The HARD cross-chain currency market after the upgrade of the Kava 5 mainnet will better connect large-scale centralized financial institutions and Cosmos ecological applications.
Written by: Lou Yue
In October 2019, Kava broke into the public’s sight with hot labels such as “Binance 10th Launchpad Project” and “Cosmos Eco Star”. As of 2021, with waves of market hotspots ups and downs and transitions, Kava is also constantly iterating and upgrading its products while crossing the bulls and bears, completing the ecological layout of DeFi lending and cross-chain directions. April 9th ushered in the official launch of the Kava 5 mainnet. What kind of changes will this development bring to Kava? Will Kava this year bring us more surprises?
Kava’s road to DeFi
At the beginning of the project, Kava closely followed the still popular DeFi-related concepts such as “decentralized finance, cross-chain, lending”. Facts have proved that DeFi has indeed ushered in a new era in the second half of last year. After the development of the track, Kava continued to make efforts. For example, in October last year, it launched the first cross-chain cryptocurrency market HARD Protocol, and carried out a multi-party layout in terms of ecological governance, technology and partner development.
Throughout 2020, Kava began the process of gradual transition from a single DeFi application to the DeFi underlying public chain. The entire ecology has achieved good development. Some major events of Kava throughout the year are summarized as follows:
- On February 5th, Kava launched the first cross-chain lending platform CDP testnet and began cross-chain functional testing.
- On April 30, Kava released the pre-registration page of CDP, a cross-chain mortgage lending platform, to open user testing.
- On May 15, Kava established an on-chain governance mechanism for the Stability Committee.
- On June 11, the Kava 3 mainnet upgrade was completed, and the first cross-chain lending platform CDP was launched, supporting BNB mortgages to lend USDX.
- On September 18, Kava released the next chapter of the project plan, announcing the shift from a single lending application to the DeFi hub public chain, and announcing the DeFi infrastructure that the Kava ecosystem can provide.
- On October 15th, the Kava 4 Gateway mainnet upgrade was completed to support the operation of the cross-chain currency market HARD Protocol.
- On November 6, the transfer function between Kava and Binance Chain was launched, supporting BTC, XRP, BNB, and BUSD cross-chain transaction transfers.
- On November 19th, Kava CDP lending platform and HARD Protocol began to support BTC, XRP, BNB, and BUSD assets.
A brief understanding of Kava
Simply put, Kava is a decentralized Hub that supports cross-chain DeFi applications and services. It currently provides Kava CDP lending platform and cross-chain currency market HARD Protocol, and provides DeFi services and KAVA for mainstream digital assets such as BTC, XRP, BNB, and BUSD. And HARD rewards.
From an investor’s point of view, Kava is an automated mortgage lending platform. Investors can use Kava to realize functions such as leveraged hedging and hedging of assets held in unstable market conditions.
The progress of DeFi Hub is also extremely rapid. Its assets under management have exceeded 1.3 billion U.S. dollars and are hovering near historical highs. Among them, Kava CDP has a total locked-up volume of 210 million U.S. dollars, and the total locked-up volume in HARD Protocol is nearly 100 million U.S. dollars. Next, we Will do a more in-depth understanding of Kava CDP and HARD Protocol.
Lending platform: Kava CDP
First of all, when talking about the Kava application, we must mention the Kava CDP, which was launched in June last year. This is a multi-collateral CDP. Similar to Maker, Kava also issues two tokens, natively decentralized. The stable currency USDX (similar to Dai) and the equity governance token KAVA (similar to MKR).
Specifically, users can mortgage BTC, XRP, BNB, BUSD and other tokens in a multi-collateralized debt warehouse CDP to generate stable currency USDX, which is anchored 1:1 with USD; in addition to USDX, KAVA is issued in the system Another equity and governance token, with an initial issuance of 100 million, is mainly used as an incentive and management tool for the circulation of the entire Kava network.
Kava CDP is mainly composed of four core modules: Price-feed, Auction, CDP, and Liquidator.
For the more detailed operating rules, principles and usage methods of Kava CDP, LinkWen has made a specific analysis in ” We Prepare for You the First DeFi Facilities Usage Guide in the Cosmos Ecosystem “, and interested readers can have a more in-depth understanding.
Cross-chain market: HARD Protocol
Kava, who is not satisfied with the lending market, continues to explore more use cases of DeFi after Kava CDP, and the HARD Protocol came into being.
On October 15, 2020, when Kava 4 Gateway was upgraded, it simultaneously launched HARD Protocol, a Kava-based cross-chain DeFi market protocol that supports the cross-chain of Bitcoin, Binance Chain, and Ripple. In addition to cross-chain, Assets such as BTC, XRP, BNB, BUSD, KAVA and USDX can all be borrowed and mined.
Like DeFi lending products such as Compound and Aave, HARD Protocol aims to establish a currency market that can provide short-term lending at any time for encrypted assets, but Compound and Aave are only assets based on the Ethereum network (such as assets on ETH and erc20) For users of, HARD Protocol can provide a cross-chain currency market for BTC, XRP, BUSD and other assets, which not only brings opportunities for other mainstream assets to enter the DeFi world, but also enhances the breadth and depth of the DeFi market.
The HARD Protocol has established a completely decentralized operation model due to its governance token HARD, allowing daily users to become governance controllers. With a fixed supply of 200 million HARD, the agreement will use 40% of the governance tokens. Assigned to users to provide users with ecosystem maintenance and voice. In just over a month of operation, the platform distributed rewards worth approximately US$2.6 million and successfully attracted a total value lock (TVL) of US$40 million.
Further reading: ” Launching the world’s first cross-chain currency market HARD Protocol, what else does Kava want to do? 》
The difference between Kava CDP and HARD Protocol
From the perspective of operation principle, Kava CDP acts as a lending opponent between users and the system. It mortgages assets to the CDP system to lend a stable currency USDX, which requires a mortgage rate and has a certain liquidation risk; in theory, HARD is a lending opponent between users and users. The supplier of assets deposits the assets in the fund pool for other users with borrowing needs to lend. There is no need to set a mortgage rate, and there is no damage under normal circumstances.
In addition, HARD Protocol is a product built on the Kava blockchain and the first application on Kava DeFi Hub with its own special module functions. In addition, HARD Protocol has its own token HARD and a unique distribution mechanism. When users provide or lend BTC, XRP, BUSD, KAVA and other asset liquidity on the platform, HARD tokens will be distributed to users as mining rewards .
On the basis of the Kava mortgage loan product CDP, HARD has created a nested reward mechanism within the ecosystem. In addition to providing cross-chain DeFi services for BTC, XRP, BNB, BUSD and other mainstream digital assets, it also provides the original stability in the Kava ecosystem. Coin USDX provides more value use scenarios and provides users with multiple combinations of compound interest models.
The highlight of the new year: Kava 5
Let’s switch the time back to this year. Kava started to advance the progress of Kava 5 according to the project plan at the beginning of the year. The biggest feature of Kava 5 is to support the HARD Protocol V2 version, which supports the borrowing function of the HARD platform fund pool, and other updates. It also includes Binance cross-chain bridge optimization, scalability and performance improvements, and further integrates the deep-level functions and requirements of DeFi.
In February, the Kava 5 testnet incentive event was launched, and the HARD Protocol “Crazy Money Market” contest was also launched. It attracted more than 15,000 active users in the first 5 days of the event. After the testnet ended, it was officially officially launched on April 8. Ushered in the launch of the Kava 5 mainnet.
Kava 5 will release a full-featured version of the HARD currency market V2. Large centralized financial institutions such as Huobi, Binance, Bitmax, and many other users in Cosmos will be able to use the HARD cross-chain currency market.
After the Kava 5 mainnet upgrade, it mainly has the following three functions:
- The second version of the HARD currency market: It includes HARD lending with a dynamic interest rate model, enhanced governance and optimized integration of the Chainlink cross-chain oracle
- Optimized Binance cross-chain bridge function, which has transferred more than $250 million in assets
- Scalability and performance enhancement
Kava Labs co-founder and product leader Scott said when talking about Kava 5, “We intend to let the HARD currency market compete with XVS on BSC and Aave + Compound on Ethereum. With a unique value proposition, HARD will be different in many ways. The chain provides services to users, not just a single chain.”
Cross-chain hard demand in the DeFi market
DeFi has become an indispensable development direction in the industry, but its development is inseparable from the opening up of assets. The native applications on the chain require cross-chain circulation of assets. The future development scale of DeFi is not only related to the overall market value of encrypted assets, but also Related to assets that can circulate freely.
Although some cross-chain models of anchored assets on the market have become one of the existing solutions, due to the state of segmentation between the various blockchain chains, it is very necessary to cross-chain assets in the future, so cross-chain models such as Cosmos and others Chain projects continue to attract market attention.
Recently, the cross-chain project Cosmos has completed the “Stargate” mainnet upgrade and activated the cross-chain transmission of IBC tokens. IBC has once again become a hot spot in the market. Of course, Cosmos is also inseparable from the Kava we are talking about today. Link.
The “cross-chain city” created by Cosmos
Since the establishment of the project in 2015, Cosmos has received varying degrees of attention from the market. It provides a decentralized network with expansion and interoperability. After a standard protocol (IBC) allows other blocks to be linked into the protocol, Complete information exchange. As one of the popular projects on the cross-chain track, it has always been given great expectations by the community and users.
After the upgrade of “Stargate”, the Cosmos mainnet will have the ability to cross-chain through IBC, which also means that the interconnected “blockchain Internet” will soon be born, giving the decentralized network more value and information transmission. , Through the IBC protocol, other projects will be able to connect to any other Cosmos-based blockchain and be directly used by all blockchain projects.
Cosmos once demonstrated an example of cross-chain appliances, comparing the Cosmos Hub to a port city with a trade route to the largest blockchain economy.
This is a city that has become rich and colorful due to intercommunication, a city that can provide support for the people or things connected to it. Hubs will not impose political and economic systems on residents, but compete on an equal basis to provide the best services possible. To achieve this goal together by attracting those who want to form connections, transactions, and participate (the best validators, merchants, developers, blockchain, etc.), whether they are built on Hub or not.
Cosmos does have a relatively complete ecological map. According to The Block report, as of January, the Cosmos ecosystem includes 143 projects in 17 different verticals. If you borrow the above-mentioned “port city” example, Kava’s positioning It is more like occupying the first-level hub in the Cosmos Hub city.
Kava accesses the first-level hub of “cross-chain city”
Kava is the first project to use the composability of IBC to introduce DeFi into Cosmos, and it is also the first DeFi platform built on Cosmos technology.
Kava will become more cross-chain DeFi applications and provide more options. For example, some applications are built on the Kava first-layer blockchain, and some can be connected to the Kava blockchain through a bridge protocol (such as Cosmos IBC).
With the native Cosmos Stargate upgrade, faster code execution and higher overall throughput can be achieved after integration. These changes will also benefit all other projects built on the Cosmos ecosystem that also integrates IBC, but Kava is the first to use the composability of IBC to introduce DeFi to all Cosmos projects.
Kava CEO Brian Kerr for building Kava DeFi Lego issue in the Cosmos Eco has expressed : “In general, would like to see a stronger than Ethernet Square ecosystem, because when you put the ability to combine different block chain, It may give birth to a stronger ecosystem.”
As the native DeFi solution and DeFi center of Cosmos, Kava will usher in huge potential after upgrading and integrating IBC. After the HARD Protocol V2 version is launched and the Kava 6 mainnet (automatic market making service-AMM will be released) launched in the second quarter, Kava is expected to become the first-level hub of the Cosmos ecosystem.
Extended reading: ” Kava announces that it will integrate IBC and position it as the DeFi center of Cosmos “
Safety
The preliminary review of the Kava code took place from December 14, 2020 to February 9, 2021, and was in charge of CertiK security engineers Jay Jie and Alex Papageorgiou.
CertiK conducted a series of thorough security assessments. No major or critical issues were found during the audit. Only 4 issues were identified and presented in the vulnerability summary, 2 of which were informative and the other 2 Is secondary. The Kava Labs team then refined all the questions raised by the CertiK team.
The sole purpose of the audit is to verify Kava Labs’ implementation of the issuance module. The main mechanism of the module is to allow whitelisted entities (that is, issuers) to control the minting and burning of assets against the specifications provided.
Multi-party ecological collaboration
In addition to enriching its own products, Kava is also cooperating with other ecosystems and projects to establish multiple connections.
From the perspective of Kava itself, in order to promote the better development of the project, a number of activities including Kava 5 testnet incentive activities have been launched.
In terms of integration with centralized financial institutions, Kava has recently integrated HBTC into the Kava cross-chain lending platform, and has cooperated with Huobi to open the HBTC DeFi mining product. The first installment of 500 HBTC was exhausted within 5 minutes.
In addition, it has established strategic partnerships with many partners including Akash Network, a decentralized cloud computing market based on the Cosmos cross-chain protocol, Persistene, a project designed to bridge traditional finance and DeFi using NFT, and Layer 2 derivatives DEX Injective Protocol.
Outlook: Strengthening the integration of financial services
The Kava DeFi platform will move towards a broader world in 2021. According to its announced product roadmap for 2021, Kava plans to further enrich the product function line (including adding at least 2 native applications and tokens) and build decentralization. Cross-chain bridge access to the most mainstream encrypted assets, as well as a series of main network function optimizations, to strengthen the security measures for Kava’s decentralized financial applications and services.
In terms of asset integration, Kava is evaluating USDT, USDC, WBTC, HBTC and other assets that use Kava to review and issue modules. The evaluation cycle will continue until the first half of 2021.
Kava has successfully integrated with partners such as Binance, Huobi and Bitmax in 2020, and it is expected that there will be more DeFi and CeFi business integrations in 2021.
