Harvest is just the first step for Kava to become a decentralized hub for cross-chain DeFi applications and services. In the future, Kava will further bridge the gap between assets and ecology, thereby building a more free and open financial ecosystem.
Written by: Ad
In this round of DeFi boom, ETH and various financial innovations based on Ethereum ushered in an unexpected carnival. However, some important roles seem to be absent from the feast, such as Bitcoin and other public chains. Although there are still assets such as WBTC that anchor BTC to participate in the DeFi ecosystem, the current situation is that mainstream crypto assets other than Ethereum are falling into a sad state of “the excitement is theirs, I have nothing.” At the same time, the Ethereum network is limited by high gas fees, insufficient scalability, and incompatibility with mainstream assets, and cannot build a reliable bridge for mainstream high-quality assets to penetrate the DeFi world. And this pain point has become the shackles of the further growth of DeFi.
Recently, Cosmos-based DeFi platform Kava released the world’s first cross-chain cryptocurrency market, Harvest, which attracted the attention of Chain Wen. This time, Lianwen will lead readers to the end to explore Harvest’s mechanism and governance, and see Kava’s ambitions for DeFi application integration.
What is Harvest?
According to the official team, Harvest is the world’s first cross-chain currency market. The concept of money market in the traditional financial market mainly refers to the short-term market whose main demand is to maintain the liquidity of financial assets. This type of market can find a way out for temporarily idle funds while meeting the short-term capital needs of borrowers. It has the characteristics of short term, strong liquidity and low risk. It can be seen that Harvest’s market positioning is to provide a new liquidity platform for digital assets on the chain. As a “cross-chain currency market”, Harvest also supports users to use mainstream high-quality assets other than Ethereum for lending and Earn profits by mining.
As an application built on Kava, Harvest can support any asset on the Kava blockchain. After the Kava-4 mainnet “Gateway” upgrade is completed, the BEP3 cross-chain bridge will be extended to support other assets such as BTC, XRP, BUSD, etc., to ensure that these assets, together with native Kava assets such as KAVA and USDX, are available for users in the Harvest currency market Used.
Harvest’s operating mechanism
From the development of DeFi this year, we have seen the market prospects and future trends of cryptocurrency mortgage loans. This type of decentralized lending platform is effectively helping users in the blockchain world to improve financial transaction processes and increase financing channels. The rise of Ethereum’s value is also inseparable from the development of such platforms.
Like DeFi lending products such as Compound and Aave, Harvest aims to establish a currency market that can provide short-term lending at any time for encrypted assets. But we also see the limitations of Compound and Aave, both of which are based on the DeFi platform built on Ethereum, so they only provide a currency market for users of assets based on the Ethereum network (such as ETH and assets on erc-20). Thanks to Kava’s cross-chain infrastructure, Harvest can provide the world’s first cross-chain currency market for BTC, XRP, BUSD and other assets. This not only brings opportunities for other mainstream assets to enter the DeFi world, but also increases the breadth and depth of the DeFi market.
Simply put, Harvest can operate as a liquidity pool built on Kava. First, liquidity providers can deposit digital assets into the pool and earn interest; secondly, borrowers can also mortgage digital assets on the Harvest platform to lend to others; finally, both deposit users and borrowers can provide liquidity. Sex earns HARD. In addition, Harvest will have exclusive access to native Kava assets such as USDX, KAVA, and HARD. Because it is built on Kava, it also avoids the headaches of high gas fees, low transaction efficiency, and oracle failures on the Ethereum network. In essence, Harvest has greatly shortened the “distance” between mainstream asset lenders and borrowers in the cryptocurrency field.
At the same time, as an open, permissionless application, Harvest has the characteristics of open integration. Ideally, exchanges, financial applications and institutions can integrate Harvest’s money market products to directly provide users with participation in liquidity mining. Opportunities to earn income and borrow.
Compared with the current currency market in the industry, Harvest has also ingeniously launched a flexible reward function. Users can choose the Vesting Period of HARD token rewards according to their needs. The shorter the redemption period, the smaller the corresponding reward. However, regardless of whether users choose a 12-month or 1-month redemption period, they can immediately use the core governance functions of HARD tokens.
Harvest’s governance
HARD is a governance token issued by the Harvest platform. Users can supply assets on Harvest to obtain HARD mining rewards. The holder will be responsible for managing the key parameters of Harvest, such as which assets are provided, how rewards are distributed among Harvest assets, platform fees, etc.
HARD token and distribution mechanism
HARD tokens have no seed rounds and private placements. Its maximum supply is 200 million, divided into at least 4 years of supply. The initial total supply is 80 million, 100 million is in the hands of community governance, and it is gradually given to participants as a liquidity reward .
In the HARD distribution, 40% is an incentive for liquidity providers and borrowers; 25% belongs to the foundation; 20% will be provided to Kava holders to reward them for providing security and infrastructure for applications; the remaining 10 % And 5% will be allocated to the team and IEO.
In the process of liquidity mining, the specific allocation ratio of HARD tokens in each asset market is as follows: USDX: 49%; HARD: 45%; KAVA: 4%; BNB: 2%.
Reasons for the “split” of KAVA and HARD
Kava officials believe that the development of Harvest needs to be promoted by the users who use it, and the governance of the Kava blockchain should not be confused with the governance of the Harvest application; secondly, not all KAVA holders will become participants in Harvest. If KAVA is adopted Intensifying liquidity providers requires inflation of their supply to more than 50%, which will harm the interests of existing KAVA holders; finally, the application of multiple scenarios will confuse the value of KAVA as a reserve asset.
At the same time, 20% of HARD tokens will be provided to them as compensation for the contribution of KAVA holders to Kava network security and cross-chain infrastructure.
Peeping the Leopard in a Tube: Kava’s ambitions are not just a cross-chain lending platform
Kava blockchain was designed as the basis for many open financial service operations at the beginning of its creation. In June 2020, Kava released Kava-3, which mainly includes the functions of decentralized validator set, on-chain governance, cross-chain bridge, CDP module, auction and price feed module, and provides a global cross-chain lending for the market platform.
The launch of Kava-4 “Gateway” and the launch of Harvest on October 15 can be said to have completed Kava’s task of establishing cross-chain DeFi for mainstream assets such as BTC, XRP and BNB. Judging from the current progress, while ensuring the original loan service, Kava has embarked on a journey of exploration of the future DeFi world.
In the fourth quarter of 2020, the main goal of the Kava ecosystem is to open up the ecological value connection between the Kava CDP lending platform and Harvest, support more assets such as BUSD, BTC, and XRP to enter the Kava ecosystem, provide USDX supply and liquidity, and provide a future for USDX More usage scenarios are embedded in the foundation. The construction of the decentralized cross-chain bridge will be completed when the Kava-5 mainnet is upgraded. In 2021, the construction of the Ethereum Bridge, BTC Bridge and XRP Bridge will be gradually completed.
In Kava’s plan, with the help of the Kava chain’s security, price-feeding service and cross-chain functions, Harvest opened the first Kava blockchain application integration. Kava’s blockchain will become the home base for more cross-chain DeFi applications-some are built on Kava’s Layer 1, and some are connected to the Kava blockchain through a bridge protocol (such as Cosmos IBC). With the further construction of the infrastructure on the Kava chain, the development of decentralized communities, and the synergistic combination of ecological funding, Kava will become a decentralized hub for cross-chain DeFi applications and services.
Starting from infrastructure: Kava-4 provides a guarantee for Kava’s ecological layout
From the official introduction, we can see that Kava-4 adds some new functions on the original basis, mainly: 1. Expand cross-chain functions, and expand the assets supported on Kava to BTC, XRP, BUSD, LINK, etc.; 2. Add coins and burn modules to ensure that issuers of new encrypted assets, stable coins, encapsulated assets, etc. can directly mint and burn on Kava’s platform; 3. Optimize cross-chain bridge technology: implement on-chain rate limiting, and Provide additional performance and high security for assets cross-chain to Kava.
From the expansion of cross-chain functions, to the increase of minting functions, and to the optimization of bridge technology, Kava-4 has created a layer 1 platform that provides developers with a way to quickly build applications on Kava’s open decentralized network Ability also provides the possibility for Kava’s evolutionary development.
Extending from community development: community audit to ensure the security of cross-chain applications
Based on the current updated infrastructure, the Kava blockchain will support any cross-chain applications of developers in the ecosystem, and applications built on Kava will automatically benefit from its price-feeding services and cross-chain functions.
Unlike other open smart contract platforms such as Ethereum or Polkadot, after the development is completed, developers need to submit the newly created DeFi application to KAVA holders in the community for review. If approved, they will be deployed during the next Kava mainnet upgrade. Kava can provide a supervised “Apple Store” experience, each application will be thoroughly audited by the Kava community for code and security performance before it goes online.
For KAVA holders who stake to participate in community governance voting, Kava has created a unique App compensation mechanism. That is, if a certain application issues tokens or adopts a charging model, the system will allocate a certain proportion of fees to feed back the community, thereby achieving sustainable ecological development.
Promoting growth from funding: Ecological funding helps Kava lay out the future
Kava Grants are one of the main tools to give reasonable support to key contributors who help Kava achieve its mission. In the first quarter of this year, Kava announced that it would invest US$1,158,500 to fund ecological development. The main funding categories are: research and education, software development, and community activities. Funding methods include service agreements, direct funding and investment.
According to official information, Kava grants are expanding the funding and management of application developers. Allocating resources to entities and projects with potential can help the application of the Kava ecosystem to enter the next stage.
summary
Judging from the current hot development of DeFi and the bottleneck of Ethereum, users’ demand for the currency cross-chain market is increasing. However, how to ensure the safety, reliability, and efficiency of asset transfer on the mainstream asset chain, and truly improve the vitality and efficiency of the DeFi ecosystem, is the focus of major cross-chain projects. By supporting mainstream assets, Harvest has improved the circulation path of mainstream assets in the DeFi ecosystem, increased asset utilization, and brought greater market and vitality to existing DeFi.
And Harvest is just the first step for Kava to become a decentralized hub for cross-chain DeFi applications and services. Through the expansion of infrastructure, Kava will further bridge the gap between assets and ecology, thereby building a more free and open financial ecosystem.
