How much can you earn by staking your Kava (KAVA)?
What is Kava?
Kava is a decentralized finance (DeFi) lending protocol based on Cosmos that allows users to lend and borrow without a middleman. The KAVA token is the native token of the Kava network.
Kava’s key feature is that it allows users to collateralize their crypto like BTC or XRP to mint USDX, a stablecoin pegged to the US Dollar, while at the same time earning rewards in KAVA. Through this process called Kava Mint, users deposit their cryptocurrencies into smart contracts on Cosmos in order to borrow USDX. When they borrow USDX, Kava Mint users also earn weekly rewards in KAVA, Kava’s cryptocurrency token.
The Kava project began in 2018, when Brian Kerr, Ruaridh O’Donnell and Scott Stuart co-founded Kava Labs. Kava Labs is a for-profit company formed to develop and drive the creation of the Kava platform. In 2019, the Kava team held a token sale on Binance, raising $3 million through the sale of 6.5% of the total Kava supply. Kava’s decentralized lending platform first went live in June 2020.
What is Kava staking?
Kava is built on Cosmos and uses a Tendermint-based Proof-of-Stake (PoS) consensus mechanism. This means that users holding KAVA tokens earn staking rewards in exchange for using their holdings to support the operations and security of the Kava network. Through this process of staking, the Kava network ties its security to the honesty of the majority who are incentivized as token holders to maintain the integrity and value of the network.
How do I stake my KAVA?
KAVA token holders can earn a staking yield on their KAVA through a process called delegation. Delegation is where you appoint your staking rights to a validator so that you can participate in staking without having to maintain your own node.
To delegate and stake KAVA you must first purchase KAVA tokens on an exchange and then move them to a wallet that supports staking, like the TrustWallet Kava Wallet or Ledger hardware wallet. These are both non-custodial wallets.
With a non-custodial wallet, you have the sole control of your private keys which means that you do not have to trust a third party with your keys. The downside to a non-custodial wallet is that you are solely responsible for not losing your keys and keeping them secure. With this approach, you are responsible for choosing a good and reliable validator to stake your tokens with, so choose carefully.