Everstake is pleased to be in the active set of validators for the Kava Chain, which was conceived as a marriage between Cosmos and Ethereum of sorts. Since Everstake native staking solution will soon be available, it stands to reason that potential delegators would be interested in learning about this ecosystem before deciding on whether to stake KAVA.
This article explores the intricacies of the Kava Chain, laying out its fundamental aspects, operations, and notable characteristics.
What Is KAVA Chain
Kava Chain is a Layer-1 blockchain integrating the swift scalability offered by the Cosmos SDK with the extensive developer support found in the Ethereum ecosystem. With its proprietary architecture, Kava promises developers the tools and environment to design solutions fit for the next generation of blockchain applications.
The roots of Kava trace back to 2018, when it was co-founded by Brian Kerr, Ruaridh O’Donnell, and Scott Stuart. They designed a Collateralized Debt Position (CDP) product akin to that in MakerDAO but aimed at facilitating cross-chain DeFi solutions. Kava was envisioned to bring foundational DeFi services to significant market chains, such as Bitcoin, Ripple, and Binance, which had limited DeFi options. By October 2019, Kava made substantial strides, raising $3 million worth of BNB, which translated to 6.52 million KAVA tokens, through an Initial Exchange Offering (IEO) on Binance Launchpad. Progressing steadily over the subsequent years, as of early September 2023, the Kava Chain boasted a total value locked (TVL) of $196.28 million, positioning itself 12th in TVL rankings across all blockchains.
At the heart of Kava's operations is its unique proprietary architecture. This approach allows developers to employ the Ethereum Virtual Machine (EVM) or the Cosmos SDK for their projects, which work akin to the two brain hemispheres, each optimized for specific purposes. The Ethereum Co-Chain provides an EVM-compatible setting, aiding Solidity developers and dApps to harness the scalability and security of Kava. On the other hand, the Cosmos co-chain offers a secure, scalable connection to the broader Cosmos ecosystem, facilitated through the IBC protocol.
Linking these two distinct environments is the Translator Module, a bridge ensuring both co-chains function cohesively. Put simply, Kava achieves a harmonious blend of Ethereum and Cosmos via its Layer-1 architecture.
The Kava Native Token
Central to Kava's ecosystem is the KAVA token, which plays pivotal roles in security, governance, and network functionalities. Its primary purposes are as follows.
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Security: The top 100 nodes responsible for block validation are determined by a stake in KAVA tokens. Validators are incentivized through Kava block rewards and a share of the network's transaction fees. Still, they're also held accountable with strict slashing conditions for non-compliance or errors.
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Governance: KAVA plays a vital role in network governance. Token holders can propose and vote on crucial network parameters, ranging from the types of supported assets, debt limits, fees, and even treasury allocation decisions.
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Incentives: KAVA issuances are strategically used to incentivize the growth of the network. Top projects across chains receive these incentives to foster growth, stimulate competition, and bolster the health of the Kava ecosystem. Users can gain inflationary rewards via Kava Earn and Pools or borrow and lend through Kava Lend.
Tokenomics and Innovative Programs
The Kava Chain's foundation rests on two primary tokens: KAVA and USDt. While KAVA functions as the native governance and utility token, USDt is the decentralized stablecoin within the ecosystem.
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KAVA: Functioning as described above, KAVA has an uncapped total token supply, reflecting its expansive role in the ecosystem.
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USDt: One of the most popular stablecoins in the world, it grants the Cosmos ecosystem access to Tether USD natively issued on an IBC-compatible blockchain. It was introduced to the Kava on June 21, 2023, and has significantly strengthened its role in the crypto ecosystem, effectively inviting Kava to the small club of blockchains supporting one of the most popular stablecoins out there—others include the likes of Ethereum, Tron, and EOS. The effect of introducing UDSt goes beyond the Kava Chain alone and tackles known Cosmos limitations such as fragmented liquidity and high volatility.
To attract top-tier builders, Kava introduced the Kava Rise program in conjunction with the Kava 10 upgrade. Over four years, the program will dispense 200 million KAVA on-chain as follows:
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Developer Rewards: The top 100 Kava protocols will receive 63.5% of the KAVA rewards per block.
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Stakers: They receive 37.5% of the KAVA block rewards should they comply with the eligibility criteria.
These distributions are based on monthly usage metrics, predominantly the time-weighted TVL (Total Value Locked) of a protocol relative to the combined TVL of the top 100 protocols. The effect of the Kava Rise program is arguably palpable, with major protocols like Curve, Sushi, and Beefy Finance joining the network. These additions have significantly boosted Kava Network's TVL.
Governance and Oversight
The Kava DAO shoulders the governance of the Kava Chain. While Kava stakers and validators mainly comprise the DAO voters, anyone can table a proposal if they wish as long as they have a 1,000 KAVA deposit. Although a significant focus of Kava's governance revolves around on-chain developer incentives distribution, its scope isn't confined. Proposals can address any facet of the Kava Chain. Mintscan offers insights into the voting patterns of Kava DAO members and furnishes detailed data on the top 100 Kava validators.
On the other hand, the Kava Foundation is entrusted with the crucial tasks of securing and fostering the growth of the Kava Chain. It aids in channeling a formidable $750 million in assets from the Kava Community Pool, which is under the governance of the Kava DAO. This pool has been established with a threefold objective:
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Proof-of-Stake (PoS) Security: Ensuring the integrity of the consensus mechanism.
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Infrastructure Security: Solidifying the network's foundational components.
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Financial Reserve Security: This layer specifically funds the Kava Rise Program, underlining its significance.
With over 110 protocols integrated and counting, Kava's on-chain activity is seeing a noticeable surge. This growth is supplemented by substantial advancements in infrastructure and developer resources, supporting Kava’s general appeal in the DeFi realm.
Kava’s Progress and Plans
During the first quarter of 2023 alone, the Kava ecosystem witnessed a significant growth rate in the Cosmos-based and EVM decentralized apps (dApps) launched on its network. This uptick in demand may signify the industry’s growing need for an increase in speed, security, and performance.
To address these demands, Kava 14 brings the ‘internal bridge,’ designed to provide secure interoperability between the Cosmos and Ethereum ecosystems.
Earlier, Kava 13 upgrade introduced a series of architecture enhancements while equipping developers with the necessary tools to expedite their protocols and enrich user experience within the Kava ecosystem. Moreover, a significant enhancement in EVM software enabled parallelizing request handling. This laid a foundational structure for sharding node databases, a crucial step to manage the escalating state brought about by the surge in transactions and usage.
There are other areas for improvement that the community and the developers have identified.
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The introduction of sharding and sidechain technology is pivotal in enhancing Kava's scalability and accommodating the influx of new users and transactions.
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There's an active push to further the interoperability with other blockchains, promoting a more unified and interconnected blockchain universe.
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Kava is looking to finetune its security protocols to offer users an even more secure environment.
Those notions are set for updates in 2023 and beyond. In particular, Kava 14 update sets up an internal bridge to ensure a better, more secure way to transfer native Cosmos assets to and from Kava EVM.
In general, however, Kava's roadmap is hinged on three main “pillars”: adoption, security, and governance. Upholding those pillars and concluding tier-one partnerships is at the heart of Kava’s development strategy, which is expected to fuel the ecosystem’s rapid adoption.
With its unique EVM + Cosmos design, Kava facilitates the integration of native stablecoin issuers. This fosters an environment where all major bridges and exchanges can seamlessly integrate with Kava, ensuring streamlined onboarding and offboarding processes. The focus on crafting bridges to the blockchains that may currently underdeliver DeFi services to their token holders can give Kava an edge.
Additionally, there’s notable enthusiasm around KinetixFi, a DeFi hub and a decentralized exchange for the Kava community and beyond.
Other notable projects working on Kava include Abracadabra which issued the stablecoin MIM and launched a MIM/USDt liquidity pool on the Kava blockchain, and Hover, which is a DeFi market working on institutional lending for Kava, Cosmos, and more.
Finally, the popular Exodus Wallet has recently added the staking option for Kava. Transitioning to the Exodus provides you with a user-friendly interface and the added benefit of their innovative “Restake” feature, accessible with 1 swipe. This feature allows you to compound your staking earnings effortlessly, potentially boosting your staking APY by approximately 2%. Don't miss out on this opportunity to optimize your returns and manage your KAVA tokens more efficiently.
Conclusion
In summary, Kava's unique blend of scalability, security, and a clear roadmap, combined with key strategic partnerships, shows its prospect to play a noticeable role in the DeFi realm, mainly due to its potential of combining acceptable scalability with enhanced security and high interoperability.
For more insights and updates, consider subscribing to Kava’s Blockchain Manager on X. If you have any questions regarding staking with Everstake or how and when you can stake KAVA, check out this dedicated Everstake & Kava page. Here you can stake your KAVA with Everstake in 3 clicks.
