There was a time when people who saw that Kava is offering 110% APY on BUSD made them question whether Kava is legit or a scam. How are they able to guarantee such enormous returns? Let’s first take a look at the process called “staking”.
Staking is a concept that’s been around for decades but has gained popularity in the cryptocurrency world. It’s delegating your holdings to a third party (like staking pools) as collateral for a loan. When you stake your KAVA coins or any other one, you’re loaning them out to a pool operator, who then uses them to make loans to other people. The pool operator pays you interest and returns them to you when the loan is paid off.
The benefit of staking is that it allows users to earn passive income on their crypto holdings without selling them. Basically, investors earn staking rewards on their KAVA. This piece provides a detailed step-by-step guide on how to stake KAVA and the benefits and risks of staking the KAVA token. So, comes the ultimate question, how to stake KAVA?
Keep in mind though that is 110% on the coin itself; if the coin drops dramatically in value you will still lose money because it will still convert to less USD. This was an offer made a year ago but depending on your validator, you can earn up to 21.12% interest.
Today’s Kava price is $2.12 with a 24-hour trading volume of $23,798,091. Kava is down 2.69% in the last 24 hours. The current CoinMarketCap ranking is #82, with a live market cap of $518,632,794. It has a circulating supply of 244,871,332 KAVA coins and the max. supply is not available.
What is Kava?
Kava is a blockchain project with a co-chain infrastructure combining unique properties of the Ethereum and Cosmos ecosystem to create a single, secure, scalable network. Kava Labs developed the Kava blockchain, and it is the premier cross-chain DeFi platform.
With the Ethereum Co-chain, Kava functions as an EVM-compatible network enabling the operations of Ethereum dApps and smart contracts. Meanwhile, the Cosmos Co-chain is responsible for Kava’s Tendermint-based Proof-of-Stake consensus and granting the network access to the Inter-Blockchain Communication protocol (IBC).
Kava primarily operates as a decentralized lending platform, and its native utility token is KAVA, which is used as a medium of value exchange or for staking. The staking process of KAVA simply entails locking up your tokens on the Kava blockchain to aid transaction validation and contribute to network security. In return, you earn rewards in the form of interest while being made eligible to participate in the network’s governance.
Kava Staking and How it Works
Using a crypto wallet, you can stake your KAVA tokens by delegating them – bonding – to network validators. These validator nodes participate in staking on your behalf while taking a commission on the block rewards. The individual Kava rewards depend on block time, total volume staked, block rewards, and daily network rewards.
Delegating your KAVA to validators allows you to retain full custody of your staked tokens, thus, maintaining your voting rights. Delegation comes with risks, such as slashing – reduction in your staked tokens – if your chosen validator flouts the network rules. You should also note it requires a 21-day unbonding period to “undelegate” your staked tokens or transfer them to another validator. At the end of the unbonding period, you have full access to your KAVA tokens.
Alternatively, you can create and operate a validator node by yourself. However, Kava chooses only the top 100 validators determined by total staked KAVA to verify transactions and receive staking rewards. Hence, bonding to a network validator with a massive stake weight is recommended.
Another staking method is using crypto exchanges that provide staking services. Binance offers staking periods of 30, 60, and 90 days, with different APRs. You choose a staking package, make a deposit, and earn token rewards.
However, while exchanges eliminate the burden of choosing a network validator, they retain complete control of your assets for the whole staking duration. Hence, they acquire your voting rights for that period. In addition, on certain exchanges, e.g., Binance, unstaking your KAVA before the maturation of your staking product could lead to penalties in the form of fees/charges.
Kava’s Tendermint-based PoS mechanism: Easing the Staking Process
The Kava network utilizes a Tendermint-based Proof-of-Stake consensus algorithm which is solely responsible for its staking operations. With this mechanism, users can stake their KAVA tokens in a simple, secure process, thus ensuring the security and integrity of the network.
With the Tendermint PoS algorithm, KAVA holders have access to asset delegation, which enables them to participate in staking and reap the rewards without being actively involved in any transaction validation process.
Why is the demand for Kava staking so high?
There are several reasons behind the massive interest in kava token staking.
To begin with, KAVA staking is a relatively effortless process with few requirements; thus, it attracts many investors, including crypto newbies. Furthermore, its staking services are easily accessible on major crypto exchanges, including Binance, Huobi global, Bitmax io, etc. In addition, popular cryptocurrency wallets such as Trust wallet, and others like Keplr Wallet, Cosmostation, etc., allow their users to stake the token directly on the Kava network.
Depending on your validator, you can earn up to 21.12% interest. Finally, Kava offers a short unbonding period of 21 days, allowing users quick access to their tokens after unstaking. Unlike Ethereum, this is longer, with lock-up periods extending from months to years.
Staking KAVA on Trust Wallet
Step 1: Download/Install Trust Wallet
- Download the Trust Wallet application on your iOS or Android device. Then, create a new wallet or import an existing wallet (if you have one).
- If you create a new wallet, ensure to backup your wallet.
Step 2: Create a Kava Wallet
- On the Trust Wallet dashboard, click the button at the top right corner.
- Search for Kava, and turn on the wallet feature to make it visible on your Trust Wallet dashboard.
Step 3: Add some tokens to your wallet
- Click on your Kava wallet.
- You can transfer KAVA from other wallets to Trust Wallet using your receiving address.
- Trust Wallet also allows you to buy KAVA from third-party providers.
Step 4: Stake KAVA
- After obtaining some KAVA tokens, you can now begin staking.
- To start, click on Kava.
- Select the Stake icon and click Stake on the following page.
- Type in the volume of KAVA you want to stake and select a network validator. The APR offered by each validator will influence your choice. You also want to look for other factors, such as the validator’s history and past performance.
- After picking a validator, tap Continue to confirm your action. Just like that, you’re done.
Take note that you will be charged a network fee of 0.001 KAVA!
How to Stake KAVA on Binance Exchange
Step 1: Register an account on Binance and verify your identity.
Step 2: On your Binance dashboard, click on Earn and select Staking.
Step 3: Under Locked Staking, Search for KAVA. Pick your preferred staking duration and click on Stake Now.
Step 4: Enter the amount of KAVA you want to stake.
- Take note of parameters such as the Est. APR on each staking duration, the Stake Date, and the Interest End Date – when you will have access to your KAVA tokens again.
Step 5: Agree to Binance Staking Service Agreement and click “Confirm” to stake KAVA.
It is worth noting that on Binance, the APR for each staking duration changes daily according to the on-chain staking rewards.
Staking KAVA on Cosmostation Wallet
Step 1: Download/Install the Cosmostation Wallet for Android or iOS
Step 2: Create a Kava Wallet
- After launching the Cosmostaion Wallet, click on Start, and then Create.
- On the next screen, you will find your mnemonic or wallet phrase (ensure to save the phrase, preferably offline). After that, Click on Derive Wallets and set up your alphanumeric security pin.
- Scroll till you find Kava, select it, and click Derive Wallets to create a Kava Wallet.
Step 3: Add tokens to your Wallet
- You can use the receiving address at the top of your wallet dashboard to transfer KAVA tokens from other wallets.
- You can also buy KAVA tokens with fiat money (USD, EUR, and GBP) on Cosmostation via MoonPay.
Step 4: Stake KAVA
Having acquired some KAVA tokens, here’s how to stake the asset.
- Select Delegate, and choose your preferred validator. You can filter validators by name, voting power, or APR.
- If you choose Cosmostation as your validator, you will find details about the total bonded tokens, estimated APY, and commission. Select Delegate, and enter delegation amount. Click Next.
- Select your transaction fee using the slider (this determines how fast your transaction is confirmed on the network). Click Next and input your security pin to confirm the transaction.
Viola! You’re done!
How to Stake KAVA on Keplr wallet?
Step 1: Add the Keplr wallet extension to your browser
- To learn how to install Keplr on the Chrome browser, you can watch this video https://youtu.be/-6-2JupRdpk
- After installation, you can easily access the Keplr wallet by clicking on the extension icon on your browser.
Step 2: Create an account on Keplr
- Create a new account.
- Input your account name and password.
- Ensure to copy and store your mnemonic seed safe offline. You can choose between a 12 or 24-word seed phrase.
- Click Next to continue, and reselect the phrases accordingly to complete your registration.
Step 3: Setup Kava Network
- On the Keplr dashboard, switch from Cosmos Hub to a Kava Network.
Step 4: Add KAVA token to Wallet
- Add some tokens to your Kava Wallet by clicking to copy the wallet address.
Step 5: Stake KAVA
- After adding KAVA to your wallet, click on Stake, and then Manage to pick your preferred validator from over a hundred on the list. Take note of their commissions and APR.
- Click Delegate, specify the amount, and select Delegate again.
- After that, click Approve to confirm the transaction, and your tokens are staked.
Is it possible to mine Kava (KAVA)?
Kava (KAVA) employs a Tendermint-based PoS consensus mechanism, not a Proof-of-Work (PoW) algorithm; hence it cannot be mined. You earn new KAVA tokens solely by staking participation.
How much do you earn with Kava staking?
Using Binance, you will earn a 7.20% APR on the 30 days period, an 8.78% APR on the 60 days staking period, and a 12.63% APR for 90 days. You can earn as high as 21.12% interest from staking your KAVA by delegating your tokens to network validators.
On Kraken, you can earn a 20% annual percentage yield (APY) on your KAVA stake. Using the Walletburst calculator, we can calculate the expected yield on staking $1000 worth of KAVA (495.5 KAVA) on Kraken for one year.
With a 20% APY, you will earn $200 worth of KAVA(93.897 KAVA), bringing your total stakings to $1200 worth of KAVA (563.380 KAVA).
Benefits of Staking Kava
- When you stake your KAVA coin, you become eligible to participate in Kava’s governance and can vote on any proposed development on the network.
- It is a long-term investment technique, allowing users to earn profits if KAVA experiences any gain in its value.
- There is no maximum supply of KAVA, so the token undergoes yearly inflation of 3% to 20%. Staking KAVA helps to keep this inflation rate down, thus maintaining the value of KAVA.
- Staking can be quickly done and requires no complex equipment.
Risks of Staking Kava
- The primary disadvantage of staking any coin, including KAVA, is the probability of the token’s value reducing to zero while it is locked up.
- With Kava, validators can be penalized if they commit offenses such as – double signing or liveness -, leading to token slashing, including yours.
- After unbonding your tokens from network validators, it is inaccessible to you for 21 days.
- Staking through centralized exchanges usually involves a lock-up period ranging from 30-90 days. You cannot sell or access your staked KAVA tokens during this period.
- Staking the token via centralized exchanges also relieves you of your voting rights. Thus, you cannot participate in Kava’s governance till the maturation of your staking product.
Staking KAVA presents numerous benefits, including a simple means of earning passive income. However, before staking, do more research while considering the risk and possible scenarios involved.
Kava is legit enough in the sense that it’s a real project with real devs. They just had a botched Kava5 launch followed by a successful Kava5 launch two weeks later. All cryptocurrencies suffer some glitches in one form or the other. A founder wouldn’t be all in just to fold up the next day,
The current APY won’t last that’s the practical perception. This is a common strategy with newer DEFI protocols to offer incentives to get liquidity in. Those rates will fall rapidly, most likely in an expiratory fashion.
If you think kava will exist in the future then Kava/hard/BUSD would be a solid investment. Will the Kava project succeed? It’s been there for over two years now, so let’s hope that they will continue to expand and go on with their roadmap.
Will people use the protocol? Nobody knows. They could fail. They could fumble along for years and not grow. Or it could explode.
The only issue with BUSD was volatility. It’s not very well pegged. This is an issue. Not sure about the current state of that, I’m only looking at the KAVA token. It’s too early in the roadmap to be worrying about price. They are hitting goals but there is a LOT left to do on the development side.
If you have the same perception as most people do, stake enough Kava you can afford to lose through Kraken and plan on forgetting it for a long while. We’ll have to see how the protocol and Cosmos itself continues to develop. For information, Twitter has been the only real source of news.