What Is Kava?
Kava is a decentralized finance (DeFi) protocol that facilitates permissionless lending and borrowing. It operates on its native layer-1 blockchain, which was created using the Cosmos SDK.
Background
Brian Kerr, Scott Stuart, and Ruaridh O’Donnell founded Kava Labs in 2018.
How It Works
Kava’s unique infrastructure allows users to contribute digital assets to a pool to earn interest. After contributing, users can borrow Kava’s native stablecoin, USDX, using their supplied assets as collateral.
USDX is a stablecoin whose value is loosely pegged to the US dollar, with the exact value determined by market forces. It is minted when a user opens a Collateralized Debt Position (CDP) by supplying and locking up collateral. Users can then borrow USDX against this collateral. When the debt and fee are repaid, the collateral is returned to the user, and the borrowed USDX is burned.
Key Takeaways
- Kava is a decentralized finance (DeFi) protocol allowing permissionless lending and borrowing.
- It operates on its layer-1 blockchain, which was created using the Cosmos SDK.
- The system enables users to contribute digital assets to a pool and earn interest.
- Users can borrow Kava’s native stablecoin, USDX, against their supplied assets as collateral.
- USDX is a stablecoin whose value is loosely pegged to the US dollar and minted when a user opens a Collateralized Debt Position (CDP).
