Kava Swap will be the foundation to complement Kava DeFi's eco Lego

The red-hot DeFi market began to cool as the market fell, and many DeFi agreements began to expand into previously less competitive segments. Some of the money in the market that had nowhere to go went into stablecurrency wealth management products and some went into play to Earn games.

Is not the hot spot of the market, not by the attention of hot money does not mean that the development of stagnation. The recent airdrop from dYdX, a decentralised derivatives trading platform, has once again spurred the market to try out DeFi apps that have not yet issued tokens.

Kava Labs, which supports cross-chain DeFi applications and services, has launched the Kava Swap test network on July 29 with a one-week incentive campaign. According to Kava, Kava Swap is the world's first cross-chain liquidity center that connects DeFi, blockchain and financial services.

BlockBeats chatted with Brian, CEO of Kava, to better understand why Kava chose to launch a cross-chain liquidity center when all the buzz in the industry is games.

Kava Swap is the building block of Kava DeFi Eco Lego, which will seek an IPO in the future

BlockBeats: In the official introduction of Kava Swap, it is "the world's first cross-chain liquidity center connecting DeFi, blockchain and financial services". Could you please explain the purpose and applicable population of Kava Swap more easily?

Brian:Kava Swap is an automated market making (AMM) service that allows traders to trade directly with a liquidity pool, where both parties' tokens are stored and exchanged seamlessly, and receive liquidity rewards, compared to a centralized trading platform.

As an open, permitless application, Kava Swap is not just for single traders. Trading platforms and institutions can use Kava Swap to gain additional liquidity, trade assets and gain revenue. With Kava Swap, users can complete the process of coinage, borrowing, trading, and earning income through circulation pool in a one-stop shop in Kava, which will greatly improve capital efficiency.

BlockBeats: At the moment, DeFi is not receiving much attention from the market. Why launch the Kava Swap test network at this time?

Brian:We believe that the DeFi boom has never faded, and it is just going through a period of growth shift. Kava chose DeFi not because of a market boom, but because we believe there will always be a need to utilise the assets.

Kava is an early player in the cross-chain DeFi space, having set up its cross-chain mortgage lending app in the first half of last year and has been running well ever since. After the DeFi industry broke out in the middle of last year, we timely adjusted the company's development strategy and began to develop into a public chain ecology dedicated to DeFi.

Kava's goal is to help users around the world make the most of their assets and gain more revenue opportunities without barriers to entry. Kava Swap is a part of our ecological planning and a very important module. After the launch of Kava Swap, the basic module of Kava DeFi Eco-Lego has been basically built. Together with Kava lending and HARD currency market, which are already in operation online, it can form a closed loop of capital utilization ecology, and achieve high utilization rate of users' funds and maximization of profits through nested product usage patterns.

The next direction of Kava is not only to improve capital utilization in DeFi and even the blockchain industry, but also to help DeFi embrace the broader traditional financial world, which is also the strategic goal of Kava's IPO, USDC integration with Circle, etc.

BlockBeats: The Kava Swap test network incentive program will be launched on July 29th and will be based on the "trading profit" and "Liquidity Provider (LP) Reward". LP Reward is familiar to you.

Brian:First on the Kava Swap test site, we will mobilize the price dislocation of the liquidity pool and the price of the internal capital pool by setting a large number of trade orders throughout the activity to simulate various market conditions. We also encourage participants to be creative. In addition to constantly trading in Swap's liquidity pool to obtain arbitrage opportunities, they can also make more profit by using Kava's existing loans and the lightly leveraged loans made by HARD application.

Regarding the trading profit logic of Swap, compared with the trading model of CEX, the biggest difference of Swap is that it will provide quotation between two kinds of assets in the liquidity pool at any time according to a simple pricing algorithm. The value of the two kinds of assets multiplied basically remains a constant, and the pricing of the liquidity pool will move back and forth on a price curve. This gives arbitrageurs more room for manoeuvre than CEX, because as the assets in the liquidity pool trade, the system automatically adjusts the pricing because of the liquidity pool's balancing mechanism.

BlockBeats: The Kava Swap test network is based on the Kava 5 main network, which will be launched on the Kava 6 main network. This means that Kava Swap will go through the Kava mainnet upgrade from the test network to the launch mainnet. What should users and developers be aware of during this process? Are the operation habits of the Kava Swap main network the same as that of the test network?

Brian:There will be two rounds of open testing for Kava Swap. The first round of testing will be for ordinary users. We also launched a one-week test network incentive campaign to encourage users to find any bugs in the back end code base, suggest improvements to the front end, and stress test the system. The second test network will be opened to verifier nodes to encourage them to find security compatibility issues on the chain. In the course of the two rounds of open beta network activities, we conduct internal and external code audits and make product fixes and improvements based on the audit results and feedback from beta network activities. The internal audit and testing process will continue until the main network goes online.

When Kava performs the main network upgrade, all Web apps will be suspended and open again after the main network upgrade is completed and the security is confirmed. During the upgrade, users cannot trade on the platform, and the authenticator node also needs to be upgraded along with the main network. The main network operation of Kava Swap will be basically the same as the current test network.

The synergies brought by SWP will maximize user revenue

BlockBeats: There's no doubt that token issues are at the top of users' minds. Will the launch of Kava Swap bring economic empowerment to Kava holders?

Brian:Kava Swap is an application service built on the Kava DeFi platform. This means that the Kava Swap code runs on the Kava blockchain, but has its own unique features. In addition, Kava Swap has its own token SWP with its own unique allocation mechanism. SWP tokens are allocated to Kava Swap users when they use Kava Swap to gain additional liquidity and trade assets. Like HARD Protocol, in return for Kava Stakers' contribution to on-chain security and cross-chain infrastructure, Kava Stakers receives 20% of its supply of HARD tokens for four years. As a result, the Kava Swap token (SWP) will also be distributed pro rata continuously among Kava Stakers. That is, if you Stake KAVA, you are eligible to receive the SWP token.

BlockBeats: Kava Swap will launch its own token SWP. What other uses will SWP have besides project governance?

Brian: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 allocated among Kava Swap assets, platform fees, and more. In addition, SWP Staking will be used for LP incentives, KAVA Staking incentives, airdrop rewards, community voting, and more.

BlockBeats: Kava Ecology has issued Kava and HARD tokens. SWP will be the third token in Kava Ecology, and Kava Stakers, who previously enjoyed a 20% HARD token supply for four years, are now enjoying SWP supply. Does this weaken the value capture of SWP in the whole ecology?

Brian:Kava ecology also has a very important stablecoin, USDX, and the growth of USDX supply and usage is one of the important indicators to realize the external expansion of Kava's financial services ecology. The SWP, HARD, and KAVA tokens serve as governance tokens on their respective apps, essentially to help the community govern and grow the USDX, and to maximize user revenue through collaboration across the three apps.

In general, the stability and security of Kava's entire on-chain environment is based on the contributions of Kava Stakers, so it is reasonable and necessary for Kava Loan, HARD and Kava Swap to compensate Kava Stakers for their on-chain services. The fact that Kava DeFi public chain ecology has been opened up to more developers, and that developers have access to Kava's on-chain services and cross-chain infrastructure, we suggest that these apps compensate Kava Stakers appropriately, is one of the reasons to ensure the healthy and sustainable development of Kava Ecosystem.

Kava will vigorously develop derivatives and smart investment advisory services

BlockBeats: Kava said in ecoPlan 2021 that the Kava SAFU Fund will be launched when the Kava 6 mainnet goes online to underwrite some infrastructure and cross-chain activities. Lightning loans and hacker attacks are the actions that most DeFi users are aware of. Is it safe to assume that with the Kava SAFU fund, there is no need to worry about lightning loans and hacking attacks on Kava?

Brian:First of all, Kava doesn't offer flash loans. Kava's goal is to create the most secure cross-chain DeFi platform, and to date, Kava holds a record of zero vulnerabilities and zero attacks.

The Kava SAFU Fund was launched in June and has nearly 10 million Kava in reserve. The function of the fund is to provide users with compensation after unexpected bugs, bugs, hacks, liquidation failures or other technical problems cause users to lose money during extreme markets.

In the black Swan of 519, The Kava SAFU fund has received its first application to compensate users facing liquidation fines through a community governance vote.

In addition to the Kava SAFU fund, Kava also has a rigorous internal code review process and employs professional third-party code audit partners to help us minimize vulnerability risks. But we also know that there is no process to ensure 100% security, and what Kava can do is to minimize the risk to users' money and to minimize the loss of users in the event of a possible event.

BlockBeats: At present, Kava ecology already has HARD Protocol of loan market and Kava Swap. Will derivative market and other products be launched in the future?

Brian:The launch of Kava pledged derivatives is planned in the Kava 2021 product roadmap.

A KAVA pledge derivative is an asset derived from KAVA tokens pledged to secure PoS consensus on the web. KAVA pledged derivatives can ensure that more KAVA (in the form of derivatives) can obtain liquidity and be applied to a variety of financial services on KAVA, while not giving up the security and return brought by KAVA POS pre-pledged.

BlockBeats: Kava 7 will launch a smart investment service and application platform. What can you tell us in advance about the impact of this service and platform on the Kava ecosystem and the Kava Swap?

Brian:Yes, the Kava 7 main network will launch a Robo Advisor and application platform to help users enjoy automated investment strategiing across the various financial services that Kava offers, and will increase user engagement by providing more ROI generation strategies for less active Kava users.

At present, intelligent investment consulting still belongs to an emerging field in the development of the industry. In fact, it plays the role of a bridge between users and financial products, and provides users with better asset allocation through algorithm and model customization of risk asset portfolio. Asset allocation plays a very important role in investment returns, about 90% of investment returns are due to successful asset allocation. Therefore, after the launch of the intelligent investment advisory application of Kava, it will have a huge impact on the entire Kava ecology and Kava Swap. It can provide a system-level integration and improvement for the capital utilization of the whole ecology.

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