Expert Review

Review and Rating

Kava Network and SVET Rating
SVET Execution (Solution – Validity – Equity – Team)

Solution: before starting the review, it is necessary to understand what the project is and how it earns. It is important to say that a potential investor can find more detailed information in the documentation section on the official project page [1]. From there we learn that the is a cross-chain decentralized finance platform. In other words, Kava is a decentralized bank with various digital assets such as Bitcoin (BTC), Ripple (XRP), Binance (BNB), Cosmos (ATOM) and others, allowing users to lend or, conversely, borrow these assets from each other without intermediaries to subsequently make a profit. Having studied many other open sources besides the site of project, I could not find an exact answer regarding what Kava makes money on. However, the supposed business model of the project is to charge fees from users for the opportunity to borrow a Kava stablecoin – USDX – in exchange for their crypto assets, which will be frozen in smart contracts. It is at this point that a CDP (collateralized debt position) is created, and the user's blocked funds begin to act as collateral for the loan [2]. At the moment, there is no other information regarding the business model.

Also, briefly consider the situation with the number of users on this platform. It is worth noting that on the project website there is a link to the DefiLlama, decentralized finance aggregator, which will allow us to assess the scale of Kava network. However, the exact number of users is not indicated anywhere, however, on the website of the crypto exchange Binance, I was able to find the number of wallets holding the KAVA token. As of the beginning of February, their number is approaching one and a half thousand addresses [3]. Let's turn to the DefiLlama website and find out that at the moment the project is managing more than $600 million in assets (total data on cryptocurrencies KAVA, Kava Land (HARD) and Kava Swap) [4]. Moreover, Kava’s partners include Chainlink, a decentralized oracle service for smart contracts, Mantra DAO DeFi platform and liquidity aggregator Reef Finance. Thus, the Solution rating will be set at level b.

Validity: according to information from open sources, it can be found out that the Kava project began its existence back in 2018, when the Kava Labs company was created [5]. However, the roadmap posted on the Kava website Networks testifies that the project began to develop actively only in the 4th quarter of 2021, when the development of the Ethereum joint network began, which allows to optimize the development of smart contracts running on it.
Now let's look at the legal status of the project in question and turn to the user agreement and privacy policy posted on the Kava website [6,7]. It follows from these documents that Kava Labs is registered in the United States of America, in particular, the exact legal address is as follows: 2 Embarcadero Center, San Francisco, CA 94111, United States. Thus, we can say that the project in question is being developed by a company officially registered in the United States, with an exact legal address and properly executed documents regulating legal relations with its users, on the basis of which it is possible to determine the Validity rating as b.

Equity: consider the financial health of the Kava project. The main cryptocurrency has a similar name – KAVA. Let's turn to the CoinMarketCap portal and, based on the data obtained, conduct a brief analysis. As of March 2, 2022, this cryptocurrency is trading at a price of $4.1 and has a market capitalization of $750 million. The daily trading volume was $76 million. In turn, the market capitalization at the full issue is only $711 million. However, the capitalization at full supply cannot be less than the current market capitalization, but CoinMarketCap gives information that the circulating supply of tokens (182 million) also exceeds their maximum supply (173 million). Nevertheless, it is important to emphasize that this situation is possible because this cryptocurrency can function as a reserve if the Kava system is under-secured. In this case, new tokens are automatically created, which are subsequently used to purchase the project's own stablecoin – USDX, until this stablecoin is sufficiently backed. Let's take a brief look at its performance. USDX currently has a market capitalization of $172 million and a daily trading volume of $350,000 [8].

As for investments in Kava, the CrunchBase portal gives information about 5 investment rounds, thanks to which the project managed to raise $1.2 million from third-party investors. Also, there is information that Kava directly launched its own «$185M Ignition Fund» for onboard DeFi projects in September 2021, and in April 2022 it already collected the entire amount and sent it for further development [9]. As a result, the Equity rating will be at c.

Team: the project team listed in the workers tab on CrunchBase contains 5 profiles. However, the registration of Kava Labs in 2018 was run by three founders: Brian Henning Kerr (one of the board members at Kava, previously worked at Fnatic Gear (esports products) as CEO), Ruaridh O'Donnell (software developer at Kava) and Scott Stuart (CEO and Product Manager at Kava). Also, there are links to two more key employees – Sarah Austin (Head of Content) and Michael Levi (Chief Marketing Officer). The total number of employees is 45 people, which is confirmed by data from the company's page on LinkedIn, where you can also see the pages of the founders and project employees [10]. Kava page Network on Twitter has 165 thousand followers, which means that the Team rating will be c+.

Rating: b / b / c / c+

1. Kava. Developer Docs
2. Review: Is It Worth Investing? Here is All You Need to Know
3. BNB Chain: KAVA
4. Defi Llama
5. What is Kava? (KAVA)
6. Kava. Terms of Use
7. Kava. Privacy Policy
8. CoinMarketCap: Kava
9. Kava Labs Inject $185 Million for Growth
10. Crunchbase: Kava Labs
11. Twitter: Kava Network
12. LinkedIn: Kava Labs Inc
13. CoinMarketCap: USDX [Kava]
14. Kava Launches $185M Phase-1 Ecosystem Fund