GAINS Associates
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GAINS Associates

Kava — Telegram AMA — October 28

On Monday October 28, we had the pleasure to welcome to our Telegram chat:

Scott Stuart, Product Manager and

Stan Press, Head of Marketing from Kava.

We asked them questions about the development of Kava, currently ranked 385 on Coinmarketcap.

Some sentences have been slightly edited for readability, but the meaning has been conserved.

Introduction:

Q — Lotfi (GMT+2) from GAINS: Hi, welcome to Gains!

A — Scott Stuart from Kava:

Thank you for having me.

Q — Alexandre R from GAINS: Can you guys introduce yourselves, tell us what you did before Kava, how you got into crypto and started working with Kava?

A — Scott Stuart from Kava:

My name is Scott Stuart and I am heading product at Kava Labs. I previously founded a company in the AdTech space and before that played professional internet poker.

Q — Alexandre R from GAINS: Cool! What got you into crypto?

A — Scott Stuart from Kava:

I had been tracking it for a while and in early 2017 when the AdTech space was consolidating. I am quite experienced in delivering software products and the nice thing about the crypto space is that it is software all the way down.

Q — Telegram user Kon Porter — Spider Man: I want to ask why a successful person like you got into cryptocurrencies and blockchain. There are many other areas for you to choose, so why are you targeting such a risky market?

A — Scott Stuart from Kava: Successful? Hehe. Depends how you define success and what your goals are. I love delivering products to users. Crypto has some fantastic users, and there is still so much to be built. I think Kava has a lot of promise, but there is still so much work to be done and I hope users like you all become producers some day as well.

Q — Lotfi (GMT+2) from GAINS: Thanks for the introduction. Could you tell us in a few sentences what Kava does?

A — Scott Stuart from Kava: Kava is a cross-chain DeFi platform offering lending and stablecoins for major cryptocurrencies such as BTC, BNB, XRP, and ATOM.

Q — Alexandre R from GAINS: What’s the story behind the brand Kava?

A — Stan Press from Kava: We really liked the sound of Kava it was as simple as that. It doesn’t have much meaning in the USA where we are from, but it’s short, sweet and when we were just starting, Kava.io was available for a reasonable price. :)

Fun facts:

· Kava is coffee to you.
· Kava is Hippopotamus to Japanese.
· Cava is a region in Spain
· Kava is also a root that is used in tea which makes your mouth numb.
· Kava is also crow in Hindi.
· Kava last but not least is a DeFi platform launching on Binance.

Q — Telegram user Elias Wagner: As per Kava’s website, Kava has many partnerships with big project like Ripple, Cosmos, TenderMint, Hashkey, etc. What’s the major reason and benefits of these partnerships to the Kava project?

A — Scott Stuart from Kava: Working together. Pooling resources and talent to make something bigger! Crypto is still a little fish in a huge ocean of financial services. Kava Labs has always had an eye for inclusivity. Grow the pie!

Q — Telegram user Bhau: Considering Kava’s association with Ripple, is it possible to foresee DeFi loans from crypto to fiat?

A — Scott Stuart from Kava: I don’t know about that, but we will be working closely with the great folks over at Ripple, that’s for sure!

Product:

Q — Telegram user Sahil Khanna: Which cryptocurrencies are supported by Kava for Lending in Kava DeFi Platform ?

A — Scott Stuart from Kava: BNB, BTC, XRP, ATOM.

Q — Telegram user Alibaba: Where does the interest rate come from for holding USDX specifically & technically?

A — Scott Stuart from Kava: Great question! Just like in MakerDAO, lenders of collateral (e.g. BTC, BNB) pay an annual interest rate to borrow USDX. A portion of that interest rate accretes to holders of Kava, the rest we can apply a ‘carrot’ for users to adopt USDX. In short, savings rate is loan interest rate less ‘rents’ collected from Kava holders.

Q — Telegram user Doppelganger(Pink Floyd — Coming back to Life): As far as I understand, Kava is used both as a staking token and as collateral for Kava stablecoins (USDX). Can you talk a bit about the stability mechanism? Can other forms of collateral be used to create Kava stablecoins (a la Multi-Collateral Dai)?

A — Scott Stuart from Kava: Kava will not be used as a collateral type in the CDPs. Collateral types will be assets exogenous to the system, like BTC and BNB. Of course BTC and BNB’s value fluctuates. To make USDX not fluctuate we ensure there is always more BTC or BNB in the CDP bucket than ‘stable’ USDX. Therefore BTC could increase or decrease a lot, as long as it’s less than the ‘stable’ debt of USDX that you have drawn, the system is healthy and functional. 👌

Q — Telegram user Dhoom: How is the conversion ratio between cryptocurrencies and USDX calculated, and how will you calculate stability fee?

A — Scott Stuart from Kava: By governance and votes in-protocol!

Q — Telegram user Zing: What happens if someone fails to repay the debt? How secure is Kava to safely handle the collateral tokens?

A — Scott Stuart from Kava: These CDPs or “collateral debt positions” are always over-collateralized, which means you have to have more asset locked up in the bucket than you can draw from the bucket. The system leaves a margin when the collateral is ‘called’ to be able to sell off. If the asset cannot be fully redeemed Kava is minted to cover the balance. Hence Kava is a ‘lender of last resort”. This is why it’s important that we select good initially assets to support.

Q — Telegram user Tran Uyen: What do you think of DEFI in the Blockchain space? DeFi brings many benefits to users, but there are conflicts of interests with the Bank. What is the Kava’s solution?

A — Scott Stuart from Kava: DeFi to me is offering financial primates, the supplies of which are spread out amongst many participants, as opposed to few. People offer loans on BTC today. Kava’s goal is to maximize the amount of counterparties to any loan, thereby ‘socializing’ the returns on any actively used financial product.

Q — Telegram user Zing: What’s the most critical and innovative point of Kava to ensure users that it is the best under the DeFi niche? How can you compete with MakerDAO which has done a good number of business with recent market?

A — Scott Stuart from Kava: To the extent that users on other chains begin to trust Kava brand for loan issuance, and we get some solid adoption of USDX I think we’re in a good spot. I would say a benefit of Kava is that we are FOCUSED. We’re not trying to be everything for everyone. This is lending, quite simply, for the large market cap coins — and that’s hard enough.

Q — Telegram user SAAHO: Why does Kava need to create its own stable coin, while there are many other options available in the market?

A — Scott Stuart from Kava: Yeah there are a lot of USD backed stable coins, which is true. Indeed we have looked around with working together with a number of them. The difference with USDX (and DAI) is that its crypto-collateral backed. Doesn’t mean we won’t work with others in the future. 😉

Q — Telegram user Tiger: DeFi is a hot niche when it comes to crypto/blockchain project! Most of the projects are developing aiming DeFi. How is Kava looking to contribute in DeFi ecosystem?

A — Scott Stuart from Kava: DeFi is big. Mostly on Ethereum, which is great! Kava is for non-Ethereum networks.

Technology:

Q — Lotfi (GMT+2) from GAINS (Twitter question): Will Kava have its own blockchain or stay forever on BEP2, and why did you choose Binance chain for the token in the beginning?

A — Scott Stuart from Kava: The Kava blockchain is set to launch on November 5th. BEP2 issuance was done in partnership with Binance for the IEO distribution event. BEP issuance was scoped only to Kava funds set for IEO event. Once the Kava mainnet is launched, there will be conversion over to Kava proper.

A — Stan Press from Kava: Binance is the leading exchange in the world. Not only are they a strategic partner to us because of BNB and the Binance Dex, but Binance is also the best place to launch a platform like Kava which is designed specifically for crypto traders and investors.

Q — Alexandre R from GAINS: Why does Kava build on Tendermint? Which types of unique features does this consensus serve and why is it better compared to another great consensus like POS, POW, POSV etc?

A — Stan Press from Kava: We chose the Cosmos SDK because we see it as the future. Even Facebook’s Libra consensus design was just a copy of Tendermint. Kava, Binance, the Cosmos Hub and many other blockchains are built on the same Cosmos-SDK framework. It’s very flexible and soon will be interoperable. This is a huge advantage over Ethereum, where systems like MakerDAO will be forced to develop in a slowly evolving chain like Ethereum and only touching Erc20 assets. Kava will be able to rapidly evolve, program in GO rather than Solidity, and achieve interoperability with chains like Binance directly.

We’re super excited to get BNB and BTCB onto Kava’s CDPs and to put Kava and USDX onto the Binance DEX, and Cosmos makes this easy for us.

We have Tendermint P2P protocol, the Cosmos SDK framework for our blockchain, and the consensus options we have. The cosmos SDK is an easy way to build out applications and Tendermint is a P2P protocol that’s been around for several years, and that’s pretty well established. As with any consensus protocol, there’s a cost to it and we feel that a delegated POS is the right cost for our platform.

A — Scott Stuart from Kava:

1. Cosmos SDK is a “software development kit” for building blockchain applications written in GO. We like it a lot, probably the best tool we’ve seen for the job thus far.

2. Tendermint is a p2p messaging protocol which has been around for years. A lot of organizations have used it with PoA consensus, but a lot of the edge cases have been addressed, which is important for these systems. So we went with that one, and it pairs nicely (obviously) with the Cosmos SDK.

3. To Stan’s point on consensus, there is essentially a cost for security in these models and we feel DPoS is a good cost to benefit and pairs well with Kava’s token economic design.

Q — Telegram user Vinayak mishra: Which types of success have you seen in testnet? How many testnet have been processed in the past?

A — Scott Stuart from Kava: Three major testnets with some minor iterations therein. Testnet-3000’s software was pinned to Kava mainnet software. That testnet is looking good which is a good indicator for smooth sailing on mainnet launch, we’ll see. 🤞

Q — Telegram user Aslam Ansari: I am very impressed with your voting method. How does it work?

A — Scott Stuart from Kava: Thanks. A lot of this was pioneered with the Tendermint team. Basically voting is entirely open and asynchronous, meaning anyone can submit a proposal to be voted on. All the project in the Cosmos ecosystem are working diligently to expand the space of variable or features that can be modified via this governance method in protocol. For example, we were the first to enable transactions directly via governance in our Testnet-2000!

Q — Telegram user Man Secret — Special: As far as I know, Kava had 150 validators in the test. Why do you have so much?

A — Scott Stuart from Kava: Kava mainnet will launch with a cap of 100 validators. We want as many validators as possible. The reason? What if Kava was run by just you and me. Well that works if people trust us, but it’s pretty easy for us to collude and act maliciously. It’s harder for 100 people to collude — it’s still possible, but harder. And so we put a lot of effort into promoting a healthy and large validator community, and empowering them to grow their stake in the system.

Q — Telegram user Karnwati: As a developer, which program languages can I use in Kava core smart contracts?

A — Scott Stuart from Kava: The Cosmos SDK is currently written in Golang.

Q — Telegram user Quyen Tran | Investor: Can you talk more about the new technology that combines the benefits and interactive functions of Cosmos with the DeFi applications you have built? What is the crucial thing, in your opinion that would increase adoption of Kava and possibly the rest of crypto?

A — Scott Stuart from Kava: Principally, what I believe is ‘new’ about the Kava tech stack is that we are building a standalone piece of software that treats other network technologies as ‘first class citizens’. This means from the ground up our design is meant to easily incorporate and work with other software. A lot of blockchain is a story of “everyone will use my software, because it’s the best”. Kava Labs worked for years against this view while bringing open Interledger to market.

Q — Telegram user Satish: What is the main reason that you think that Cosmos-based Kava zone will present a new validator opportunity, i.e. a complex and multi-faceted governance system that allows differentiation?

A — Scott Stuart from Kava: I believe it’s important for validators to be able to distinguish their service in multiple ways, not just on security (otherwise they will be treated as a commodity). Kava presents an opportunity for validators to distinguish themselves on the basis of proper governance of system parameters on behalf of their delegating constituents. Kava is a “lender of last resort”, so delegating to a sophisticated validator could lead to better results.

Finances:

Q — Telegram user Helin Mcnally: Revenue is an important aspect for all projects in order to survive and keep the project/company up and running for long term. What are the ways that Kava generates profits/revenue and what is its revenue model?

A — Scott Stuart from Kava: Again, value accretion to Kava holders from loan interest in supported collateral assets. Kava is all about AUM “assets under management” by the system.

Business Development:

Q — Alexandre R from GAINS: After the successful launch of Kava in Binance Launchpad, what is Kava’s next plan?

A — Scott Stuart from Kava: Updating the software to incorporate V1 of the CPD modules. Working software for CDP upgrade can be found here.

A — Stan Press from Kava: For our future, we have a few things as Scott mentioned. We’ll have our main net launch on Nov 5th. Only the Kava token, staking and delegating, and voting rights will be activated features. Shortly after, the validators (governors of Kava) will vote to enable the CDP system. At that time, we will support BNB and ATOM first because those are two blockchains we can work with via the new IBC module being released next week from the Tendermint team. From there, we will expand support for XRP and BTC as our top priorities. This might take some time. After we have integrated and served those communities, we will open Kava up to whatever assets the Kava community wants to support.

Q — Telegram user Karan: Which one of your milestones do you think was difficult to achieve and what motivated you to achieve it?

A — Scott Stuart from Kava: We’ve been working on open source cross-chain technologies for a number of years and honestly it can be a pain. I think the Cosmos SDK made it significantly easier to implement the features that we wanted into the software.

I think the largest challenge for Kava is not software based but in market adoption. MakerDAO is a great project and they have spearheaded a lot of the work in the lending field. Hopefully Kava can be a very meaningful contributor as well.

Q — Telegram user Newbie — Software Engineer: What are the future community growth strategies that Kava is most concentrated in today, in the future and the coming time. What is your global development plan?

A — Scott Stuart from Kava: Well the lending platform supports any over collateralized asset. So naturally we will tackle the largest standalone crypto networks by market cap first, but that doesn’t mean we cannot incorporate other assets classes into the system. It’s just a case of grabbing low-hanging fruits first.

A — Stan Press from Kava: Once we clear our IEO phase, we’ll have a much stronger understanding of who our audiences are and where they live. From there, we can start creating community channels on the appropriate platforms (Telegram, Wechat, Bihu, Youtube, etc) to help organize and communicate with all of our key regions.

Then comes the content generation and audience engagement portion where we’ll be opening up on all levels across blogs, video, events, more AMAs, and direct access. If there’s anything you’d like to see from us in a content or community perspective, please tweet at us or ask in our Telegram chat.

Q — Telegram user Alex: What is your plan to strengthen and develop the community to persuade more people to look at the product than the price?

A — Scott Stuart from Kava: It’s a good point and question. In this case a functioning Kava platform actually should impact price. Kava being the ‘lender of last resort’ has a two-fold effect. I mentioned the first one previously. The second is that when the system is healthy, loans are being withdrawn and being repaid, a portion of the interest rate (less the USDX ‘Savings Rate’) accretes to Kava holders because a portion of Kava that the borrower pays in interest is burned. If all goes well, Kava supply deflates over time.

Q — Telegram user Shelly: What does the Kava team think about long-term competitors such as traditional financial institutions, and what long-term strategies do they have to embrace traditional financial consumers?

A — Scott Stuart from Kava: People seem to want to swing for the fences out the gate. There seems to be an ethos in startup cultures which takes the opposite approach. Find strong product market fit in a smaller industry (crypto) first, and then expand. If we can capture BTC demand to borrow, I think that is a successful product. Anyways, it’s a learning and iterative process, I agree we’d love to tackle larger financial markets — baby steps, Rome wasn’t built in a day.

Q — Telegram user Roger Camacho: Can you talk about what Kava has done and plans to do to achieve mass adoption in reality?

A — Scott Stuart from Kava: Bitcoin is real! I’m continuously impressed by the demand and size of that network. Really, if we can capture that demand, I think the future looks bright for Kava.

It was a pleasure having you, and learning more about Kava. Where can people go to join you? Alexandre R from GAINS

To stay in tune and follow Kava as we go to mainnet and beyond, check us out on Telegram and Twitter. Scott Stuart from Kava

Thanks guys! Great questions from an awesome community. Stan Press from Kava

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