For centuries in our lives, money has become one of our most important indispensables. To acquire, reach, protect, store and increase it; people have always entered into an endless race with each other. Although some stages of this race, which have continued throughout history, are remembered for their abundance, some times have also been engraved with famine and absence in people's minds. The 2008 financial crisis, the most destructive force that humanity has seen since the Great Depression, occurred in the early 2000s. As a result of a number of events following the bankruptcy of the company ’'Lehman Brothers", all humanity was witnessing a radical change in order to open the doors of the new world: Cryptocurrencies and Blockchain Technology…
In 2008, only a 9-page declaration made the balances of the traditional financial system would be turned upside down. This history replaced privacy and obscurity with transparency and openness, central authority structures replaced with decentralized platforms and the era when trust was to be built between people again. Now '‘the future of money’' would be designed by '‘the money of the future’' and those who believed in it.
What Is DeFi?
Blockchain technology used during the construction of our future performs the function of sending and receiving only, for one asset. However, if we look at the financial system and banking characteristics that we have traditionally know, only such asset movements are quite inadequate. In order to overcome the lack here again in a confident environment with a decentralized solution, practices that managed to gather all banking activities under one platform were needed. '‘Pull your credit’', '‘loan’', '‘utilization of various investment instruments’', '‘interest income'' etc... which we can consider the operations of any person or entity without being connected to platforms designed to allow any people from every corner of the world to benefit and it's called ''DeFi platforms''. So how do DeFi platforms work?
(Image by Gerd Altmann from Pixabay)
How Do DeFi Platforms Work?
As a result of the fact that traditional banking products can't provide convenience for our financial freedom and no steps are taken in the name of decentralization, the formations that will fully fulfill the various obligations mentioned here have been described as ‘'DeFi platforms'’. One of the most famous example of DeFi platforms until this time is ''the MakerDAO’' project. It has continued its development and reached today thanks to its participants from all over the world on the condition that it remains connected to the Ethereum chain.
It is possible to summarize the MakerDAO working principle in the following sentences:
-You lock and/or ‘stake’ a certain amount of crypto assets that you hold in your hand through Dapp (decentralized applications) designed specifically for MakerDAO. In return, you are given ‘'stablecoin'’, whose value is usually indexed to 1$.
--You can also make any investment without any restrictions with that '‘stablecoins’' at the same time while the staking process continues in the application.
---After that, you can return the stablecoin you received to the application and get the cryptocurrencies that you locked back. In this process, if you overstep the threshold set by the system and as a result of that condition your collateral is insufficient, the stablecoin given to you is automatically refunded.
All the features, conditions and investment tools that we have described so far are currently in use in today's world. So what makes DeFi technology special then?
To access DeFi platforms, you only need to have an internet connection and have a sufficient amount of cryptocurrency in your personal wallet. In addition, you do not have to share any personal information with a tertiary person or institution for use. And perhaps most importantly, ‘'YOU’' are the sole owner of every cryptocurrency you keep in your wallet. General features of DeFi platforms that can be built using blockchain technology can be listed in this way. In addition, we would like to note that the principle of decentralization has gained strength again because these platforms are written using ‘'open codes’' which these codes are easily accessible to everyone. So what does '’KAVA" offer us in this ecosystem?
What is KAVA?
KAVA/KAVA Labs is a project created to create a DeFi platform for all people in the cryptocurrency ecosystem. The main difference from MakerDAO, which we briefly mentioned earlier, is that it allows you to get credit and participate in the system, not only using Ethereum but also with many other major cryptocurrencies. Thanks to the decentralized application that appears on the web browser as ‘'KAVA APP’', everyone can step into the DeFi platform by connecting their wallet. The BNB locking phase, which will be performed after the wallet binding process, is also the key to the door that will bring you into the world of KAVA APP. Apart from the KAVA APP, you can also join the kava platform by using the mobile applications ‘'Frontier'’ and ‘'Cosmostation’'.
How does ''KAVA APP'' work?
Kava app, which you will launch on the web browser, first of all, your personal wallet (Trust Wallet, Ledger, etc...) must be connected. The reason these wallets are recommended is that direct and easy matching is provided due to the ‘'Wallet Connect'’ features. After connecting the wallets, we transfer the BNB tokens that you want to use in the application with a transaction signed by the mobile wallet. On the screen that appears in the sequel, we state how much BNB we demand in exchange for how much USDX stablecoin. After signing this transaction by your mobile wallet, USDX tokens are accesible for your use, while BNB tokens are locked. Now you can evaluate USDX tokens in your wallet and also enjoy your KAVA tokens which will be defined as stake reward. After all your transactions are complete, you can return the USDX stablecoins you received to the platform back and unlock your BNB tokens.
NOTE: The amount of USDX that can be taken personally throughout all of these has been determined to be at least 10 USDX. You should also more carefully adjust the amount of BNB you lock as collateral against the USDX you will receive. If this balance cannot be established well and the BNB token value falls below the ‘'liquidation value'’ that appears on the screen when you receive USDX, all USDX given to you will be automatically refunded to the platform.
About tokens on the ''KAVA'' platform...
As mentioned earlier, you can get USDX using any major cryptocurrencies (such as ETH, XRP, ATOM...) as collateral through the Kava APP. Here we will talk about 3 cryptocurrencies that are available in the Kava app; BNB, USDX and KAVA, respectively.
BNB is a token specific to the leading cryptocurrency exchange BINANCE platform, as it is known to most cryptocurrency believers. KAVA is a token that will be distributed to users as a reward after BNB locking in the application. USDX is a stablecoin that will be opened to users after the BNB lockdown, as we have described in previous chapters.
The KAVA token, which built on BEP2 chain, represents a cryptocurrency whose initial supply is 100,000,000 and whose ‘'circulating supply’' will constantly increase with block reward inflation. Features on the app such as ‘'staking’ and "governance", come to life through KAVA token usu. For the use of these functions, it is built on the consensus ‘'Tendermint-based Proof-of-Stake’', on which Cosmos is also built. Staking rewards range from 3% to 20%, inversely proportional to the number of platform users. Switching to its own ‘mainnet’ infrastructure in mid-2020 and 3. developments continue in the quarter as the CDP integrates its structure.
Why Use KAVA?
- Not only one cryptocurrency has been identified as a ''collateral". In this way, KAVA Labs is open to use with various cryptocurrencies.
- Credit formation between users is possible without the need for any central authority.
- It is a platform that can be easily used by people even who can't reach traditional financial instutions.
- Unlike other examples, it is possible to create ‘'synthetic leverage'’ with USDX tokens in the form of credits.
- A solid infrastructure has been formed because it is funded by companies such as Ripple, Cosmos etc... They are the key ones in the market.
- They won the ''2020 Binance Launchpad Project Award''.
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