens are often used to “wrap”, “tokenize,” or represent assets on other chains. For example:
Binance Coin (BNB) can be represented as a token on Kava Chain. During a cross-chain swap, BNB(Kava) coins are created or destroyed (burned) on Kava Chain, and frozen/unfrozen on Binance Chain.
Assets from other blockchains are considered non-native assets. This includes coins from other Cosmos ecosystem blockchains, which can connect to the Kava Chain through protocols like Cosmos IBC.
Be aware that KAVA (native) has been tokenized on other blockchains, namely Binance Chain. KAVA (BEP-2) is a token that exists solely on Binance Chain. Do not send KAVA (BEP2) directly to the Kava Chain.
represents BTC which has been tokenized on Binance Chain. This BNB token has also been tokenized on KAVA, making BTCB (Kava) a doubly tokenized representation of BTC.
How do I access Kava?
The Kava Platform or Kava Web App, which is live at app.kava.io, is a user-friendly hub for interacting with the protocol.
Similarly, Kava Lend can be found at app.kava.io/lend.
Where can I learn more?
Here are great introductory readings:
Check out our other articles on Medium.
Does Kava have smart contracts?
Like most Cosmos ecosystem blockchains, the automated transaction behaviors known as smart contracts are hardcoded into the protocol. They are referred to as “modules” in the Cosmos Ecosystem. The Kava App uses a special kind of module called a CDP.
What is a CDP? How do I mint USDX?
A CDP or Collateralized Debt Position is a new kind of automated loan contract, used to create “stablecoins” that are pegged to a fiat currency like the US Dollar. The lender puts up a crypto asset as collateral to ‘mint’, or create new stablecoins.
For example, on Kava, users can stake BNB as collateral to mint USDX. The collateral is locked while the position is open. The lender unlocks their collateral once they repay the loan amount plus accumulated interest.
Minting USDX is as simple as supplying your asset to Kava and clicking “Borrow.” The lender can only take out 2/3rds of the collateral amount. Read more here
Lenders should keep in mind that if the price of the collateral asset drops below the liquidation price, their CDP will be liquidated. Therefore, it is advised not to mint more than 1/2 of the value of the collateral. The “Safe Max” button included in the app goes by this recommendation.