Original title: “Dialogue with Satoshi Mamoto: How does Harvest build a financial Lego in the Kava ecosystem”
Finishing: Satoshi Mamoto
On October 13, 2020, Satoshi Mamoto, Kava, Harvest and Winkrypto jointly organized an AMA event. This AMA invited Kava & Harvest CEO Brian Kerr, who introduced Harvest’s vision and working principles to everyone The value capture and development progress of its tokens.
First, let’s take a look at the wonderful answers of the guests in this AMA:
- Kava is a complete Layer 1 blockchain. Its purpose is to provide an infrastructure for cross-chain DeFi applications while avoiding many of Ethereum’s traps, such as high gas fees, oracle failures, and other network congestion conditions
- Harvest opened the first of Kava blockchain application integration. In the future, all applications can use the security, price-feeding services and cross-chain functions of the Kava chain to provide the world with open and decentralized financial services
- Harvest is also to increase the value of the Kava platform and provide enhanced yields for Kava’s native stable currency USDX. Users can borrow while supplying assets, and interest flows from borrowers to suppliers.
- Kava’s scalable design means it can support multiple applications. We are building Kava into a DeFi-focused Hub that can support many applications and many areas to connect to it.
The following is the text content of this AMA, Enjoy it!
Q1: From your perspective, can you briefly introduce Kava and Harvest to our community friends? How do they work, what is their vision and mission?
Many people think that Kava is the “MakerDAO” in the cross-chain DeFi ecosystem, but it is much more than that. MakerDAO is just a smart contract. Kava is a complete Layer 1 blockchain. Its purpose is to provide infrastructure for cross-chain DeFi applications, while avoiding many of Ethereum’s traps, such as high gas fees, oracle failures, and other network congestion.
Harvest has opened a precedent for Kava blockchain application integration. In the future, all applications can use the security, price-feeding services and cross-chain functions of the Kava chain to provide the world with open and decentralized financial services.
Regarding how it works, there are three main sections on Harvest:
- Liquidity Supply (Supply)-You can safely deposit digital assets on Harvest and earn interest
- Borrow-You can mortgage your digital assets on the Harvest platform to lend to others
- Earn from mining (Earn)-both deposit users and borrowers can earn HARD, Harvest’s governance token
Q2: The last time you came to our community is a year ago. In the year since Kava was founded, how did the blockchain and DeFi feel about you? Why did you have the idea of creating the Harvest project?
I have been following the success of Ethereum closely. Kava’s original idea came from our collaboration with Ripple, where we customized a design specifically to create a CDP system for XRP. MakerDAO is a good reference for us, because it had real users and adoption before 2018.
Similarly, in the past year, we have paid close attention to the rapid development and iteration of the Ethereum field. Although DeFi has achieved tremendous development, its success can be distilled into a very simple relationship between the two initial projects MakerDAO and Compound.
MakerDAO promoted the creation of DAI, which is a stable currency supported by encryption, and users then put their DAI in Compound to obtain greater benefits. This synergy has greatly increased the supply of DAI and led to the lock-in of billions of assets between the two agreements.
Similar to this relationship, Harvest also aims to increase the value of the Kava platform and to provide an enhanced rate of return for Kava’s native stable currency USDX. Users can borrow while supplying assets, and interest flows from borrowers to suppliers.
In terms of cross-chain, all assets (except KAVA and HARD) are derived from other chains and can be used as collateral for the entire Kava application.
Q3: Some people say that Kava is benchmarking MakerDAO and Harvest is benchmarking Compound. Do you agree? For Harvest, who is its true competitor? What are the main advantages of Harvest?
In recent months, the growth of the money market industry has set a new record, and a total of 4.6 trillion cash is currently stored in a few money markets. As more and more investors put cash into the currency market, they are also looking for digital assets to hedge against the new risks brought by the ending epidemic and the debt cycle of large companies.
Compound and Aave provide currency markets for users of Etheruem-based assets such as ETH and erc-20s. Thanks to Kava’s cross-chain infrastructure, Harvest.io can provide the world’s first cross-chain currency market for BTC, XRP, BUSD and other assets.
Although the designs between these products are similar, the assets available on Harvest are very different from those on Ethereum. This is a strong competitive advantage for Harvest.
In addition, Harvest will have exclusive access to native Kava assets such as USDX, KAVA and HARD. Since it is built on Kava, it also avoids all crazy gas fees and slow transaction times.
Q4: Why not create a separate Harvest “Zone” and choose to base it on Kava?
This is a very good question. Building a zone or a new blockchain will create unnecessary friction (delay and cross-chain exchanges are the biggest).
Kava’s scalable design means it can support multiple applications. We are building Kava into a DeFi-focused Hub that can support many applications and many areas to connect to it.
The community also spent millions of dollars and more than a year of development time to create the infrastructure that exists on Kava-such as a powerful validator set, a price-feeding module with third-party oracles, and cross-chain bridges . If these components are not reused to launch new cross-chain DeFi applications, it would be stupid and expensive.
With the foundation provided by Kava DeFi Hub, developers can focus only on the code required by the application and skip all hard infrastructure issues. We believe that this will allow developers to quickly build and deploy many cross-chain DeFi applications in the coming months.
Q5: How is the token economic model of Harvest’s native token $HARD designed? For token holders, what is the role of tokens?
The main purpose of issuing Harvest’s cross-chain currency market governance token $HARD is to put Harvest’s future in the hands of users. It is you token holders that ultimately determine the future of Harvest.
Each week, holders of $HARD can decide which assets are supported and the amount of incentives each asset market receives.
In the future, $HARD may also accumulate fees generated by the platform. In the growth phase, zero expenses make sense, but in the long run, given that the money market operates with billions of funds, accrued expenses can be considerable.
Q6: What is the initial token distribution method for $HARD? How is its liquidity mining designed? What do we need to prepare for participation?
The maximum supply of HARD tokens is 200 million. The distribution method is as follows:
- 40%-Incentives for asset suppliers and borrowers
- 25%-Foundation
- 20% – Kava Stakers
- 10%-team
- 5% – IEO
The initial total supply is 80 million, and 20% is provided to Kava Stakers to reward them for providing security and infrastructure for applications. 100 million is in the hands of community governance and gradually given to participants as a liquidity reward.
Q7: Why not adopt KAVA token governance? And how can KAVA holders participate in the development of Harvest?
When designing Harvest, we carefully evaluated whether KAVA tokens can also be used to manage Harvest applications. Three main reasons prevented this idea:
- The development of Harvest needs to be driven by the participants who use it. We believe that for long-term success, users must be fairly distributed. The users of the Harvest money market may be the same as the users holding KAVA today, or they may not be the same, which gives us reason not to confuse the governance of the Kava blockchain with the governance of the Harvest application
- In today’s yield-oriented DeFi market, it is necessary to have incentives for suppliers and borrowers. If we use KAVA tokens for incentives on Harvest, we need to inflate KAVA to more than 50% of the supply. Given that not all KAVA holders will become participants in Harvest, inflation KAVA will intentionally dilute the value of existing KAVA holders, which is unacceptable to a certain extent.
- Finally, KAVA tokens need to be retained as a reserve asset responsible for the capital restructuring of the lending platform. Confusing its value in multiple use cases will cause a series of problems and may destroy its value as a reserve asset.
Q8: How is Harvest’s governance mechanism designed? What are the main decisions made by $HARD token holders to participate in the governance of the project?
HARD governance is responsible for currency market parameters. This includes:
- Which assets can enter the currency market
- What supply caps are allowed
- What are the incentives for lenders and borrowers
Q9: What assets will Harvest initially support lending? And how will the number of supported tokens be expanded in the future?
When the mainnet is released on October 15, the native assets USDX, KAVA and HARD will be fully operational in the currency market. We estimate that it will take about 24 hours to build and operate the cross-chain bridge, by which time BTC, XRP, BNB and BUSD will become available.
We may further expand assets in the next few weeks, including USDT, LINK, HT, etc. Of course, the approval of these new assets will be determined by the governance.
Q10: What is the overall development progress of Harvest’s project? What are the next steps?
Harvest version 1 has been fully reviewed. It will be launched with the Kava-4 upgraded mainnet on October 15th. This version includes HARD token creation, transfer, incentive distribution, and supply-side components, so that users can start supplying digital assets to the money market and earn incentives.
Version 2 of Harvest is scheduled to launch on December 30th. This upgrade will include the lending side of the currency market and is a fully functional version of Harvest.
The following are free questions from the members of the Satoshi Mamoto community to the guests:
Q11: When faced with extreme market conditions, what is the Harvest liquidation mechanism?
Similar to Kava’s CDP, the collateral is auctioned at the discount rate of the borrowed asset, which ensures that the debt collateral is always in a state of balance.
Q12: Will there be other DeFi projects based on Kava in the Cosmos ecosystem in the future? How do they build DeFi Lego?
Kava’s blockchain will become the home base for more cross-chain DeFi applications-some are built on the Kava first-layer blockchain, and some are connected to the Kava blockchain through a bridge protocol (such as Cosmos IBC).
In general, I hope to see a stronger ecosystem than Ethereum, because when you combine the capabilities of different blockchains, a stronger ecosystem may be produced.
Q13: Is there any relationship between Harvest.io and Harvest.Finance?
The two have absolutely nothing to do. Harvest.finance is a fork project based on Ethereum, designed for “DeFi farming enthusiasts”. Harvest.io is a fully audited cross-chain DeFi application on the Kava blockchain.
Harvest.Finance is an anonymous product, and Harvest.io is carefully crafted by Kava Labs.
