Unlike most DeFi projects that solely focus on Ethereum, Kava provides a decentralized finance solution for different assets.
Now the two biggest cryptocurrency exchanges with the largest audiences in the world have integrated and are integrating Kava DeFi solutions with the Kava API.
According to the announcement and press release issued by Huobi DeFi labs, an integration similar to how Binance provides exposure to Kava’s technology would mark a new entrant of enterprise integrations in DeFi that recognize the trend started by Binance and see the value of DeFi for centralized financial institutions. Any financial service that has crypto can now add decentralized financial services as a feature for their users. Other financial institutions will likely want to hook into DeFi should the trend continue. For example, users of Robinhood want to not only buy their Bitcoin and hold it, but they want to earn high APY since this feature is now becoming available across centralized financial institutions worldwide. Etoro recently stated that they are looking for decentralized financial integrations. Kava has a very strong business development team working on these partnerships directly out of Silicon Valley. When users request new features it typically indicates that the services are trending on other platforms, and right now traders want DeFi.
Broadening Access to DeFi
Following the DeFi industry’s ongoing growth, teams and developers begin to look toward the future. Despite the industry’s popularity, several shortcomings have become outspokenly apparent. For one, too many projects like Polkadot and Ethereum support a siloed blockchain ecosystem only, thereby defeating the decentralized nature of DeFi. On the other hand, some developers prefer the quick and easy turnaround of deploying an app on the Ethereum blockchain.
Binance has paved the way for DeFi solutions that span multiple blockchains and increase overall liquidity. Both Kava and Compound Finance are directly accessible through the Binance platform. It speaks volumes that the biggest exchange in the world favors blockchain-agnostic decentralized finance solutions. In a media interview on July 31st 2020, CEO and Founder of Binance, CZ stated, “we’re definitely looking at DeFi very closely. Binance has two separate platforms. One is like a centralized exchange platform and the other one is sort of the Binance chain, decentralized blockchain. So I think we’re offering similar centralized finance solutions on Binance.com like saving and staking, and we’re letting some of the industry players lead the effort on the decentralized finance development, like Kava and other projects.”
Ever since launching DeFi staking on Binance, users have been flocking to these offerings. The integration of Kava and Compound Finance triggered a surge in subscriptions and sold out within the first 30 minutes. This clearly signals the overall demand for DeFi solutions that go beyond the single blockchain architecture peculiar to Ethereum.
What Is Huobi Up To?
Recall that Huobi officially kicked off its foray into the decentralized finance landscape with the launch of Huobi DeFi Labs in August 2020. This initiative underscores Huobi’s commitment to partner with and invest in viable DeFi projects. From what we have learned so far, the core mission of this subsidiary is geared at positioning Huobi and its users at the heart of the explosive DeFi market.
It comes as no surprise that Huobi is strengthening its working relationship with Kava. In November of 2020, Huobi Global integrated the KAVA token for trading. A promising first sign, but this news appears to go much deeper than that.
More specifically, Huobi is adopting a similar approach as Binance. Rather than just supporting the asset’s trading, Huobi has begun to experiment with DeFi staking and has recently integrated Kava’s technology into its platform. Its users can now enjoy the high yielding opportunities of DeFi as Kava is poised to incorporate HBTC into its ecosystem. With this, HBTC holders can access USDX loans on the Kava lending app and even use the loans generated to accrue more yields on Hard Protocol, the world’s first DeFi cross-chain money market.
Additionally, the joint decision to strengthen their working relationship confirms that Kava is one of the few DeFi projects with an actual long-term vision. The team has unveiled the 2021 roadmap, introducing many significant changes and upgrades to the ecosystem including plans for Ethereum.
In the next couple of months, expect Kava to offer more use cases for Huobi’s assets. Huobi Token, HBTC, and HUSD will all become part of Kava’s DeFi platform. For holders of these assets, the possibilities that come with the exposure to collateralized lending and HARD money markets is limitless.
Kava Is an Example of DeFi 2.0
Unlike most DeFi projects that solely focus on Ethereum, Kava provides a decentralized finance solution for different assets. The network currently supports Binance Coin, Bitcoin, BUSD, XRP, KAVA, and HARD. Users who hold any of these assets can now earn up to around 69% APY through Kava’s technology.
Comparing this to the APY offered by other DeFi projects, Kava’s rates are more than acceptable. While users can earn more by investing in obscure DeFi assets – potentially prone to rug pulls – many people favor the proven track record of Bitcoin, Binance Coin, or XRP. These assets have been around for years and continue to play a role of importance in the cryptocurrency industry.
Rather than locking oneself into Ethereum-based DeFi, 2021 will be the year that cross-chain decentralized finance will take center stage. Huobi’s upcoming collaboration with Kava illustrates this point even further. Rather than forcing users into buying tokens that will – most likely – lose value over time, Kava’s approach embraces the tried-and-test crypto-assets.
Potential KAVA Price Impact
Since 93% of crypto users are not yet engaged in DeFi earning activities, Kava has continued to capture the opportunity seen with centralized exchanges. These exchanges will bring DeFi solutions like Kava to millions of people’s attention and they are very much likely to be the ones to take the “DeFi meets CeFi” trend mainstream. If Kava can tap into this market, the value of its native KAVA token is likely to skyrocket. More importantly, there will be more liquidity across their products.
Additionally, the price of Cosmos’ native token ATOM is rising. KAVA may benefit from this momentum as the Kava blockchain is built using the Cosmos Tendermint SDK that announces the launch of IBC, inter blockchain communication enabling composability February 18th, 2021. This is right about the same timeline when the Kava integration launch on Huobi. When comparing the two, Kava has a broader appeal than Cosmos, as it is better positioned for business development, especially with Fintech platforms because Kava is located in the Silicon Valley. Huobi is paying close attention to Kava and not Cosmos, after all.
From a broader perspective, it seems safe to assume that the partnership between Kava and Huobi will pave the way for broader DeFi adoption. It also highlights the potential of this cross-chain decentralized finance solution. When exchanges want to integrate projects looking beyond Ethereum for liquidity, a clear message is sent to the rest of the industry.
The year 2021 will put a strong focus on cross-chain DeFi solutions and slowly erode the importance of Ethereum-only projects. Kava paves the way for broader adoption of decentralized finance. With over $850 billion in liquidity to tap into, the future looks promising for Kava.
Founder and editor at BTC PEERS. Andrey writes about financial experiments, DeFi, cryptocurrency, and blockchain.