{"id":10501,"date":"2023-05-14T14:44:47","date_gmt":"2023-05-14T14:44:47","guid":{"rendered":"https:\/\/www.bitnovo.com\/blog\/?p=10501"},"modified":"2022-05-17T08:31:41","modified_gmt":"2022-05-17T08:31:41","slug":"what-is-kava-at-defi","status":"publish","type":"post","link":"https:\/\/www.bitnovo.com\/blog\/en\/what-is-kava-at-defi","title":{"rendered":"What is Kava at DeFi?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_75 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Alternar tabla de contenidos\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-kava-at-defi\/#what_is_kava\" >What is Kava?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-kava-at-defi\/#benefits_of_kava_protocol\" >Benefits of Kava Protocol<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-kava-at-defi\/#cosmos_paradigm\" >Cosmos Paradigm<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-kava-at-defi\/#kava_modules\" >Kava Modules<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-kava-at-defi\/#hard_protocol\" >Hard Protocol<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-kava-at-defi\/#kava_problems\" >Kava problems<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Tiempo de lectura:<\/span> <span class=\"rt-time\"> 3<\/span> <span class=\"rt-label rt-postfix\">minutos<\/span><\/span><p><strong>DeFi,\u00a0<\/strong>or\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-defi-o-decentralized-finance\/\">decentralized finance<\/a>, is a very broad ecosystem and there are thousands of solutions and applications. We can find from\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/stablecoin-what-is\/\">stablecoins<\/a>\u00a0to\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/cex-and-dex-what-are-the-differences\/\">decentralized exchanges<\/a>\u00a0that work with Automated Market Makers.<\/p>\n<p>&nbsp;<\/p>\n<p>This time we are going to talk about\u00a0<strong>Kava<\/strong>, a blockchain designed specifically for<strong>\u00a0DeFi applications.<\/strong><\/p>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<h2><span class=\"ez-toc-section\" id=\"what_is_kava\"><\/span><strong>What is Kava?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<div class=\"is-divider divider clearfix\"><\/div>\n<p>Kava is a blockchain\u00a0<strong>PoS<\/strong>\u00a0(<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-proof-of-stake-and-how-does-it-work\/\">Proof of Stake<\/a>) developed using the\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-cosmos-atom-the-key-to-interoperability\/\">Cosmos<\/a>\u00a0<strong>SDK<\/strong>\u00a0(Software Development Kit)\u00a0<a href=\"https:\/\/es.m.wikipedia.org\/wiki\/Framework\">framework<\/a>. Next we will see what this framework is all about. For now, you just need to know that the<strong>\u00a0focus<\/strong>\u00a0of the Kava blockchain is\u00a0<strong>DeFi.<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p>Kava\u2019s most relevant application is\u00a0<strong>Kava Protocol<\/strong>, a\u00a0<strong>stablecoin lending platform<\/strong>. Kava Protocol\u2019s stablecoin is called\u00a0<strong>USDX<\/strong>\u00a0(it maintains parity with the US dollar) and is<strong>\u00a0backed by different cryptocurrencies<\/strong>\u00a0that have been\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-tokenization-or-tokenization-process-quick-guide\/\">tokenized<\/a>\u00a0on Kava.<\/p>\n<p>&nbsp;<\/p>\n<p>This allows users of some cryptocurrency to use it in Kava (in its tokenized version) to borrow, or issue, USDX. The money used to\u00a0<strong>back a loan is called collateral<\/strong>. In the case of Kava Protocol, up to<strong>\u00a067% of the value of the collateral<\/strong>\u00a0can be borrowed.<\/p>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div id=\"image_954797993\" class=\"img has-hover x md-x lg-x y md-y lg-y\">\n<div class=\"img-inner dark\"><img fetchpriority=\"high\" decoding=\"async\" class=\"attachment-large size-large lazyloaded\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/08\/Que-es-KAVA1.jpg\" sizes=\"(max-width: 768px) 100vw, 768px\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/08\/Que-es-KAVA1.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/08\/Que-es-KAVA1-300x205.jpg 300w\" alt=\"Qu\u00e9 es Kava\" width=\"768\" height=\"526\" data-srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/08\/Que-es-KAVA1.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/08\/Que-es-KAVA1-300x205.jpg 300w\" data-src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/08\/Que-es-KAVA1.jpg\" data-sizes=\"(max-width: 768px) 100vw, 768px\" \/><\/div>\n<\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<h3><span class=\"ez-toc-section\" id=\"benefits_of_kava_protocol\"><\/span><strong>Benefits of Kava Protocol<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"is-divider divider clearfix\"><\/div>\n<ul>\n<li><strong><a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-leverage-in-trading\/\">Leverage<\/a>: Borrowers<\/strong>\u00a0(those who borrow) can exchange USDX for more cryptocurrency collateral. By doing this the borrower is creating a<strong>\u00a0leveraged position<\/strong>. With this type of position one becomes<strong>\u00a0more exposed to the price<\/strong>\u00a0of an asset, that is, profits increase, but so do losses. For example, if Bitcoin drops 50% and you were leveraged x2, you will lose 100%. These operations with\u00a0<strong>more risk and potential profit<\/strong>\u00a0are widely used by traders.<\/li>\n<li><strong>Interest on stablecoin: USDX holders earn 4.5% per annum<\/strong>\u00a0from borrowers.<\/li>\n<li><strong>Rewards in KAVA:\u00a0<\/strong>The first borrowers will receive<strong>\u00a0interest in KAVA<\/strong>, the<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-a-cryptocurrency-governance-system\/\">\u00a0governance currency<\/a>\u00a0of Kava Protocol.<\/li>\n<li><strong>Payments<\/strong>\u00a0in stable currencies: USDX can be used as a currency for payments.<\/li>\n<\/ul>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div id=\"image_822941943\" class=\"img has-hover x md-x lg-x y md-y lg-y\">\n<div class=\"img-inner dark\"><img decoding=\"async\" class=\"attachment-large size-large lazyloaded\" src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/08\/Que-es-KAVA.jpg\" sizes=\"(max-width: 768px) 100vw, 768px\" srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/08\/Que-es-KAVA.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/08\/Que-es-KAVA-300x205.jpg 300w\" alt=\"Qu\u00e9 es Kava\" width=\"768\" height=\"526\" data-srcset=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/08\/Que-es-KAVA.jpg 768w, https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/08\/Que-es-KAVA-300x205.jpg 300w\" data-src=\"https:\/\/www.bitnovo.com\/blog\/wp-content\/uploads\/2021\/08\/Que-es-KAVA.jpg\" data-sizes=\"(max-width: 768px) 100vw, 768px\" \/><\/div>\n<\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<h3><span class=\"ez-toc-section\" id=\"cosmos_paradigm\"><\/span><strong>Cosmos Paradigm<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"is-divider divider clearfix\"><\/div>\n<p><strong>Cosmos SDK\u00a0<\/strong>is a framework for building<strong>\u00a0PoS blockchains<\/strong>\u00a0like\u00a0<strong>Cosmos Hub<\/strong>\u00a0or\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-a-proof-of-authority\/\">Proof of Authority<\/a>\u00a0blockchains. But its development paradigm is completely different from blockchains like\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-ethereum-eth-and-how-does-it-work\/\">Ethereum<\/a>.<\/p>\n<p>&nbsp;<\/p>\n<p>In Ethereum we have a\u00a0<strong>Virtual Machine<\/strong>\u00a0(<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-the-ethereum-virtual-machine\/\">EVM<\/a>) that provides a\u00a0<strong>programming language<\/strong>\u00a0for\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-a-smart-contract\/\">smart contracts<\/a>\u00a0and\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-a-dapp\/\">decentralized applications<\/a>. It is a\u00a0<strong>general purpose<\/strong>\u00a0blockchain.<\/p>\n<p>&nbsp;<\/p>\n<p>However, the Cosmos paradigm consists of\u00a0<strong>creating blockchains designed for a specific application<\/strong>. Instead of creating applications on a general purpose blockchain, a blockchain is created for each application.<\/p>\n<p>&nbsp;<\/p>\n<p>This is why Cosmos SDK works with\u00a0<strong>modules<\/strong>, which can be\u00a0<strong>added to the blockchain<\/strong>\u00a0<strong>to add functionality<\/strong>\u00a0(like a Minecraft plug-in or mod). Also an important focus, not only of Cosmos, but of\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-third-generation-blockchain\/\">next-generation blockchains<\/a>, is<strong>\u00a0interoperability.<\/strong><\/p>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<h3><span class=\"ez-toc-section\" id=\"kava_modules\"><\/span><strong>Kava Modules<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"is-divider divider clearfix\"><\/div>\n<p>The modules used by the Kava blockchain to provide DeFi functionality are:<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li><strong>Collateralized Debt Position (CDP) module,<\/strong>\u00a0the lay block of loans.<\/li>\n<li><strong>Auction Module,\u00a0<\/strong>to guarantee the stability of the currency. These auctions are used, for example, to\u00a0<strong>liquidate positions<\/strong>\u00a0in case the\u00a0<strong>value of the collateral<\/strong>\u00a0falls sharply.<\/li>\n<li><strong>Pricefeed module<\/strong>\u00a0to access from the blockchain to\u00a0<strong>cryptocurrency prices<\/strong>, provided by\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-chainlink\/\">Chainlink<\/a>\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-a-blockchain-oracle\/\">oracles<\/a>. Thanks to this, the blockchain can calculate the price of the collateral at any given moment.<\/li>\n<li><strong>BEP3 module,<\/strong>\u00a0to enable cryptocurrency\u00a0<a href=\"https:\/\/www.bitnovo.com\/blog\/en\/what-is-an-atomic-swap\/\">swaps<\/a>\u00a0between the Kava blockchain and other blockchains.<\/li>\n<li><strong>Incentive Module,\u00a0<\/strong>which determines the amount of\u00a0<strong>rewards<\/strong>\u00a0(in KAVA) that borrowers will receive.<\/li>\n<\/ul>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<h3><span class=\"ez-toc-section\" id=\"hard_protocol\"><\/span><strong>Hard Protocol<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"is-divider divider clearfix\"><\/div>\n<p>In addition to Kava Protocol, there is\u00a0<strong>Hard Protocol<\/strong>, another financial product that allows you to\u00a0<strong>make loans with different cryptocurrencies<\/strong>\u00a0(and earn profitability by doing so).<\/p>\n<p>&nbsp;<\/p>\n<p>In the same way that in Kava Protocol we used KAVA as a<strong>\u00a0governance token<\/strong>\u00a0and to\u00a0<strong>incentivize<\/strong>\u00a0users, in Hard Protocol we use\u00a0<strong>HARD.<\/strong><\/p>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<div class=\"is-divider divider clearfix\"><\/div>\n<h3><span class=\"ez-toc-section\" id=\"kava_problems\"><\/span>Kava problems<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"is-divider divider clearfix\"><\/div>\n<p>One of the problems with Kava, or rather USDX, is that this type of\u00a0<strong>stablecoins are not really stable<\/strong>. In the specific case of\u00a0<strong>USDX<\/strong>, it has reached a price of\u00a0<strong>0.62 dollars<\/strong>, compared to the dollar it should be worth.<\/p>\n<p>&nbsp;<\/p>\n<p>In addition, when using\u00a0<strong>tokenized cryptocurrencies<\/strong>\u00a0in another blockchain, we have a\u00a0<strong>totally different security model<\/strong>. First, because we are making use of\u00a0<strong>another blockchain<\/strong>\u00a0<strong>less proven<\/strong>\u00a0and with a\u00a0<strong>lower security budget<\/strong>\u00a0(lower reward to miners or validators).<\/p>\n<p>&nbsp;<\/p>\n<p>Second, because the\u00a0<strong>tokenized asset<\/strong>\u00a0requires<strong>\u00a0trust in third parties.<\/strong>\u00a0It is therefore a kind of\u00a0<strong>debt<\/strong>\u00a0and is subject to<strong>\u00a0risks of non-payment<\/strong>\u00a0and\u00a0<strong>bugs in the code.<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p>Finally, it is\u00a0<strong>unattractive to use Kava for DeFi<\/strong>\u00a0when there are already<strong>\u00a0platforms and escosystems like Ethereum<\/strong>\u00a0with<strong>\u00a0much larger network effects<\/strong>. In fact these types of networks already have many<strong>\u00a0tokenized assets such as Bitcoin<\/strong>. In my opinion, it does not seem that Kava has a\u00a0<strong>competitive advantage<\/strong>\u00a0in DeFi over other networks, quite the opposite.<\/p>\n","protected":false},"excerpt":{"rendered":"<p><span class=\"span-reading-time rt-reading-time\" style=\"display: block;\"><span class=\"rt-label rt-prefix\">Tiempo de lectura:<\/span> <span class=\"rt-time\"> 3<\/span> <span class=\"rt-label rt-postfix\">minutos<\/span><\/span>DeFi,\u00a0or\u00a0decentralized finance, is a very broad ecosystem and there are thousands of solutions and applications. We can find from\u00a0stablecoins\u00a0to\u00a0decentralized exchanges\u00a0that work with Automated Market Makers. &nbsp; This time we are going to talk about\u00a0Kava, a blockchain designed specifically for\u00a0DeFi applications. What is Kava? Kava is a blockchain\u00a0PoS\u00a0(Proof of Stake) developed using the\u00a0Cosmos\u00a0SDK\u00a0(Software Development Kit)\u00a0framework. Next [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":7592,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-10501","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-criptomonedas"],"_links":{"self":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts\/10501","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/comments?post=10501"}],"version-history":[{"count":0,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/posts\/10501\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/media\/7592"}],"wp:attachment":[{"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/media?parent=10501"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/categories?post=10501"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bitnovo.com\/blog\/wp-json\/wp\/v2\/tags?post=10501"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}