Want a super simple strategy to earn on DeFi to return a high yield? Then check out this article on how Kava Earn works.
DeFi Made Easy with Kava Earn
DeFi made simple with Kava Earn. Pre-made DeFi strategies have been created by the Kava team by combining Kava Mint, Kava Lend, and Kava Swap.
Kava Earn strives to simplify complex DeFi features to a simple supply-and-withdraw user interface, similar to Yearn Finance and Instadapp Lite.
As one of the most stable assets in crypto, Kava Earn focuses on Binance USD (BUSD) in its first edition.
In partnership with Binance and Paxos, BUSD is a stablecoin backed 100% by US Treasury bills and fiat cash (US dollars).
With the BUSD Kava Earn strategy, it’s never been easier for users to earn with Kava.
How Does Kava Earn Work?
The whole process on Kava Earn is super simple. Multiple messages are sent in a single transaction when users supply to a Kava Earn page.
The opposite messages are sent in a single transaction when users withdraw from Kava Earn.
Users can see their positions reflected throughout the Kava platform when they supply and withdraw. When using an Earn strategy, it’s best not to update positions outside the Earn page since it can put the strategy at risk.
Strategies on Kava Earn are picked based on user risk and value. The goal is to provide safe strategies that return a high yield.
BUSD Earn, for example, focuses on Mint and Lend to mint USDX with BUSD, then supplies that USDX to Lend, where it earns extra incentives thanks to its status as Kava’s native stablecoin.
In the case of BUSD Earn, Mint is used to convert BUSD into USDX instead of Swap because the user maintains ownership of their BUSD and removes the risk of loss due to price changes in USDX and swap fees.
Loans on Mint are valued in USDX rather than USD to create further protection from price fluctuations in USDX.
By leveraging BUSD vs. exchanging it, users can take advantage of USDX incentives while limiting their exposure to it.
Since the price of BUSD is fixed in Mint to US$1, it would take a multi-day de-pegging of the BUSD to put the strategy at risk.
Next for Kava Earn Strategy?
USDC and USDT are the immediate assets users can expect to be added as a Kava Earn Strategy.
Over time, Kava Governance will evaluate strategies using new protocols such as Kava Swap and other Kava Network DeFi apps.
As new strategies and assets are added, they will need to be evaluated and tested for potential risks due to liquidation or impermanent loss.
Kava Governance may vote to add new functionality to limit user risk too. User safety and user value are the primary concerns when evaluating new assets and protocols.