Kava Rise Enters Adoption Stage

May 1, 2023
4 min read

Rewarding Value Creators for a Thriving Ecosystem

Kava’s mission is to become the go-to decentralized Layer-1 blockchain to combine the speed and interoperability of Cosmos with the developer power of Ethereum. One year ago, Kava EVM launched with a goal of going from 0 to 100 protocols building on Kava. The $750M Kava Rise incentive fund was launched, along with several Kava protocols to achieve this goal.

Today, the Kava ecosystem has reached escape velocity from the growth stage with over 100 protocols deployed. On the heels of this success, the team is now focused on scaling adoption and maximizing decentralization by positioning Kava to attract larger projects and updating Kava Rise to support projects that drive usage, volume, and fees.

The Kava Rise incentive fund was initially designed to pay out protocols in full for Total Value Locked (TVL) in six subcategories based on the following DeFi Llama metrics: 

  • Borrows: Assets borrowed from lending protocols that need to be repaid, such as 500k USDC in a Money Market with 1 million USDC supplied.
  • DoubleCount: Assets supplied to one protocol and moved to another, like assets supplied to Yield Aggregators and redistributed to earn yield.
  • Staking: Governance tokens staked within the same protocol, stored in a risk-free manner, such as in a vault without redistribution.
  • Liquid Staking: Assets staked on a protocol with a derivative token given back, which can be used in other DeFi protocols.
  • Pool2: A farm type requiring users to take exposure to native tokens, incentivizing them to hold to receive rewards in the protocol's tokens, such as a UNI-ETH pool on Uniswap.
  • Vesting: Tokens locked in a protocol and released after meeting certain conditions, like team tokens in a project vesting over a 4-year period.

Next, we’ll explore the transition plan and future opportunities of moving out of growth and into an adoption-focused strategy.

The Path to Decentralization and Scaling Adoption 

In April 2023, the Kava Foundation and Kava Origin foundations were proposed to restructure, and further the security, growth, and decentralization of the Kava ecosystem. Kava will continue shifting focus to promote its partner protocols over its own. As part of that process, any Rise rewards received by Kava protocols will be given back to Kava network users through rewards distributed across various ecosystem projects.

Until now, Kava Rise payouts used unweighted metrics to incentivize early growth stage goals. Though the system worked, it no longer accurately rewards the value each protocol creates and has a limited ability to respond to community feedback and market conditions.

By moving to a weighted system, these shortcomings can be resolved, making the Kava Rise program more flexible, adaptable, and better aligned with the value each protocol brings to the ecosystem. A weighted payout system also more effectively rewards projects like NFTs and GameFi dApps that drive usage, volume, or fees.

These are the proposed payout category weighting adjustments from April through August 2023. TVL weights are proposed for April, May, June, July, and August, while future weight adjustments and additions of new Kava Rise payment categories are under consideration. Additionally, a boost to EVM protocols may be added to better support ecosystem partners:

The transition to a weighted system will be gradual and transparent, allowing the core team to gather and consider community feedback before implementing changes, and allow time for any necessary adjustments to ensure a smooth transition and a sustainable long-term rewards system. 

Committing core-team protocol rewards back to users through different ecosystem protocols and adopting a weighted system will help cultivate a robust, diverse, and decentralized ecosystem, but we will need your help to achieve it.

It’s important that the Kava community understands and agrees with these changes, so share your feedback and suggestions, and help guide this transition in the right direction!

Unleashing Kava’s Full Potential

Kava's mission is to become the go-to decentralized Layer-1 blockchain by combining the speed and interoperability of Cosmos with the developer power of Ethereum. The evolving rewards system will incentivize value-creators, position Kava to scale adoption, accelerate ecosystem growth, and maximize decentralization.

As Kava streamlines how Rise protocol data is compiled, more improvements will be made to the payment categories to include and take into account volume, fees, unique active wallets, and more. This continuous refinement will ensure that the rewards system remains relevant and effective as the Kava ecosystem continues to grow and mature.

Stay tuned for exciting developments as Kava keeps innovating and expanding, fostering a thriving ecosystem that empowers value-creators and sets the stage for even greater success in the future.