Kava Labs is releasing its new cross-chain liquidity hub for DeFi, Kava Swap.
Earlier this year, Kava Labs announced the launch of its newest project, “Kava Swap.” The new platform will be an application for all DeFi apps and financial services across the space.
Its central purpose is to allow for the aggregation of capital, which can then be deployed seamlessly to various blockchain ecosystems and other DeFi instruments.
Initially, Kava Labs built its own blockchain ecosystem, which led to DeFi apps’ development. At the beginning of the year, the network released a roadmap of the year ahead. In addition to the launch of Kava Swap, Kava plans for two other cross-chain bridges, ethereum, and bitcoin.
In its official write-up, Kava commented that the introduction of Kava Swap is the “third synergistic pillar” of the DeFi ecosystem its creating.
So what is the swap?
Kava Swap is an Autonomous Market Making (AMM) protocol, which works cross-chain to utilize key features of the Kava platform.
Swap allows users to swap assets between different blockchains and stake their funds into market-making pools. If done, users have the ability to earn returns on what’s staked.
The platform has three main functions:
- Swap: This allows users to easily trade or swap between assets with guaranteed liquidity.
- Supply Liquidity: Users can make their digital assets productive by using them as capital in liquidity pools. The AMM uses the liquidity pools on Kava Swap when swapping between assets.
- Earn: Those who provide liquidity via capital staked in liquidity pools, earn both fees from traders and Kava Swap Token. The Kava Swap Token are the governance tokens of the application.
As it stands, the Kava Swap roadmap lays out four versions of the application. With each subsequent version, the platform adds bridges between other decentralized ecosystems. Along with new cross-chain bridges, updates to governance and scalability come along with each new version.
The V1 one of the applications supports swaps between BTC, XRP, BNB, BUSD, USDX, KAVA, HARD, and SWP. At this stage addition of new assets and liquidity pools is possible through on-chain governance votes.
Kava Swap tokens and governance
As with all DeFi applications, governance tokens are key in operating a fully decentralized space. On Kava Swap, the tool to maintain decentralization is the Kava Swap token. It provides community members a voice in building the future of the application.
Those who hold Kava Swap tokens manage what assets are available on the platform, platform fees, and reward distribution. At the onset of the Kava Swap launch, 250 million Kava Swap Tokens will be minted. However, they will only be accessible for over 4 years.
Developers designed Kava Swap tokens with no intention of a seed or private sale. Instead, they will be released in stages with specific allocations.
- 55% — Community: these funds are for liquidity pool incentives, KAVA staking incentives, airdrops, and community elected activities.
- 25% — Treasury.
- 15% — Team.
- 5% — Ecosystem.
It should not be confused that the KAVA token, while made on the same ecosystem, is different from Kava Swap tokens. This is due to the full sovereignty to be had by the decentralized community Kava Swap intends to foster.
Kava Network accelerates with DeFi
Developments on the Kava Network picked up over the last half a year.
This past month, the native token of the network (KAVA) peaked slightly above its resistance point. While it failed to break through, it still continues its upward trajectory.
In addition to the token finding stable footing, the network made bit moves in the DeFi space. In June, Kava teamed up with EU-licenced financial institution Simplex. Together the pair are working on the first “fiat-to-DeFi” ramp.
This would enable users to exchange their funds from debit and credit cards into crypto almost instantly. Simplex provides this ability to many prominent crypto exchanges, including Binance and Huboi.
However, such a capability in DeFi is yet to exist and would completely level up the space.
As Kava Swap becomes available to users, this too will add yet another capability to the DeFi spaces. The permissionless application is to be accessible by anyone, anytime, anywhere in the world.
From exchanges and financial institutions to individual investors, Kava Swap can be leveraged to create new liquidity and trade assets cross-chain.
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