Intro
On October 26, a significant event took place. The leading Layer-1 blockchain Kava launched an upgrade of the main network and was updated to Kava 11. Find out what innovations have occurred on the platform in today’s article.
What Is Kava?
Kava is a Layer-1 blockchain that takes the best of two established ecosystems — Cosmos and Ethereum — and creates a single scalable, secure, and cross-chain compatible network. Thanks to its co-chain architecture, Kava combines the interoperability and speed of Cosmos and the power and security of Ethereum. The Kava network architecture is formed by a co-chain connecting two chains. The first is the Cosmos co-chain, which is connected via the IBC protocol to the entire Cosmos ecosystem, including all blockchains connected to the Cosmos Hub. The second is the Ethereum co-chain, which could be connected to the entire Ethereum ecosystem through its EVM compatibility. The co-chains data interacts through the Translator Module and is protected by the Tendermint Consensus Engine. Thanks to the described architecture, Kava is an flawless place for blockchain developers who can benefit from the best characteristics of the two most powerful networks.
In addition, Kava is a secure and flexible Layer-1 blockchain that is in the top 15 of the DeFiLlama rating and has a TVL of more than $260 million. The Kava 11 upgrade is aimed at expanding the influence of the project. The developers intend to achieve more than $1 billion of TVL and deploy more than 100 protocols to the Kava Network (at the moment, the Kava ecosystem includes over 50 protocols). What changes have occurred in Kava 11? There are five of them, and all of them are aimed at increasing flexibility, convenience, and user profitability.
Kava Liquid
A novel of the Kava Network, Kava Liquid is the first ever fully convertible liquid staking protocol, which became possible thanks to the upgrade. To understand all the benefits of Kava Liquid, we need to understand the details.
Traditional staking allows coin holders to lock their assets in the protocol (thereby ensuring the functioning and security of the network) and receive passive income. Traditional staking has one significant drawback — reduced liquidity. If you have added your tokens to the staking pool, but the tokens have fallen in price, and you want to unstake them so as not to suffer further losses, you will not be able to do it right away. Since your tokens are required to pass the unlock period.
Liquid staking is an innovative alternative that allows you to stake your tokens (and receive passive income) while maintaining the liquidity of your assets. How does it work? Let’s look at the example of the popular liquid staking protocol Lido. For example, you wanted to lock your ETH tokens on Lido. By adding ETH, you will receive a representative stETH token in a 1:1 ratio. Next, you start to receive staking rewards, and in addition, you can use stETH in apps and services integrated with the Lido to generate extra income. Everything would be fine, but there are a few nuances. Using the Lido as a staking provider, you transfer your voting power to the protocol. That is, if, in theory, all ETH will be locked on the Lido, the Ethereum network will become centralized.
The Kava team uses a different approach. Users who stake KAVA tokens and receive liquid bKAVA tokens independently choose a network validator, thereby preserving their voting power and the network’s decentralization. Moreover, there are no unlock periods within the framework of Kava, users can instantly convert their staked KAVA back into KAVA tokens, and all their bKAVA can be instantly converted back into the staked KAVA.
In addition, bKAVA can be used in other novel products — Kava Earn and Kava Boost — which will allow you to significantly increase your income.
Kava Earn
Kava Earn is a yield optimizer that provides various strategies to increase user revenue. The project team develops strategies for each individual token (supported within Kava Earn) based on risk and value and providing the safest and most profitable. Kava Earn is a collection of all available products of the Kava ecosystem, such as Kava Mint, Kava Lend, and Kava Swap.
As part of Kava Earn, three stablecoins are available: BUSD, USDT, and USDC (the developers plan to expand the list in the future). How does Kava Earn work? Depends on the specific coin and the strategies provided. In general, all functions are minimized to “supply” and “withdraw” on the users’ side.
Let’s look at the example of BUSD. Navigate to the official BUSD Earn page. Here you can see a comparison of profitability. If you decide to use Binance to earn on BUSD, your APY will be about 10%; with Kava Earn, your APY will be 17.44%. Click the “Supply” button, enter the desired number of coins, and confirm the transaction. After that, you start to earn passive income. BUSD Earn focuses on the mix of Kava Mint and Kava Lend. That is, when you supply BUSD, you are credited with a native Kava’s USDX stablecoin, which is then deposited in Kava Lend for extra earnings.
Kava Boost
Kava Boost is an innovative protocol that allows you to boost your income. First of all, the developers launched support for Kava’s liquid staking feature. That is, users can use Kava Liquid to supply their KAVA in exchange for bKAVA and then use bKAVA as part of Kava Boost for extra rewards.
Kava Foundation
One of the most significant events related to the Kava 11 upgrade is the creation of the Kava Foundation. This will ensure further expansion of the network. The liquidity owned by the Kava community will be used to improve network security, support the expansion of existing network infrastructure, and open new channels for business growth and technological progress.
MetaMask Signing of SDK Transactions
Last but not least is the improvement aimed at the possibility of interaction of the Kava App with the popular MetaMask wallet. Kava 11 will allow Kava App to interact with MetaMask for the direct signing of Cosmos SDK transactions. That is, users will no longer face the problem of ERC-20 incompatibility and will be able to interact with Kava.cosmos balances through MetaMask after transferring them from EVM to Cosmos. This will allow for the seamless transfer of ERC-20 tokens between EVM-based and Cosmos-based protocols integrated into Kava through one transaction via MetaMask.
Conclusion
Summing up the results of the Kava 11 upgrade, we can conclude that the developers are seriously aiming to get into the top 10 DeFi networks. They make efforts to maximize user profitability and optimize the workflow for stakers. Today, the protocol attracts more and more users due to its co-chain architecture. In addition, Kava liquid staking is an example of an excellent DeFi product since it does not deprive users of voting power and does not harm the centralization of the network.