Kava Swap: A cross-chain liquidity hub that connects Defi apps to financial services

Introduced the World's First Cross-Chain Liquidity Center -- Kava Swap

Original source: Kava Chinese community; Kava Labs   

Kava  After the successful launch of the Kava 5 mainnet and the Hard Protocol V2 version, LABS followsKava 2021 Eco PlanKava Swap, the world's first cross-chain liquidity center that connects DEFI, blockchain and financial services, is coming soon.

Kava Swap is introduced

What is Kava Swap?

Kava Swap is a cross-chain liquidity hub that connects Defi apps to financial services. It aims to aggregate assets so that they can be deployed seamlessly across different blockchain ecosystems, DEFI applications, and financial services.

At the basic level, Kava Swap is a cross-chain autonomous market making (AMM) protocol based on the DEFI infrastructure, cross-chain bridge and security of the Kava platform. Kava Swap provides a service for seamless trading of various assets between different blockchains, making it easier for users to use assets in market-making pools to gain more revenue.

What does Kava Swap mean for the Kava platform and HARD apps?

Every app that Kava Labs makes on the Kava platform works in synergy with other apps. For example, Kava CDP enables users to lend out the stablecoin USDX and put it into the Hard Protocol cross-chain currency market for double nested rewards. Kava Swap is the third Protocol in the Kava Defi ecosystem with synergies that will bring significant growth to existing applications such as the Kava CDP lending application and the Hard Protocol cross-chain money market. Kava Swap enables users to seamlessly trade various assets on the Kava network, avoiding the problem of loss when trading cross-chain assets, and making it easy for users to exchange all reward tokens for any other desired crypto asset within the Kava platform.

How does Kava Swap work?

Kava Swap has three main modes of operation:

trading  -- You can seamlessly trade between different assets with liquidity.

Provision of liquidityYou can trade your digital assets into tradable digital assets and supply them into a pool of liquidity backed by your own market making agreement.

A profit-- Both liquidity providers and traders can earn Kava Swap Token (SWP), the governance token for the Kava Swap app.

How did Kava Swap get started?

Kava Swap is an application built on the Kava blockchain platform. As a result, it was able to leverage Kava's existing validators for security and use Bridges for cross-chain asset transfers, as well as Kava's eco-partner services such as the ChainLink prognostic machine that provides price reference data. This code will exist as a separate module and will be added to the existing Kava Mainnet package.

Version 1 of Kava Swap, support asset trading between BTC, XRP, BNB, BUSD, USDX, Kava, HARD and SWP Each tradable pair of assets has a corresponding pool of liquidity that can be financed by a liquidity provider. In Version 1, adding new assets and supporting new pools of liquidity will be done through a simple on-chain governance vote.

Version 2 of Kava Swap, package all the functions of Kava Swap into the Kava API, which can be easily integrated with any application that provides cryptocurrency services for users to make transactions and leverage their assets as a liquidity provider. In addition, this release will include some governance and extensibility improvements.

Version 3 of Kava Swap, will build an intelligent liquidity bridge between the Binance smart chain and the Ethereum ecosystem, making it easy for users to allocate assets to the liquidity pool, enabling transactions between different ecosystems, DEX and AMM.

Version 4 of Kava Swap, will have intelligent autonomous trading capabilities and build an additional ecological bridge where Kava Swap can funnel liquidity to various DEFI applications and financial services.

* Note: This is the current planned Kava Swap product roadmap, subject to change during the actual development process, please refer to the on-chain governance proposal for final details.

Open integration

Kava Swap is an open, permission-free app that can be accessed by anyone anywhere in the world at any time. Trading platforms, fintech apps, and financial institutions can all leverage Kava Swap to gain additional liquidity, trade assets, and provide their users with opportunities to earn revenue.

Kava Swap governance

As seen in all decentralized financial applications today, governance tokens are essential to proper decentralization, incentive adjustment of liquidity providers, and to ensure the continued development of the application.

About Kava Swap (SWP)

Kava Swap Token (SWP) -- Decentralized governance and incentives

Kava Swap Token (SWP) will give the holder a say on Kava Swap. Kava Swap token (SWP) holders will be jointly responsible for managing key parameters of Kava Swap, such as what assets are offered, how rewards are distributed among Kava Swap assets, platform fees, etc.

Kava tokens and compensation

In designing Kava Swap, Kava Labs carefully evaluated the question of whether Kava tokens could be used to simultaneously manage the Kava Swap app. There are three main issues preventing this:

1. The development of Kava Swap needs to be driven by its participants. Fair distribution of users is necessary to maintain long-term success. The users of the Kava Swap protocol may or may not be the same as the users who hold Kava today. This gives us reason not to confuse the governance of the Kava blockchain with the governance of the Kava Swap app.

2. In today's yield-driven DEFI market, it is necessary to provide incentives to liquidity providers. If the Kava token were to be used as an incentive for the Kava Swap, then the Kava token would need to be inflated to more than 50% of the supply. Since not all Kava holders are participants in Kava Swap, inflation Kava will dilute existing Kava holders.

3. Finally, Kava tokens need to be retained as a reserve asset to supplement the lending platform. Mixing its value in multiple use cases creates a cascade of problems and potentially undermines its value as a reserve asset.

Compensate Kava Swap Tokens (SWP) to Kava Stakers

Just like Hard Protocol, Kava Stakers will receive 20% of its HARD token supply for four years in return for its contribution to security and cross-chain infrastructure. Therefore, we believe that Kava Swap Tokens (SWP) should be continuously distributed proportionally among Kava Stakers.

Kava Swap token (SWP) allocation

Kava Swap Token (SWP) allocation

Kava Swap Token (SWP) issued 250 million tokens and distributed over four years. The initial allocation of Kava Swap tokens (SWP) is as follows:

1. 55%, the community

2. 25% -- Foundation

3. 15%, the team

4. 5% - IEO

Community money would be used for LP incentives, KAVA incentives, air drops, community voting, and other activities.

* Note: In order to achieve fair distribution, there will be no Seed Round or Kava Swap Token (SWP) private placement.

Kava Swap V1 version product roadmap and schedule

June 30, 2021 - Kava Swap code freezes

All internal Kava Swap module code will be completely reviewed and "frozen" internally, no more new features will be allowed, while internal and external audits begin.

July 12, 2021 - The Kava Swap Incentive Test Network launches

Open to Kava users the incentive test network with Kava Swap functionality.

July 14, 2021 - Kava Swap audit completed

Internal and external audits completed.

July 21, 2021 -- Launch confirmation

Based on feedback from internal and external audits, as well as the results of the incentive test network, a decision will be made to launch Kava Swap to the Kava Verifier community.

August 12, 2021 - Kava Swap mainnet launches

Kava Swap was released to the Kava Defi platform and then put forward a series of governance recommendations to gradually turn on various functions of Kava Swap to ensure the maximum security of operation.

Kava Swap Version 1 features list

1. Governance parameters

Add and remove token pairs for the liquid pool

Adjust the reward APY for the liquid pool

Adjust the percentage of transaction fees and deposit them in the liquidity pool

2. Rewards to the Client

Users who delegate Kava to a verifier will now also be rewarded with Kava Swap Token (SWP).

3. Transaction costs

The user pays a fee for each transaction in return for the liquidity provider. Expenses will be deposited directly into the appropriate pool of liquid funds.

4. Put assets in a pool of liquid capital

Users can select assets and the amount of each token to be deposited into the existing pool through the Kava Web app, third-party app, or command-line interface (CLI). Users who provide liquidity will be rewarded with Kava Swap Tokens (SWP).

5. Withdraw assets from the liquidity pool

Users can withdraw their assets from the liquid pool at any time. The assets withdrawn will only be affected by other users' recharge and withdrawal, and the trading function will not affect the assets withdrawn. Withdrawals will be deducted from all accumulated transaction costs. The reward module will track the corresponding reward amount and display this information in the user interface. However, if the user has withdrawn all the funds before the end of the lockup period, he is not entitled to the reward. If only part of the money is withdrawn by the end of the lock-up period, the reward share will be reduced accordingly.

6. Trading assets between liquid pools

Users can trade any number of their tokens for another digital asset via the Kava Web app or the CLI, based on the asset and token pairs available. The user can specify the transaction period (1 minute by default) and the slippage point (1% by default). The price will be automatically determined based on the curve formula so that users can get an instant quote when using Kava Swap. If certain parameters are not violated, the user should be able to successfully complete the transaction of the asset to reduce the loss of funds due to slip points and trade timeouts.

7. User Interface

Users will have an interface to view pool statistics on liquidity to ensure that they can trade tokens at the best price and simultaneously invest in the pool that maximizes rewards. The interface also allows users to view rewards they have earned and those to be earned at any time.

8. Custom lockup period

Users can choose between 1-month and 12-month lock-in periods, with additional rewards for selecting the 12-month option, and the incentive logic is similar to that of the Hard Protocol.

9. Enable on-chain governance for Kava Swap Token (SWP)

The community will make changes to the committee module to allow Kava Swap Token (SWP) holders to vote on governance proposals, enabling users to directly participate in shaping the future of the project. In addition, the locked Kava Swap token (SWP) will be counted toward the governance vote.

10. Variable features of version 1 of Kava Swap

* The following list of features is not an exhaustive release and is not related to the next release upgrade.

Arbitrage robotAutomatically query the trading logic in the memory pool to take advantage of arbitrage opportunities.

Adjustment of transaction cost allocation-- The user can decide the transaction and the transaction cost proportion of the deposit agreement through the governance vote.

Trading platform listing and integration-- Collaborate and integrate with the exchange platform to ensure that users use Kava Swap directly.