The Future of Money. KAVA —The next frontier of the digital economy
Digitalization
Many of you know how vital the macroeconomic background is for of the cryptocurrencies and digital assets market? How do they fit into a sector that is often phased out by the sound of money tales and comparisons to digital gold?
As with many emerging industries, there are several age-old tailwinds behind the cryptocurrencies, some of which deserve the most attention, including rising digitalization, a global growth deficit, record low interest rates, and widening wealth inequality.
Given the global shift towards digitalization, this almost guarantees that digital economic growth will continue to outpace growth in economic activity all across the board. In addition, if policymakers have a chance to reverse the downward trend, they will likely need to create a more inviting environment that encourages technological innovation and change, rather than inhibits it.
Decentralized Finance
Over the past year, every man and his dog have written about the Decentralized Finance industry (DeFi). We enjoy getting to the bottom of the trending developments in the space and have previously looked into DeFi as well, describing the advantages and disadvantages of this area. Neither investors nor media interest in DeFi technologies can be called random. This summer in the crypto industry is nothing but a DeFi summer. It is difficult to imagine anyone interested in crypto who would not have heard of the general hysteria around Decentralized Finance. We’ve seen the launch and growth of dozens, if not hundreds, of projects that collectively have greatly enhanced the decentralized finance network. The intuitive interfaces and the declared high return on passive investments have led to an enormous increase of funds blocked in the DeFi ecosystem — over $9 billion. We also saw the introduction of a number of new unique products. But being new and well thought out at the same time is rarely the case, and many of DeFi’s key flaws remain unresolved.
The future of DeFi
The Kava project is well-positioned in the space, with its launch of the CDP-Mainnet on June 10, 2020. Kava is a cross-chain platform for decentralized finance, built on the Cosmos SDK working with the Tendermint-based Proof-of-Stake (PoS) consensus mechanism. At its core, Kava works similarly to MakerDAO, but it uses Cosmos zones to add cryptocurrencies based on independent networks, such as BNB. Kava uses two main tokens: Kava (governance coin) and USDX (stablecoin). The primary use case for the platform is classic and somewhat routine at first glance: blocking a collateral asset using a smart contract and getting a loan in USDX stablecoins. But the peculiarity of the project is precisely the interaction with collateral assets from numerous blockchains. The first such asset was BNB, and now a considerable number of BNB holders have the opportunity to use it as a collateral asset in the DeFi ecosystem, which was previously impossible. The Cosmos SDK also supports Binance Chain, which simplifies the cointegration of BNB and Kava significantly. In the coming months, developers from the Kava Labs team promise to add XRP, ATOM, and even the mighty BTC as collateral assets.
Any application, network, or blockchain can integrate with Kava’s open platform. Services that hold crypto assets can integrate Kava to offer their users Kava’s financial services like loans, stablecoins, and high-yield interest accounts. This is witnessed by financial institutions integrating Kava to open up DeFi products to their users. The big news of the week is how Kava is now officially supported on the Binance.com platform. Trading of the native KAVA asset has been going on for months now. Taking the next step in this partnership was crucial to elevate the status of both platforms in the process. It is the first time Binance.com integrates a DeFi solution directly into its platform, this first-mover advantage is priceless for Kava and its users, and should not be underestimated. Kava is essentially the foundational protocol for modern financial applications to operate and serve a global user base. There is already a growing ecosystem of apps built on Kava. As more applications integrate Kava and more users leverage its services, the Kava network will become more robust, liquid, and better able to serve its growing customer base.
When it comes to opportunities in this area, Bitcoin gets most people’s attention outside of cryptocurrencies. Still, some of its fellow travelers will also have a significant impact on the industry as a whole. We are still at the very beginning of this path. Against the backdrop of the global health and economic crisis, the popularity of DeFi projects has increased, which has led to the emergence of new institutional and individual players on the market. The cost of DeFi tokens has grown by hundreds of percent since the beginning of the year. The opportunities for startups using this technology are endless, which holds great promise for the diversification and growth of the DeFi ecosystem. New groundbreaking DeFi products are emerging, built at less cost, and ready to hit the mainstream market. Kava, running on the Cosmos SDK, are set to play a vital role in the field of DeFi. This will allow participants to take advantage of different blockchains and open a new chapter in the development of DeFi.