KAVA is the native token of Kava.
Kava is a DeFi lending platform designed to allow users to earn high returns on its cryptocurrency by lending it out and using it as collateral for stablecoin loans. Kava’s native stablecoin is USDX.
|Circulating supply (approximately, as of August 2020)||27,000,000|
|Purpose||Governance, collateral, validator staking|
How does Kava work?
Kava’s purpose is to allow people to lock up cryptocurrency as collateral, similar to other Ethereum-based DeFi projects. One of its key differentiators, however, is that it leverages the interoperability features of the Cosmos network to allow a wide range of cryptocurrencies to be more easily used as collateral.
In a nutshell, the cryptocurrency deposited into Kava collectively becomes the collateral for USDX stablecoins, which are pegged to US$1. The network is over-collateralized, giving people assurance that the USDX stablecoin can always be safely redeemed for $1 of value.
There are two basic things a user can do with Kava:
- Lock crypto collateral in a smart contract to withdraw USDX
- Stake (lend) USDX to earn interest
These can be combined, though, and can interact with other DeFi projects to be greater than the sum of their parts. For example, someone could take on a leveraged position by taking out a USDX loan and then using that to buy even more cryptocurrency.
What does the KAVA token do?
The KAVA token serves three purposes:
- Governance. KAVA token holders can exercise governance rights on the Kava platform.
- Lender of last resort. If all else fails, KAVA can start being liquidated to help guarantee successful USDX redemption.
- Validator staking. The top 100 validator nodes on Kava’s network can earn staking rewards in KAVA.
How to buy KAVA
Here’s a step-by-step guide for one way of buying KAVA. Note that there might be other options available, so you may want to compare cryptocurrency exchanges to find the one that’s right for you.
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