The first asset supported as collateral on Kava‘s DeFi lending platform is Binance Coin (BNB) so users will be able to use BNB as collateral to obtain loans in USDX, Kava‘s stablecoin.
Kava is a DeFi cross-chain platform, based on Cosmos SDK, which can interact with various assets based on different blockchains, such as BTC, ETH, XRP or BNB.
The first asset that can be used as collateral will be BNB, allowing Binance Chain users to make use of their own BNB tokens to obtain loans in stablecoin through Kava.
To promote the initiative, BNB owners who will participate in the minting of USDX tokens by depositing BNB and taking out a loan in this stablecoin will be able to earn rewards through Kava’s Crypto Payday promotion. In fact, every Wednesday, for a whole calendar year, KAVA tokens will be distributed among those who have locked BNB as collateral and hold USDX tokens.
A total of 74,000 KAVA tokens will be distributed, for a value of about $60,000, and the first distribution will take place on June 24th, 2020.
The interesting thing about Kava’s DeFi platform is that it will be possible to use assets on various blockchains to get loans in USDX.
The choice to begin with BNB is not accidental: Binance Chain is also based on Cosmos SDK, so its user base could already know its advantages and be more capable of using the platform.
Kava’s goal is to eliminate the hassle of using multiple platforms, and the conflicts between blockchain supporters, as well as to become the main hub of the entire Cosmos ecosystem.
Currently, for example, to use Bitcoin as collateral to generate the DAI stablecoin ERC20 tokens, based on Ethereum, it is necessary to convert BTC to ERC20 tokens of equal value, such as WBTC or pBTC, and then use these as collateral.
The process involves an extra step, which Kava wants to eliminate by allowing the direct use of the assets of any blockchain as collateral to generate USDX tokens.
Kava’s decentralized lending platform will go online tomorrow, June 10th, 2020, and will be available through wallets and exchanges such as Cosmostation, Forbole, Trust Wallet, and Frontier.
The next candidates to be joining BNB as collateral for USDX are BTC, XRP, and ATOM.