On June 6, reports emerged that the Binance Chain will finally get Decentralized Finance (DeFi) utility functions. Based on findings by Cryptovibes, Binance Coin (BNB) is set to become the first asset supported on Kava Labs newly launched interoperable DeFi Lending Platform.
The June 10 launch will keep Kava’s previous promise of delivering the first-ever “cross-chain” DeFi platform in the world. The Cosmos SDK powers the Kava platform. It has extra interoperability benefits, which enables Kava to interact and integrate with all other blockchain assets. Thus, Kava can support everything, including XRP, ETH, BTC, and many others.
It is now clear that the first asset that the Kava DeFi Lending platform will support will be BNB. This integration will enable the Binance Chain to have access to DeFi related functions. The Binance Chain community will now have the opportunity to leverage BNB for stablecoins and loans using Kava’s platform.
This development is highly essential for Binance Chain since it offers its ever-growing community with additional opportunities that ever existed to leverage and gain profits from their BNB. Hence, keeping traders engaged and active motivates them to expand and HODL their existing BNB portfolios.
Interestingly, BNB holders who participate in the minting of USDX will get considerable rewards courtesy of Kava’s Crypto Payday promotion. Minting involves depositing Binance Coins and taking out a stable coin loan. Under the Crypto Payday program, over 74,000 Kava Tokens worth $60K were distributed among minters.
How It Works
DeFi lending platforms let users deposit tokens that work as collateral and take out loans in the form of various stable coins. Kava’s Defi lending platform is designed to be interoperable, unlike the traditional lending platforms. Hence, it can support all cryptocurrency assets irrespective of whatever blockchain it was initially intended for.
In that context, Kava has selected Binance Chain’s BNB Token to act as the first-ever supported cryptocurrency asset on its platform. For starters, users can deposit BNB into the Kava Defi Lending Platform as collateral. In return, they can mint loans in Kava’s Stable Token, USDX. Everyone who mints USDX can get a Crypto Payday.
CEO and founder of Binance, Changpeng Zhao while commenting on the new development said:
“We are excited that BNB users can now get access to DeFi products with Kava’s lending platform. By accepting BNB as collateral on its lending platform, Kava is creating another use case for BNB, which brings additional value for BNB users.”
Kava runs the Crypto Payday promotion to rewards BNB holders for minting USDX. Everyone who collateralizes BNB and then mints USDX is entered into the Crypto Payday pool.
These Crypto Paydays happen for an entire calendar year, with the first one expected to occur on June 24, 2021. Rewards will get distributed every Wednesday at 14:00 UTC for an entire year. The available cumulative prize pool is a staggering 3.84 million KAVA tokens, worth at least $4 million at today’s prices.
How It Impacts Binance Chain
Binance Chain will have access to many of the benefits that come with Decentralized Finance through Kava. The community will have access to DeFi Lending and stable coins. Just like Kava, the Binance Chain is also powered by the Cosmos SDK. Its users have an idea of the many benefits that Kava brings in. Hence, they can quickly adapt to the functionalities of the platform.
The BNB community can leverage their existing portfolios through the new partnership with Kava. Through the ‘Crypto Paydays,’ the Binance coin holders can earn rewards for minting USDX up to 118.5% APY. That is the highest yield that exists anywhere in the current market.
This ability to earn more awards offers extra motivation for the cryptocurrency enthusiasts, especially the individuals familiar with the DeFi structure, to adopt and hold BNB.
What It Means For DeFi
Kava aims to get rid of the challenges of using many platforms by creating a one-stop DeFi Lending Platform. That strategy is expected to deliver the functional efficiency of using interoperable products.
The BNB community is considerably large. It is quite flexible, enabling it to shun the ‘tribalism’ plaguing most of the more prominent altcoin communities. By providing the Binance coin as its first supported asset, Kava brings in a vibrant user base that will interact with the platform as additional cryptocurrency assets become supported.
The user base and community will eventually grow bigger as more crypto assets come onboard. The user base should know the available, interoperable benefits that come with being members of the cosmos ecosystem since the Cosmos SDK powers Binance Chain and Kava. Therefore, new users and community members can learn from the existing community.
As the user base grows on Kava’s DeFi Lending Platform, so does the mass adoption of blockchain interoperability in general. Thus, Kava ranks among the entities working towards the development and widespread adoption of decentralized finance products.