The Kava Network is unique in being the initial Layer-1 blockchain that blends the Cosmos SDK's scalability and speed with Ethereum's strong developer ecosystem. Its innovative co-chain architecture is designed to support developers in crafting Web3 and next-generation blockchain solutions. The network's decentralization and security are upheld by $KAVA, its native token used for governance and staking.
As of 12/31/2024 $KAVA has reduced its annual inflation to 0%, making its supply permanently hard capped at 1,082,862,470 KAVA.
As a result of this, Kava chain is set to transition into a self-sufficient operational framework. This new approach will rely on revenues generated from transaction fees, native project emissions, and provisional funding from the Kava Foundation. The objective of this strategy is to not just sustain but also to accumulate additional KAVA through blockchain-based activities. Decisions regarding the use of this extra $KAVA, whether it be for burning or reinvestment to boost network growth, security enhancement, and further decentralization, will rest in the hands of the Kava community.
In recent months Kava has seen a steady rise in its TVL. By zooming in we can see an increase of 22.26% in TVL from $202.5m in Oct 2023 to $259.88m in Jan 2024. It is important to monitor TVL going forward as it is a good indicator of the evolving dynamics of the DeFi sector and Kava's position within it.
Liquidity
On the 15th of November, Kava unveiled its alliance with DWF market makers. The partnership, as detailed in their announcement, involves DWF extending beyond fundamental risk management and liquidation roles to provide strategic counsel. Their strategy includes embarking on proprietary trades within the DEXs on the Kava network, striving to reach 7.5% of the total trading volume across all DEXs in that ecosystem. This collaboration set out to substantially improve liquidity on Kava's platform, enriching it with a wider array of trading pairs and deeper market depth, thereby enhancing overall market engagement.
By examining the table below, we can get a snapshot of the various venue’s book depth, volume and spread as of the 01/02/2024;
Binance stands out as the leading venue for volume with MEXC being the leader for overall book depth.
In summary, Kava Network's shift to a zero inflation rate for $KAVA is a strategic advancement, reinforcing its position within its sector with a hard-capped supply. This move, along with the network's evolving architecture and partnerships, notably with DWF market makers, has led to increased liquidity and a rise in Total Value Locked. As Kava transitions to a self-sustaining economic model, the community's role in decision-making becomes crucial for future growth and network stability.
Sources:
https://docs.kava.io/docs/intro/
https://kavachain.medium.com/kava-15-kava-zero-inflation-b7cb535d82ce
https://medium.com/@GryphsisAcademy/kava-15-upgrade-zero-inflation-unlocks-kava-investment-opportunities-2c5ada35bfdb
https://www.coingecko.com/en/coins/kava
https://defillama.com/chain/Kava